I originally planned to write a column excoriating the New Orleans Saints and Mayor Cantrell. The former for colluding with the Archdiocese of New Orleans to spin its latest sexual abuse scandal and the Mayor for her imperious and inept handling of the Hard Rock Hotel collapse, which happened 118 days ago.
I don’t know about you, but I’m sick and tired of being sick and tired. Additionally, I have outrage fatigue from the way Senate Republicans have handled the removal trial of the Impeached Insult Comedian so I’m telling another story from my checkered past instead. I hope you enjoy reading it as much as I did writing it.
Memory is a tricky thing and I’m relying on it for this column. I did some basic research, but this story is largely painted from memory. This particular memory was jogged by an excellent column by the Advocate’s Scott Rabalais. The title sums it up: Remembering ‘Pistol Pete’ Maravich and the 50th Anniversary of his brilliance.
On January 31, 1970 Maravich broke Oscar Robertson’s college career basketball scoring record. He still holds the record with 3667 points; averaging an astonishing 44.2 points-per-game. A quick note about Oscar Robertson for those of you too young to have seen the Big O. He was a combination of Magic Johnson and LeBron James only with a chip on his shoulder; make that a boulder. He was scarred by racism, so I give him a pass on his cantankerous personality. And Oscar could ball, y’all.
“Pistol Pete” Maravich.
It was so long ago that I had almost forgotten the day I met Pistol Pete on the LSU campus. My memory of this meeting involves the Gym Armory, the Assembly Center (now named for Pistol Pete) and the LSU lifer that everyone called Coach Jay.
I only learned recently that his full name was Lawrence J. McCreary. He was Coach Jay to one and all. When I was an LSU student, he was the director of Intramural Sports, which is how I came to know him. I worked for him. I almost put quotes on worked because I manned the equipment room 3 or 4 days a week. I checked out nets, balls, and weightlifting belts to the student masses. It was so easy that I got most of my studying done while there. A sweet gig for a student even if the old gym smelled of sweat and other unsalubrious odors.
I got the job through an old friend of the Gret Stet branch of my family, then LSU Sports Information Director Paul Manasseh. Paul and Jay were buddies, so some of their friendship adhered to me. Besides, Coach Jay and I had something very important in common: a love of basketball. We were in the minority in football crazy Louisiana.
Coach Jay McCreary.
Jay McCreary was such a great high school and college player that he was inducted into the Indiana Basketball Hall of Fame in 1970. He turned to coaching after playing on the 1940 national champion Indiana Hoosiers and serving in the Army during the Second World War.
Coach Jay’s stint at Muncie [Indiana] Central High School from 1951-1956 made him a hot commodity. It also gave him a unique claim to fame. Muncie Central was the overdog school fictionalized in the 1986 movie, Hoosiers. The McCreary-like character was played by Ray Crowe who was Oscar Robertson’s high school coach. It always came back to the Big O with Jay McCreary.
Coach Jay was head basketball coach at LSU from 1957-1965. His record was undistinguished: 82-115. He often lamented his inability to recruit black players. He wanted to break the color line, but the administration wouldn’t hear of it. He once told me that he would have sold his soul to be able to recruit such Louisiana stars as Willis Reed and Elvin Hayes.
Coach Jay was fired after the 1965 season but returned as an assistant to Press Maravich, Pistol Pete’s volatile father. In this instance, volatile is a polite euphemism for jerk. Father and son had a tumultuous relationship. Press essentially forced his son to attend LSU. This vexed Pete mightily and relations between the two-never good-soured.
That’s where Jay McCreary came in. He served as a buffer between Maravich father and son and, to some extent, became the assistant coach in charge of Pistol Pete. Coach Jay was every bit as gruff an old school coach as Press Maravich but once you got beneath the surface, he was a kind man. If Coach Jay were a dessert, he would have been creme brulee: crusty on the outside and sweet on the inside.
