Electric franchise again going to voters

La Plata Electric Association agreement rejected in spring

Since May, Durango electricity consumers have been on a holiday from paying a franchise fee that averaged $4.52 a month.

La Plata Electric Association dropped the charge after city voters rejected its new franchise agreement by a 41-vote margin.

In November, the city again will ask voters to approve another franchise agreement for LPEA or else see the city lose an estimated $20 million in revenue over the 20-year-term of the agreement.

To sway voters, this updated version would be cheaper and encourage consumers to turn off their lights, averaging $3.64 a month because it would be based only on electric consumption.

If approved, the city’s consumers would return to paying the fee starting Jan. 1, generating about $930,000 annually for the city’s general fund to pay for a variety of expenses such as street maintenance and police.

Because LPEA passes the cost of the franchise fee on to consumers, opponents still see it as an unfair tax, especially for those struggling to get by in an expensive city.

“What are we doing here? Am I missing something?” said Tom Darnell, whose group, Restore Power to the People, spent $940 on a mass mailer this spring to help defeat the franchise agreement.

Darnell will speak out against the revised franchise at a ballot issues forum scheduled for 5:30 to 7:30 p.m. Monday in the council chambers at Durango City Hall 949 East Second Ave.

City Councilor Dick White will speak for the franchise at the forum sponsored by the League of Women Voters of La Plata County.

The franchise agreement gives LPEA a monopoly to provide power to Durango, but Darnell does not think it’s right that consumers should pay for the privileges of the monopoly, such as the right to work on city streets.

Noting the high cost of living in Durango, Darnell views the fee as another tax by the city on “poor people to support amenities for those who could otherwise afford them.”

The city decided to make a second attempt to pass an LPEA franchise agreement after a series of hearings in the spring, when little to no support was given for budget cuts to make up for the revenue loss.

“I didn’t hear anybody say cut police or lay off city employees,” said Councilor Sweetie Marbury, noting that the city has had franchise agreements with power companies since the 1950s. Officials also said LPEA currently is the only utility not paying a franchise fee or occupation tax.

The city made up the shortfall from the loss of the LPEA franchise fee this year with the sale of land to Vectra Bank and by reducing some spending, including street repairs.

By not restoring the revenue, White worries the city will be forced to “double-down on the budget cuts made during the recession, without the prospect of a recovering economy to replace the revenue.”

Since the spring defeat, the city has worked to make the franchise agreement more palatable to voters.

The earlier version, for example, was criticized as a “tax on a tax” because it was applied on top of all gross revenues, including sales taxes.

In this revised version, the 4.67 percent fee would be applied only to the energy charge and not the LPEA base charge or its sales taxes.

“This will make the fee even smaller than before, amounting to about 12 cents per day for the average residential customer,” White said.

The city, however, expects to still generate the same amount of revenue as a result of population and business growth.

To answer another objection raised in the spring, the city changed the City Charter this summer to open referendums on franchises to all voters. Previously, they had been restricted to property owners who are registered to vote in Durango.

Darnell said he thinks the revised charter will aid his side by allowing renters to vote against the franchise. Voters will decide Nov. 6.

jhaug@durangoherald.com

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