The BWL Needs to Get Its House In Order
Saturday, August 19, 2006

Dear TNCP,

The  Board of Water and Light raised electric and water rates 2001-2003 and 2005. Water rates just increased 6.5% on July 1. Now the board is proposing a 1.5% increase for electric rates in September in order to generate an additional $1.5 million in revenues. Why so many increases? Is it because of inflation? To make each utility self-supporting? Rising health costs? Higher retiree benefits?

I suspect these never-ending increases are a result of BWL commissioners’ $250 limousine rides, $100 lunches and dinners, and $54 bottles of wine on a junket in Seattle in 2004. Could it be the $128,000 to $136,000 spent on travel and conferences in 2003 and 2004? What about the board spending more than $1.5 million for outside legal counsel fighting the former BWL managers and administrators since 2001? Maybe the board needs to replace thousands of dollars worth of employees' questionable purchases for meals, or to wash their personal cars at ratepayers’ expense. Must BWL pay for increased insurance premiums, because of these lawsuits and the $450,000 embezzlement by a former 19-year employee?Does the board need to pay it General Manager $206,000/year, plus a $542/month car allowance, a $1,056 membership to the university club and a $700 for civic or business club memberships? Governor Granholm only earns $177,000/year.

In May of this year the board claimed that it would lose $118 million by 2012. Yet, on May 5 the city received an additional " return on equity" of $533,000 from the board which means that that board has underestimated its budgeted profits by $13,325,000. As a result of the discovery, the projected shortfall in 2012 should be only $105 million instead of $118 million. If the board is hurting for so much money, why did it lend the city $.5 million last year and $750,000 this year in the form of reduced utility bills. Of course the BWL will get back the loan in spades when the City of Lansing begins paying back the loan when the electric, water and steam rates are higher. The proposed steam rate increase is 65%. On Aug. 4,2003 the Board of Water and Light restructured $29.7 million bonds for chilled water from 15 years to 27 years, thereby reducing its payments $900,000/year, while increasing its total debt $15.9 million. Should owners and ratepayers be responsible for these hidden costs?

We Lansing residents are not only ratepayers, but we own this public utility, Therefore our rates and increases should never be as high as non-Lansing residents, who are should only customers should. Do owners and/or CEO of General Motors pay what I pay for a car? Of course not. In fact GM employees pay much less than the rest of us. So why do we the BWL owners pay the same or sometimes higher rates than non-Lansing residents? I know that no other owner pays full price for his or her product.

As an owner I refuse to pay another increase until the board stops spending our money like a bunch of drunken sailors. Furthermore, it's time to end the reprehensible practice of charging a 5% penalty to owners who are late paying the exuberant bills.

The BWL commissioners must address these issues and get their house in order instead of relying on annual rate increases to bail them out of projected seas of red ink. Otherwise, this good ship lollipop will sink like the Titanic, and drown in its overly rate-increased owners and customers.

John Pollard
Lansing, MI

 

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