My take on the Jay-Pete relationship is painted from memory. It’s based on conversations with Jay and Paul Manasseh. Both men were old-fashioned raconteurs who were known to embellish a story to improve it. I vividly remember Coach Jay saying that he finally got his black player at LSU when he coached Pete Maravich. I was taken aback so he explained that Pete was a white kid who played just like Earl the Pearl, Doctor J, and Oscar Robertson. It always came back to the Big O with Jay McCreary.
That was a lot of exposition, wasn’t it? They don’t call me the 13th Ward Rambler for nothing.
One afternoon in 1983 or 1984, I was at work in the dank confines of the equipment room at the Gym Armory. A guy came over and said, “Coach Jay wants to see you. I’m taking over.”
I was perplexed and wondered if I’d messed up or a family member had died. Coach Jay didn’t play favorites, so it didn’t matter that I was teacher’s pet.
I was surprised to see Coach’s door closed. It was usually open. I knocked and entered. To my astonishment, Pete Maravich was sitting on the edge of Coach Jay’s desk like shamus Paul Drake in the old Perry Mason TV series. Coach Jay smiled and said: “Pete meet Peter.”
I nearly fainted because I was so surprised to meet Pistol Pete in the flesh. On the basketball court, Pete Maravich was flashy and comfortable with being the center of attention. Off court, he was a shy man with a surprisingly weak handshake. The first time I shook Jay McCreary’s hand I thought he’d broken it. Crunch.
We talked hoops. I was surprised to learn that Pete-who ended his career with the Boston Celtics-took the Los Angeles Lakers side in that great basketball rivalry. “They play like me, especially Magic Johnson but he’s bigger, stronger, and better looking,” Pete explained.
In the mid-Eighties, the Celtics-Lakers rivalry was the hottest thing in sports. In the Gret Stet of Louisiana, white people were down with Larry Bird and the Celtics whereas black folks and the odd liberal such as me sided with Magic, Kareem, and the Lakers. In Pistol Pete’s case, the style of play was the attraction. He was “showtime” before the Lakers were.
What happened next is painted from memory. I recall Jay asking Maravich if he was still in shape. He’d last played in the NBA in 1980. He shrugged and said, “Haven’t lost my shooting eye.”
Coach Jay perked up and said, “Really? Tell you what; if you can sink fifty straight free throws, I’m buying dinner, hotshot.”
Jay picked up the phone and made a brief call. Then it was showtime. I’m uncertain if we went to what is now the PMAC (Pete Maravich Assembly Center) or the court at the Gym Armory. I believe it was the former because then LSU head basketball coach Dale Brown joined us. I knew it was serious because he was wearing a whistle. I’d met Dale before and knew I was in for a hearty handshake and manly slap on the back. Ouch.
We hit the court. Dale Brown acted as referee, I was the counter, and Coach Jay the heckler. He wasn’t going to go easy on his former player. It didn’t matter. Pete sank the fifty free throws and won the bet. I didn’t get to go to dinner because Jay looked at me and said, “Don’t you have a test tomorrow, hotshot?” He was right.
That’s the story of Coach Jay, Pistol Pete, and Me with cameo appearances by Dale Brown and Oscar Robertson. It always came back to the Big O with Jay McCreary.
The last time I saw Coach Jay was on my final day as a student at LSU. I went to say goodbye and he gave me a pep talk about life and law school. I got another bone-crushing handshake and, to my surprise, a hug. I’m a hugger. Jay McCreary was not.
Jay McCreary died in 1997 at 77; nine years after Pete Maravich who was only 40. I’ve wanted to tell this story for years. He was an unpretentious man, so I don’t think Coach Jay realized what a powerful impact he had on so many young lives. He was not just a coach; he was a teacher.
The last word goes to Elvis Costello and Burt Bacharach:
Behind the scenes, the Alexandria mayor has been preparing to dismantle the city’s nonprofit utility system since at least June of 2019.
