Tuesday, September 28, 2010

LUS: Who Governs?

The question of who governs LUS—and apropos this blog, LUS Fiber—was raised last night at the meeting of the Lafayette charter commission. Terry Huval, LUS director, suggested that he favors some sort of governing board. This drew sharp questions from the commission and featured articles from both the Advocate and the Advertiser. The Independent blog weighed in early alerting readers to the meeting and offering useful background information. But AOC, as part of its desire to inform the public, has uploaded the full meeting to the web and I've embedded it here:



The stories, understandably, focus on the sure-to-be-contentious issue of governance. It's a source of conflict because LUS' governance is the point which most clearly illustrates the reasoning of those who are pushing for deconsolidation, for giving Lafayette back its own city government. LUS was owned by, and arguably was the most valuable asset of the city of Lafayette back in the days before consolidation. The clear intent of the new consolidated city-parish charter was to keep control of LUS in the hands of the city. In pursuit of that goal LUS was to be governed by the LPUA—a panel made up of all the members of the city-parish council whose district contained at least 60% city residents. Almost immediately, however, legal opinions were sought and contradictions were found between those sections that gave control of LUS to the LPUA and those that gave control of "all" functions to the full council. A subtext here is the general tenor of the time immediately after consolidation— a "we can all get along" feeling was apparently widespread and when bond attorney's voiced a feeling that bond issues would be look stronger if both the LPUA and the full C-P Council approved them that principle was quickly generalized to all governance matters. With a few tweaks to the implementation details that has been how LUS has been governed since.

This all blew up recently when LUS asked for the first electric rate hike in more than a decade. Arguably (and I do so argue) the ensuing deconsolidation conflict grew from the fact that ideologically conservative Bellard and Theriot, rural members of the council with few city citizens in their districts, refused to honor the majority decision of the LPUA to grant the hike. That resulted in a squeaker vote and served notice that the traditional ways of working around the deficiencies of the charter could no longer be relied on. People began looking for ways to "fix" the problem by fixing the charter. But once that Pandora's box was opened the issue quickly morphed into one focusing on sovereignty for the City of Lafayette—a new city-only council, a real mayor for the city, and total city control of city assets. LUS has become a secondary issue for most of those passionate about issue but it remains the biggest practical problem, and among those whose bent is practical and pragmatic a solution to the problem of LUS governance would go a long way toward ending their worries.

(Unintended consequences alert: Bellard and Theriot are the councilmen most passionately opposed to deconsolidation. It's a practical not principled position. The new ideological conservatives are supposed to be all for smaller government and moving power closer to the people as a matter of principle—and deconsolidation would do both. But Bellard and Theriot have the practical problem that their largely rural constituencies would be the ones left without resources in a new, rump, parish government. So, principle aside, they are against it. If they'd been old-fashioned conservatives earlier and honored the tradition of allowing the LPUA to decide on matters relating to the city utility they'd not be in this position today.)

What was interesting in Huval's presentation lay as much in what he did not suggest as what he did.

What was suggested (@ 1:16 minutes in the above video) was drawn from data offered by the American Public Power Association (a body of which Mr. Huval is a past president):
  1. 44% are run by an appointed Board
  2. 28% are run by an elected Board
  3. 28% are controlled by the Council or local equivalent
The Commision had asked Mr. Huval to suggest a range of alternatives and this is what he offered in response. Huval clearly did not want to wade in any deeper though he seemed, in several remarks, to favor some form of a board. For instance, he remarked that he'd recommend, and repeated this recommendation several times, that a condition of membership on the board be residence in the city of Lafayette. At another moment he was also clearly concerned that it was at least possible for a council to be made up representatives who, even if their districts were mostly in the city, were not themselves city residents.

What was not suggested was any of a range of alternatives that had been batted about and which were mentioned in passing by Commission members. Specifically: proportional voting. In such a scheme all members of the council who had any city citizens in their district would get a proportional vote on the LPUA/Council on matters relating to LUS. So, in one example, if Representative A had a 20% city constituency then he'd get 20% of a vote and Representative B, whose district was 80% city would get a vote that was 4 times as large as A's. Bruce Conque, a commission member who'd floated such a suggestion, was not present at this meeting.

Also not suggested were ways of dealing with the issue by simply changing the charter to take away any ambiguity as to the governance of LUS. It should be a relatively simple matter to make LPUA control explicit. Why that should not be explored more specifically is a matter for speculation. How much of the bond-worthiness of the city and the parish is due to having the large and stable income of four utilities to stabilize its income?

