In for a Shock

In February of 2004, an Alexandria woman was stunned when she opened her monthly utility bill in the mail. According to the city, she owed a staggering $30,000 for the electricity she had used the previous month. She recently recalled the experience on Facebook, in response to one of our reports about the behind-the-scenes efforts to potentially privatize Alexandria’s 126-year-old nonprofit municipal utility system.

But her story didn’t end the way you’d imagine. She claimed that when she called to complain, her bill was reduced… to $16,000. She hadn’t even been living in the home at the time, she said; it was under construction. And sadly, because she couldn’t possibly afford to pay a $16,000 utility bill, she ended up losing her dream home.

It was all very difficult to believe, and it would’ve meant that former Mayor Ned Randolph, who was then midway through his fifth and final term as the city’s top executive, had gone to court to collect. That didn’t sound right. I decided to do some digging.

As it turns out, she actually had received a $30,000 bill, but immediately after the bill went out, a utilities department staffer spotted the obvious outlier, according to a former member of the Randolph administration who asked not to be named out of concern for their current employer’s corporate media policy. The $30,000 bill was the result of a data entry error, and by the time the woman had called to complain, it had already been fixed. Her actual bill wasn’t for $16,000. “I don’t remember the exact number, but it was probably for less than 1% of that,” the person said.

If it’s not already obvious, the City of Alexandria never took legal action against the woman, as court records confirm. During the past sixteen years, it seems as if her story has gotten somewhat, well, let’s just say “embellished.”

I mention this particular story not because I want to embarrass anyone (I’m not using her name for a reason), but because it’s a version, albeit an exaggerated one, of a story that is occasionally told in Alexandria: That is, utility bills are too damn high.

Yet, as any objective analysis demonstrates, Alexandria residents actually pay, on average, less on their combined electricity bills than customers of the state’s largest private utility companies, including both Cleco and Entergy.

One would ordinarily expect the city’s mayor to boast about its comparatively lower costs and to push back against the perception that its residents are being overcharged, but Jeff Hall is a former Cleco Vice President and has been quietly entertaining the idea of selling or leasing the city-owned system for several months.

Despite what he may publicly assert, it’s nearly impossible to imagine any scenario in which privatization could provide a long-term financial benefit for the City; a private operator would essentially need to volunteer to operate the system at a loss. However, for reasons I will unpack in the next part of this series, there may be short-term political benefits.

Hall justified his recent decision to hire a crisis communications consultant to assist in overseeing a third-party “evaluation” of the city’s utility system by explaining that this is a “complicated” issue.

Indeed, energy regulation and utilities operations are complicated, but the answers to the questions he has posed are pretty straightforward.

According to the most recent data provided by Louisiana’s Public Service Commission, in January of 2020, a Cleco residential customer who used 1,000 kWh of electricity was charged at least $100.68. It’s important to note that this represents the minimum, not the average, because depending on where the customer lives, they may be required to also pay 50% of their municipality’s franchise fee. In addition, although residential electricity is exempt from state sales taxes, some providers, like Entergy, include clauses like this in the fine print:

In other words, because Alexandria’s customers are not subject to taxes or a franchise fee and because its system is nonprofit and city-owned, a comparison of only costs per kilowatt hour (kWh) is inherently misleading. Even without adding on those fees to Cleco’s bill, an Alexandria resident was still charged less for 1,000 kWh of electricity this month.

Last Tuesday, Alexandria Councilman Gerber M. Porter incorrectly asserted the City charges approximately 11 cents per kWh (currently, it’s actually around 9 to 9.2 cents per kWh), which he believed to be egregiously high, citing a California start-up company whose solar and lithium ion battery complex generates power at a cost of less than 4 cents per kWh. Despite the councilman’s implications that the start-up could somehow transmit energy to Alexandria, which is nearly 2,000 miles away, even if it could, the transmission costs would be staggering, and then, on top of that, customers would still have to pay additional fees as well.