More than two months before Alexandria Mayor Jeff Hall publicly asserted that he was awaiting a study prior to considering any proposal to privatize the City’s 126-year-old nonprofit municipal utility system, he dispatched Mark D. Pearce, Sr., the former general counsel of Cleco, to Baton Rouge in order to secretly meet with executives at Bernhard/NextGEN, a company that intends to spend more than $15 billion over the next several years to acquire leases and management agreements with public utility operators, during which they discussed a “possible deal structure,” according to invoices obtained through a public records request by the Bayou Brief.
Bernhard/NextGEN is the same company that unsuccessfully sought a 40-year management agreement over Lafayette’s public utility, igniting a contentious debate among residents and ultimately spurring the City-Parish Council to pass a resolution that made it clear: Lafayette’s system, known as LUS, was not for sale.
A representative of Bernhard/NextGEN did not respond to the Bayou Brief’s request for comment.
Invoices for a documentation review and a meeting between Alexandria contract attorney Mark D. Pearce, Sr. and representatives of Bernhard/NextGEN. Pearce subsequently submitted an invoice for an additional review of NextGEN’s bid in Ascension Parish. Source: City of Alexandria, LA.
Pearce’s invoices reveal he has been working on plans related to the future of the municipal utility since at least June of 2019, only seven months after Hall took office, and that Hall and at least one other mayoral staffer are already actively contemplating the sale or lease of the city-owned system to a private-sector operator, directly contradicting the claims Hall has recently made to members of the media and the City Council.
“We are committed to being transparent with this process,” Hall stated in a press release on Jan. 17th.
The invoices also undermine statements made by John Kyte, the Ruston-based crisis communications consultant who was officially hired last week to assist the Mayor’s Office in recruiting and selecting of a “third-party” firm tasked with evaluating “options” for the city-owned utility. Kyte has adamantly insisted that he would not have agreed to work for the City of Alexandria if he had believed its plans were “predetermined,” and to be sure, there is no indication that he was ever made aware of the full extent of the work that had been underway months before he began discussions with Hall’s office.
Four days after I published the first part of the Bayou Brief’s ongoing series “An Exercise in (f)Utility,” I exchanged a series of emails with Kyte in which I expressed my concern that the proposed process for “evaluating options” was nothing more than smoke and mirrors, suggesting that the mayor already had a implicitly desired outcome. Indeed, as recently noted by the Town Talk, there were widespread rumors that Hall intended to pursue the privatization of the city’s utility system throughout the 2018 mayoral election season. Similar speculation followed Hall’s unsuccessful 2014 campaign as well.
Click to expand.
“There is no factual evidence that supports your theory,” Kyte told me. “I have to believe that if you had a smoking gun, you’d use it.”
If that wasn’t a “smoking gun,” then the evidence of a City contract attorney being paid to discuss “a possible deal structure” with a private utility operator most certainly is. The details of Pearce’s work have not been previously reported or disclosed and were only provided to one member of the City Council and only after he asked for the same documents I had requested.
Pearce appears to be an architect for much of the City’s plans for the future of its utility system, and according to his invoices, Bernhard/NextGEN is the only company with which he discussed a deal.
When considered in totality, the work already conducted by Hall’s office may raise legal and ethical concerns about the ways in which they have approached a potential deal for the system, which is believed to be worth well in excess of $500 million and which generates over $100 million in annual revenue. Although it is not unusual for city staffers or legal counsel to consult with industry professionals prior to the issuance of a Request for Proposals, Pearce’s invoices indicate that Bernhard/NextGEN is also the only named firm with whom the City has met as it develops a selection criteria.
Pearce was hired as a contract attorney for the City of Alexandria in May of 2019. He stepped down from his job at Cleco after 17 years at the beginning of last January. As a lawyer for Cleco, Pearce was a part of the team that represented Cleco during negotiations for the renewal of a power supply agreement with Alexandria and was involved in defending the company against the City’s 2015 allegations of systematic fraud and in subsequent settlement negotiations.