Nor was there any discussion of separating the traditional utilities—which operate as a municipal monopoly and the LUS Fiber division which operates in a much more competitive environment and under a vastly different set of constraints. State law already separates LUS Fiber from the rest of LUS for many purposes (part of the infamous (un)fair competition act) and discussion of the value of a separate LUS Fiber board would seem in order—even if it were finally decided that was not the way to go.

A lot of the questions asked by the Commissioners centered or touched on the role of LUS in encouraging or discouraging annexation of developing areas into the city. Mostly this centered around water (which is now being sold to surrounding areas at a rate that is higher than the retail rate in the city!) LUS Fiber, which is too young to have an historical role to play in that story was largely unmentioned. But it should be clear that LUS Fiber adds significantly to what the city of Lafayette can offer unincorporated areas. What isn't being discussed is how LUS' tight ties to the city have limited the growth of the utilities themselves. To the extent that the people of the community own their own utilities they keep local money at home and can use the resources to best serve the people of the community rather than the best interests of out-of-town investors. LUS has traditionally been seen as a huge benefit to the town and then city of Lafayette and it is often cited as a partial explanation for the way Lafayette moved past larger, but less progressive cities to become the hub city of the region. Is there any way to extend those benefits to others in the region without being unfair to the people of the city of Lafayette? I'd hate to see the value of public ownership stifled by peculiar historical arrangements. Of all the suggestions so far put forward the most easily adaptable to allowing the utilities to benefit the people outside the city limits would seem to be proportional voting. It'd make sense to separate LUS Fiber and the other utilities so that they could advance at differing rates. (It is my understanding that bond covenants which entangle all of the traditional utilities would likely make it impossible to separate out the water service from the electric. I'd be happy to stand corrected.)

Interestingly, the current dustup isn't the first time the issue of LUS governance has been raised locally. The local League of Women Voters (full disclosure: I'm an active member) recommended an oversight board as the "final recommendation" in their extensive study of LUS Fiber's potential for the community. Interestingly Terry Huval was at that time adamantly opposed to the idea, attending a public meeting SLCC called to discuss the issues raised by the report chiefly to make the point that such a board for LUS Fiber was not a good idea. It isn't clear what has changed between then and now...beyond the uncomfortable realization during the rate hike discussion that LUS could no longer count on the city-parish council to honor what city councilors thought best for the utility.

Tuesday, September 21, 2010

"LUS now offering 100 Mbps residential Internet"

Nathan Stubbs over at the Independent blog has a brief article announcing that LUS Fiber is now officially offering a 100 Mbps residential tier. That makes Lafayette one of the very few places in this country where homes can easily and relatively affordably buy a 100 Mbps of connectivity.

It's not entirely clear why LUS has decided to offer this service at this time. Huval points to demand; apparently regular folks are asking for a speed that LUS thought only businesses would desire:
He adds LUS Fiber continues to be pleasantly surprised by the higher levels of service being sought by the average residential and commercial customers. "The level of service [being sold] is higher than we expected," he says, "which is very positive."
The utility was already offering a commercial tier at the 100 Mbps speed for $199.95 a month. Huval has long said that any resident that wanted to pay for the commercial version was free to order it up so it is a little unclear as to just what is new about this explicitly residential service offering. (The LUS Fiber residential internet page has not yet been updated to reflect this change.) Unlike the 10 and 50 Mbps residential offerings the new 100 Mbps residential tier it is not cheaper than the corresponding business ones. The other residential tiers are cheaper than their corresponding business tiers by 45-48%. Nor, according to Huval's remarks in the comments is the monthly usage cap any different—in both the residential and the commercial versions of the 100 meg package is capped at 8 terabits. (Note: that'd be about 1 terabyte of hard disk storage.) The idea behind the higher prices for businesses is that they use much more bandwidth than households—and LUS pays for its connectivity by capacity.

Another possible reason to formalize a 100 Mbps tier right now is that Chattanooga's still-building municipal fiber-optic utility recently announced a 1 Gbps option on its system. Chattanooga's Gig is expensive for a regular consumer at $399 a month. In general, while Chattanooga has offered higher speeds, their pricing schedule has been more expensive than LUS'. That relationship no longer holds with LUS pricing its residential 100 Mbps package at the same cost as its commercial one—LUS' price is 200 dollars a month while Chattanooga's is a 14o...

It sounds a bit as if this new residential tier hasn't been completely thought out. I'll not be surprised if revisions that bring it more into align with other residential packages don't appear.