Here’s a more concrete example, my most recent utility bill from Entergy, which, according to the Public Service Commission, had one of the lowest energy costs in the state this month:

I’ve highlighted the totals and the additional fees that I pay, as a resident of New Orleans and an Entergy customer, that I wouldn’t have to pay if I were a resident of Alexandria. As you can see, I used 1,449 kWh of electricity, and my “total metered charges” for electricity was $140.92. (You may also notice there’s an additional charge of $4.89 for city sales taxes as well).

Over the same exact time period, an Alexandria resident who used 1,500 kWh of electricity would have been charged a grand total of $137.26.

The truth is: Even though Entergy’s rates were lower than the state average this month, nearly everyone in Louisiana pays about the same in fuel costs for their electricity. Like Cleco and Entergy, Alexandria is a member of the MISO (Midcontinent Independent Systems Operator) energy market, which means, among other things, that its customers pay the same market rates they would pay if they were instead customers of Cleco or Entergy. Typically, because the City operates its own power plant and transmission lines, Alexandria customers wind up paying less for electricity than a person living only a few miles away.

So, with all of this in mind, why do some in Alexandria continue to insist that they are charged more for their utilities than they would be elsewhere?

There are a few, understandable reasons.

As I have previously mentioned, much of the city’s housing stock is outmoded and energy inefficient. Consequently, it is not unusual for residents to use more energy than they otherwise would in a more modern or better insulated home of the same size somewhere else. This isn’t a problem that can be solved by a utility company, and it has nothing to do with the rates they’re being charged, which, again, are equal if not less than what a private operator would charge.

There’s another major reason for the misperception, which has nothing to do with the age or the energy efficiency of a person’s home. It’s also the most common reason why some Alexandria residents insist that they’re being overcharged.

You may have noticed that on my bill from Entergy, I was charged for both electricity and gas. Everything else- sanitation, water, and sewer- is billed separately, by the Sewerage and Water Board; that includes weekly trash pickup, which costs $24 a month.

This, however, is what a typical utility bill in Alexandria looks like:

Because Alexandria operates every aspect of its utility system, residents receive a single monthly bill.

Let’s say that a friend of mine in Alexandria called and asked me what my electric bill was this month. (For the sake of this hypothetical, assume that the AUS bill above belonged to my friend).

“One sec, let me check my Entergy account,” I’d reply. “It was $167.68. How much was your bill?”

“It was almost $33 more than your bill,” they’d tell me. “$200.32.”

And we’d both be telling the truth, at least in the way people colloquially use the term “electric bill.”

Conversations like these are not uncommon. It’s the primary reason some Alexandria residents claim that they’re being overcharged, and it’s why Alexandria natives who move to another city sometimes believe they’re now being charged less.

On average, I spend $30 more per month for those “ancillary” utilities than I would have been charged in Alexandria and $10 more per month than Alexandria charges for the same amount of electricity and gas, but the sticker shock is lessened because the bills arrive separately.

A few days ago, the Town Talk’s Jeff Matthews reported on the ongoing saga over Mayor Hall’s potential plans for the city’s municipal utility system.

“As far back as the campaign in 2018,” Matthews noted, “rumors circulated that then-candidate and now-Mayor Jeff Hall, a longtime former executive at Cleco, would look to sell Alexandria’s electric utility system to the Pinveville-based company, a possibility that has been explored in the past.”

In 1987, Alexandria Nearly Sold Its Utility System. Then, Someone Checked Their Math.

Indeed, as I wrote about last week, Alexandria did consider a bid from Cleco in 1987, a few years before Hall would help broker deals for Cleco’s acquisition of the Teche Electric Cooperative in Jeanerette and the management of the City of Opelousas’ system.

33 years ago, even with the City’s finances in disarray and its utility infrastructure in need of major upgrades, Cleco ultimately withdrew its offer, determining that Alexandria’s system was in far better shape than most had believed. The problem wasn’t that the City’s system was somehow unsustainable or obsolescent; the problem was that the outgoing mayor, John K. “Tilly” Snyder, had no idea what he was doing.