“I currently work for entities that own and/or operate electrical utility systems and/or generating power stations, including municipalities,” he writes on his LinkedIn profile. “I recently retired as General Counsel for the utility operating entity Cleco Power LLC.”
Pearce does not list the names of any of his corporate or governmental clients, though thus far the City of Alexandria is the only public entity that has approved a professional services contract directly with his law practice. From May to December of 2019, he earned approximately $17,900 from Alexandria.
During those seven months, Pearce, who lives in the New Orleans area, attended a total of 12 meetings in his capacity as an attorney for the City of Alexandria, including his meeting with Bernhard/NextGEN and at least two meetings of the Louisiana Energy and Power Authority, better known as LEPA.
Curiously, in the 11 pages of itemized invoices he submitted for payment, there is not a single mention of Pearce discussing or meeting with officials or staffers of the city’s Finance or Utilities Departments, suggesting that, despite Mayor Hall’s public claims to the contrary, these efforts are not informed by those with subject-matter expertise and institutional knowledge of the city utility’s finances or operations.
Image by the Bayou Brief.
Refinancing existing bond debt is essential to Hall’s plans for the possible privatization of the utility system, not because Alexandria’s current bond obligations are overly burdensome but because of changes in federal law resulting from Trump’s 2017 “tax reform” package that make it easier for a private company to assume public debt.
In addition to his discussions and research involving Bernhard/NextGEN, Pearce has also spent a significant amount of time studying the possibility of refinancing municipal bond debt. The Alexandria City Council will consider- for the first time- the issuance of up to $140 million in “Taxable Utilities Revenue Refunding Bonds,” which, as I will explain later, is fraught with risk and has nothing to do with a desire to save money.
During its most recent meeting, Gerber M. Porter, who represents Alexandria’s second district, strongly criticized the previous administration for entering into bond obligations with interest rates that are now higher than today’s market. (Porter mistakenly claimed the interest rates were currently as high as 5%, and while 5% is listed as the maximum rate that could apply to one of the City’s current bond obligations, the actual rate fluctuates closer to 4%). Porter’s criticism was repeated by one of his colleagues, Councilman-at-large Joe Fuller.
Both Fuller and Porter were either deliberately ignoring or unaware of the fact the City’s existing municipal bonds are tax-exempt and that, as a consequence of a series of regulatory and tax law changes signed into law by President Trump, municipalities no longer have the same abilities they once enjoyed in refinancing or refunding their debt.
Among other things, as a consequence of the Tax Cuts and Jobs Act of 2017 (TJCA), there are limited situations in which refinancing municipal debt is even feasible, because typically any savings that could be realized by a lower interest rate are offset by the concomitant tax liability and the more volatile taxable bond market. Prior to the changes signed into law by President Trump, whenever a state or municipal government wanted to take advantage of better market conditions to refinance its existing bond debt, they would authorize the issuance of tax-exempt advance refunding bonds, which were relatively low risk and reliable.
“The (TJCA) prohibited the issuance of tax-exempt advance refunding bonds after December 31, 2017,” explains the American Public Power Association. “This provision was never debated, never publicly championed by any member of Congress, and never subjected to a vote. As a result, issuers must either wait to issue a current refunding bond or issue an advance refunding bond as taxable debt. Likewise, newly issued bonds are being issued with shorter call dates—closer to seven rather than ten years. This hurts bondholders, who are guaranteed a steady stream of interest payments for less time. Bondholders are demanding a higher rate of return on bonds with these shorter maturities, driving up borrowing costs.”
As the above graph demonstrates, the interest rates associated for municipal bonds the City of Alexandria took out at the beginning of the previous decade were within the market average. Recent comments by Councilmen Gerber M. Porter and Joe Fuller have unfairly criticized the previous administration for entering into arrangements that were perfectly typical of the municipal bond market at the time. Source: WM Financial Strategies.
