BPU board members react to idea of raising PILOT fee

At the Wednesday night Board of Public Utilities internet and phone meeting, board members reacted to the idea of raising the PILOT (payment in lieu of taxes) fee on BPU bills.

None of the board members expressed support for the idea.

Board member Rose Mulvany Henry said Wednesday that at a recent Unified Government Commission special session on the budget, it was mentioned that the PILOT fee could be increased. The UG is working on its budget, looking at revenue sources and hasn’t yet made a final decision on it.

The PILOT is a fee, similar to a franchise fee, that the UG sets and places on BPU bills. The BPU members do not have a vote on it, according to the board. According to an attorney for the BPU, before a vote could be taken on that action by the UG, the charter ordinance requires a joint meeting between the UG and BPU and a discussion of it. The charter doesn’t call for a BPU vote on it.

Then the UG would have to draft a resolution and the UG Commission would vote on it, according to officials.

BPU General Manager Bill Johnson said a joint meeting of the UG and BPU is planned at 3 p.m. June 25, but there is no agenda for it yet.

“One of the biggest complaints we get from customers is the fees added onto the bills,” Jeff Bryant, BPU board member, said at the Wednesday meeting.

BPU board member Bob Milan Sr. noted that the UG doesn’t need a joint meeting to raise the trash collection fee on the BPU bills by 35 cents. The sewer charge placed by the UG on the BPU bills also doesn’t require BPU input.

While the UG Commission recently increased the maximum mill levy by 2 mills, the commission often sets it higher than the final figure they approve, according to the BPU’s attorney.

The UG hasn’t yet approved the final budget figure. The UG has been struggling with a loss of sales tax and gasoline tax revenues, and faces an estimated loss of $23 million in 2020 and $18 million in 2021.

Another UG fee on the BPU bill, the stormwater fee, also doesn’t require a BPU vote, according to Johnson.

Johnson said the BPU is talking with the UG about a bill redesign that would place the BPU charges on one page and the UG charges on another page.

Johnson said he would like to put a UG phone number next to the PILOT fee on the bills, as the BPU currently gets a lot of complaint calls about it.

Bryant suggested putting the phone numbers for the various UG departments on the bills next to the wastewater fee, the stormwater fee and the trash fee, as well, to help with customer service in the long run.

Board member Mary Gonzales recalled that in past years, they had been told there would be a PILOT fee reduction in the following year, but it never happened.

The charges on BPU bills could be going up at a time when customers are least able to afford it. Mulvany Henry urged people to call their elected officials if they have an opinion about the PILOT fee, as an increase would affect those who are struggling in the community.

The UG has proposed a slight, 35-cent increase in the trash collection fee. An increase in the stormwater fee has been discussed, also.

The BPU also was looking at an increase in water rates; it is on hold, but it could be started again. The BPU’s proposed water rate hearings are on hold, Johnson told Bob Milan Sr., who asked about it. That is something the BPU board members will have a vote on.

BPU officials said the water rate hearings are postponed until a date to be determined later. They will be able to pick it back up where they left off and not have to start the entire process again, according to officials.

They have not done a formal cost of service study or rate design for the electric rates yet, Johnson said.

The UG will receive some of the federal CARES Act funding for COVID-19 related expenses. The State Finance Council met earlier this week to make recommendations on the disbursements.

Johnson said the BPU and UG officials have met to identify expenses that could be funded under the CARES Act and through FEMA funding. Mayor David Alvey has met with the governor and senators to discuss if there will be any opportunity to redo the rules to allow local governments more flexibility in using the funds.

The BPU is taking other measures as well on its finances. The BPU on Wednesday night unanimously passed a resolution that would refinance existing bonds totaling about $201 million. It would result in an estimated savings of $16.2 million, officials said. The resolution will go to the UG Commission for approval.

It will lower the utility’s maximum annual debt service during 2021, 2022 and 2023, according to officials.

In addition, there will be a bond issue for $10 million of new funding included, to be used for the Rosedale substation project, including distribution, substation improvements and system improvements, according to officials.