Tuesday, August 16, 2005

Utility News: Lowered Electricity Prices and Wholesale Fiber Profitability

Both the Advertiser and the Advocate carry stories on last night's Lafayette utility system budget meeting. The headline news for both papers were lower cost to the consumer. (Advocate: LUS utility bills to go down; Advertiser: Electricity rates to decrease.)

According to both papers a typical customer will realize a savings of about 3.1 per cent; about $3.77 a month due to fuel efficiencies at new plants coming online in the parish--apparently a classic case of spending money wisely in order to realize efficiencies that save everyone money in the long run. The Advocate also mentions a new and favorable agreement with the electrical cooperative CLECO that will contribute to the savings. It's probably worth mentioning explicitly that LUS passes on such savings routinely and automatically to its citizen/customers; the fact that LUS is publicly owned means that its owners are its customers, means that it makes sense to keep "profit" margins paper thin and turn the increased efficiencies that a private company would be justified in pulling out in profit back to its customers in the form of reduced rates. That's the way publicly-owned utilities operate. The Advocate documents the result:
With the decrease in bills, LUS customers will pay less per month for water, sewer service and electricity than most people in Louisiana except those in Morgan City, Lake Charles and Carencro.

Customers in New Orleans, Baton Rouge and New Iberia pay an average of almost $30 more a month for the same services, Huval said.
That's a lot of money that stays in local folks hands.

There's also, as you might expect, some fiber news.

LUS' wholesale business turned a significant corner according to the Advocate's Blanchard:

The business began making positive net income, which includes depreciation and in lieu of tax payments, early in the 2004-05 fiscal year, Huval said.

That's one year before the four year break-even point projected when LUS began the new business in May 2002, Huval said.

That's good news though how exactly the existing wholesale business will integrate into the new fiber buildout remains murky. (The issue of how well the wholesale business was doing was an issue during the early months of the recent battle before the referendum election. But it the opposition quit bringing it up when it became increasingly apparent that it was in doing fine.)

Both papers note that no money is included in this budget for the fiber to the home project--this had been announced prior to the meeting. The project has not yet been funded --the referendum only approved selling the bonds--and putting it into the budget sensibly awaits having actual money to budget. The community awaits regulations by the PSC which could have a substantial impact on how such a budget is constructed. A bond ordinance will be formally introduced at the August 23rd meeting in anticipation of the PSC's expected ruling on September 1st. It could be finalized after that and a budget amendment offered.

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