The Government Finance Officers Association is also sharply critical of the elimination of tax-exempt refunding bonds and its effects on municipal and state governments. “The elimination of advance refundings in the TCJA as a cost-savings tool for state and local governments has limited the options to refinance debt,” it explains, “especially since interest rates will certainly fluctuate over the lifetime of outstanding governmental bonds (which in many cases is 30 years). As a result, state and local governments are now paying more in interest, a cost that must be paid by state and local residents.”
Several months ago, around the time Pearce first began his research, municipalities across the nation were taking advantage of record-low interest rates in the issuance of new tax-exempt bonds, primarily in order to fund infrastructure projects and capital improvements. While this trend is expected to continue throughout 2020, Mayor Hall isn’t advocating for the issuance of new tax-exempt bonds; rather, as agenda item #9 for the upcoming Alexandria City Council meeting reveals, he hopes to refinance the $140 million in existing utility bond debt in the taxable bond market.
Importantly, the City’s utility system has consistently and easily met all of its debt obligations, even when natural gas prices plummeted (which also had the effect of allowing the City to provide cheaper-cost electricity to its customers).
Again, the opportunity to avail itself to better conditions in the bond market isn’t the reason Pearce began researching debt refinancing, and despite the mischaracterizations of doom and gloom from Councilmen Fuller and Porter, the impetus for refinancing has almost nothing to do with an exigent need to save money or even a desire to utilize potential savings on infrastructure projects. Both men were also critical of the total amount of existing utility bond debt, which could either remain the same or increase, depending on how it ultimately pursues refinancing, and which, regardless, has not constrained the utility system’s delivery of services or its operations.
Why did Congress eliminate tax-exempt advance refunding bonds, without any debate and over the objections of nonpartisan, nonprofit municipal and state policy organizations? The reason is found in the answer to another question: Who benefits the most from the change in the law?
Clearly, for reasons I’ve explained above, it’s not the public. Rather, because taxable bonds do not carry the same private use restrictions as tax-exempt bonds, the prime beneficiaries are real estate investors, who hope to take advantage of a municipal or state government’s sizable debt capacity to leverage large-scale development projects, and companies like Bernhard/NextGEN, who would have previously needed to pay off a municipality’s utility bond debt prior to entering into a purchase or lease agreement and can now simply assume that debt into its business model.
In other words, Mayor Hall isn’t seeking up to $140 million in “Taxable Utilities Revenue Refunding Bonds” because the terms of its existing bonds are overly burdensome or onerous. He’s simply hoping to make the city’s nonprofit municipal utility system more attractive to private operators.
Clockwise from center: Alexandria Mayor Jeff Hall, NextGEN’s Jeff Baudier, Alexandria Chief of Staff Susan Broussard, Alexandria contract attorney Mark D. Pearce, Sr., and Alexandria Internal Auditor Ken Nolley. Image by the Bayou Brief.
Although the prominent roles of former employees of Cleco may suggest the Pineville utility giant has influenced Mayor Hall’s push for privatization, there is no evidence of “Clecollusion.” Instead, it appears Hall is pursuing the same type of deal Bernhard/NextGEN offered to Lafayette.
Bernhard/NextGEN is a division of Bernhard Capital Partners, the company founded by Jim Bernhard following the $3 billion sale of the Shaw Group in 2013. Bernhard/NextGEN, which specializes in utility systems operations and management, is currently led by Jeff Baudier, who joined the company in April of 2018 after working as Cleco’s Chief Development Officer.
Prior to its sale, the Shaw Group, which Bernhard co-founded in 1986, was one of only two Fortune 500 companies headquartered in Louisiana, with $6 billion in annual revenue and more than 25,000 employees. Bernhard also previously served as the Chairman of the Louisiana Democratic State Central Committee, and in recent years, has occasionally expressed interest in a bid for governor.
Jim Bernhard (left) and Bernhard CEO Ed Tinsley (right).
NextGEN, a subsidiary of Bernhard Capital Partners, is the same company that had submitted a controversial $1.3 billion bid for the management of LUS, Lafayette’s municipal utility, in 2018, which will be the subject of an upcoming report on the Bayou Brief.
Like Pearce and Baudier, Mayor Hall is also a former executive with Cleco, as is his Chief of Staff, Susan Broussard, who had served as the company’s HR Manager before departing for City Hall, and his Internal Auditor, Ken Nolley, who once worked as Cleco’s Assistant Treasurer.
It is worth noting that Hall, as a candidate, raised more money for his campaign from current and former Cleco employees than from anyone else. Those donors included his neighbor, Cleco CEO Bill Fontenot. At the time, Hall defended himself against his allegations that he was too cozy with the company, telling a local talk radio host that he receives “two checks” every month and that he was proud of the work he had done to earn them.
As a result of Cleco’s $4.6 billion sale in 2016, Hall made approximately $2.9 million from the stock buyout, according to documents he filed with the Securities and Exchange Commission and the company’s report that shareholders received $55.37 per share. (Those who speculate about Hall’s future stock earnings do not seem to realize that Cleco’s stock no longer exists). In addition, as a Cleco retiree, Hall likely continues to benefit from a retirement investment account, which he is not required to include in his annual personal financial disclosures.
Given the prominent roles that these former employees now have in Alexandria’s inchoate plans for privatization, it’s understandable that some are already suspicious about Cleco’s potential involvement, but there are several reasons to believe those concerns are largely misplaced, even if it’s likely Cleco could be interested in pursuing a deal with Alexandria, just as it had been in 1987. (Two years ago, Cleco also publicly expressed interest in competing with Bernhard/NextGEN for the management of Lafayette’s utility system).
Currently, however, there is every indication that while the push for privatization may be informed by Hall’s experience with Cleco, it is being driven by Bernhard/NextGEN’s stated desire to aggressively pursue its plan to spend as much as $15 billion on similar deals across the nation. Indeed, Baudier only joined NextGEN after losing out on the job of Cleco CEO to Hall’s neighbor, Bill Fontenot. Those who had supported Baudier for CEO, like Hall’s Chief of Staff, Susan Broussard, suddenly found themselves on the outs.
But lingering resentments and bad blood aren’t the real reason to discount speculation about Cleco’s machinations. Even though the company is expected to make a 13-14% return in the upcoming year, there are widespread concerns that Cleco saddled itself with too much debt when it spent $1 billion to acquire nine power plants from NRG last year, something that both Jeff Hall and the team at Bernhard/NextGEN well understand.
Read other installments of our series “An Exercise in (f)Utility” here:
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.
The Numbers Don’t Lie.
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.
Generating Confusion
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.
“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.”
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.
In a contentious meeting Tuesday night, a splintered Alexandria City Council approved a contract with John Kyte, a crisis communications consultant from Ruston, and Adam Terry, a D.C.-based lobbyist and sub-consultant, to assist with a proposed study of the City’s nonprofit municipal utility system and to subsequently lead a public persuasion campaign aimed at promoting the study’s recommendations.
Four members voted to approve the contract, and two opposed. Councilman Harry Silver abstained, after being made aware of additional documents in the public record that had not been provided to the Council. Silver first learned of the missing documents after a motion had already been made for a vote.
In our ongoing series “An Exercise in (f)Utility,” the Bayou Brief has been chronicling the behind-the-scenes effort to dismantle Alexandria’s nonprofit utility system and the public misrepresentations about the utility’s finances and its long-term viability.
According to a “confidential“ memo Kyte provided to Mayor Jeff Hall in October, it is anticipated those recommendations will include leasing, franchising, or selling the City’s “electric utility assets,” which are believed to be worth in excess of $500 million and which generate a substantial portion of its annual revenue. Kyte’s memo also outlines the need to confront potential legal and regulatory issues and prepare for the possibility of job losses.
Earlier in the day, during a discussion of the Council’s Finance Committee, three members justified the necessity for the contract by making factually inaccurate claims and assertions about the solvency and financial condition of the utility system and misrepresentations about the sources of its power supply. At times, it appeared as if some members, most notably Councilman Malcolm Larvadain, were unaware that the City Council is legally responsible for setting the City’s electric utility rates, which were criticized as “too high.”
Kyte personally addressed the Finance Committee but was not present during the full vote. Terry‘s name was not mentioned at all during either meeting, and it is unclear exactly what role he will play, though email records reveal he is partnering with Kyte on the project and that the two men traveled to Alexandria to meet with administration staffers in mid-December.
Although Mayor Hall and Kyte have both publicly asserted that the effort is still in its preliminary stages and that no determination has been made or affirmatively sought, they have each emphasized the need to evaluate “options” for Alexandria’s 126-year-old nonprofit utility system. Because the system is owned by the City, any alternative to the status quo would inherently involve privatization.
Alexandria City Hall (right). Photo credit: the Bayou Brief.
Louisiana’s electricity rates, on average, are consistently ranked as either the lowest or second-lowest in the nation, and with the exception of nonprofit energy cooperatives, Alexandria charges, on average, less for electricity than anywhere else in the state.
When city leaders first decided to form a municipal utility system in 1894, they specifically emphasized the importance of controlling their own assets and safeguarding residents against abusive practices by private-sector profiteers. In 2014, Alexandria’s 30-year, long-term “utility sustainability program” was praised by the Louisiana Municipal Association, receiving its top annual award.
For several years, however, City Council members have persistently struggled to address the complaints of residents who believe they are charged exponentially higher prices for electricity than those living elsewhere. In part, this is because Alexandria sends residents a single monthly bill for all of their services— electricity, gas, water, sewerage, and sanitation, whereas most Louisianians receive a separate bill for their electricity. This can create the misperception that Alexandria’s rates are higher than the rates charged by private utilities like Entergy and Cleco.
It is also the consequence of chronic poverty and Alexandria’s energy inefficient and outmoded housing stock. There are statutory and constitutional prohibitions that prevent the City from expanding its “weatherization” program, which provides public money to individuals who meet certain income criteria for the purpose of installing insulation and replacing windows in their homes.
According to the most recently available numbers, the utility provides electricity to 24,449 customers, water to 21,889 customers, gas to 15,732 customers, and wastewater services for 17,488 customers. While it is undeniably true that during four of the past five years, the utility has posted a loss, it is also true that the system remains “profitable” (for lack of a better term) because of its electric utility. Those losses, in other words, are illusory, because the overwhelming majority of the electric utility’s revenue is actually just a pass-through. Put another way, because the price of natural gas has been lower than market expectations, the utility anticipated having to charge more for electricity than it needed to. Ultimately, though, the net result was negligible.
Alexandria City Councilman Gerber Porter, who previously worked for Mobil, the Big Oil corporation that merged with Exxon in 1999.
That said, the ancillary services, as Councilman Jim Villard noted, are essentially loss leaders. That is, the revenue generated from the electric utility ensures that water, wastewater, and sanitation services can be provided at a loss.
This is critical to note, because while the mayor has pointed to recommendations made by his transition team to justify the need to consider privatization, those recommendations were specifically related to those ancillary services and infrastructure, not to the electric utility.
Yet both Mayor Hall and his allies on the City Council have nearly exclusively focused on the electric utility. Indeed, Kyte’s ”confidential” memo also emphasizes the privatization of “electric utility assets.” Why? Because it’s the only asset that would be marketable and valuable to a private operator.
Councilman Gerber M. Porter, a former employee of the Big Oil corporation Mobil (which merged with Exxon in 1999), was easily the most mendacious. Claiming to have conducted additional “research,” Porter explained that Alexandria spends on average around 11 cents per kilowatt hour for its electricity. He then claimed to have located an operator that would charge only 7 cents per kilowatt hour, lambasting the City for previously investing in an ownership stake of Bayou Cove, a natural gas plant in Jennings, Louisiana, and for upgrading its existing power plant, D.G. Hunter.
Later, under questioning from Councilman Chuck Fowler, Porter was forced to reluctantly admit that he was referring to a news story about a California start-up. Presumably, it was about a company that owns a solar panel and lithium battery complex, which recently signed an agreement with the City of Los Angeles. All told, it is anticipated to generate around 7.7% of L.A.’s power supply, and contrary to what Porter claimed, it would be logistically impossible to transmit power generated in California to Alexandria, Louisiana.
Incidentally, California, on average, pays more than any other state for electricity.
Alexandria City Attorney David Michael Williams (left) and Mayor Jeff Hall (right) at a meeting of the Alexandria City Council on Jan. 21, 2020.
Before introducing Kyte to the Finance Committee, the mayor claimed some were “confused” by the “deliverables” he would perform for the City and emphasized that Kyte would not be responsible for actually conducting “any study or analysis.”
“I do not claim to be an expert in assessing the value, integrity, and fiscal sustainability of utility systems,” Kyte said, immediately after providing a lengthy summary of his work in energy policy and utility-related litigation. “But I do believe I can help identify and evaluate qualified candidates to perform that kind of work for the City.”
In my previous reporting, I repeatedly and consistently noted that Kyte would help study the utility system and that he would guide the selection of a third-party to conduct the analysis, a characterization that was confirmed and not contradicted during Tuesday’s meeting. The individual responsible for identifying and evaluating the qualifications of other outside consultants plays a significant and often determinative role in shaping the parameters and the contours of the finished work product, and as Kyte had already made implicitly obvious in his “confidential” memo, analyzing the potential privatization of the system appears to be the primary objective.
“My interest here is really relatively simple,” Kyte said. “It’s to support the City of Alexandria with communication services regarding that evaluation of the City’s current utility system that would identify options, if there are any, of the best path forward to ensure an adequate, reliable and abundant and affordable electricity for the City of Alexandria. That may or may not involve changes to the current system. Until an independent, third-party study is conducted, no one knows what those options could be for the City. I have no preconceived notion, plan, or preferred options, and no one I have spoken to at any point in the limited, frankly, conversations that I’ve had has expressed to me in any way, shape, or form there are preconceived notions, plans, or preferred options.”
Consultant John Kyte addresses the Finance Committee of the Alexandria City Council on Tuesday, January 21, 2019.
Notwithstanding Kyte’s earnestness, while it may be true that no recommendations or options have yet been made, the only reason to conduct to ever “study” “options” is because of a desire to entertain offers or bids from private operators, a fact that didn’t escape Council members.
It is also the only reason to hire a “crisis communications” consultant to lead an outreach effort and public persuasion campaign.
What is most ironic about the discussion on Tuesday is that Alexandria’s electric utility has only posted a loss because electricity was cheaper than expected.
While claiming to be concerned about high prices, both the mayor and four members of the city council are justifying their rush to entertain privatization of the electric utility because Alexandria residents benefitted from less expensive power, not because of poor performance.
Preparing for Krewe du Vieux is eating my life. The parade is early this year, February 8th. We do everything ourselves so there are many details to attend to. The sub-krewe of Spank specializes in paper throws and we have printing deadlines up the wazoo. I get stressed just thinking about it. The result is worth it, but the journey is like a street in Lakeview, full of bumps, potholes, and unexpected surprises.
EYE ON THE TIGERS
This will be my last segment about LSU football for the foreseeable future. Sports are fun to write about, especially when you have a rooting interest, but all good things must come to an end.
Unless you’ve spent the last week wandering in the wilderness, you know that the LSU Tigers won a resounding victory over the defending champion Clemson Tigers, 42-25. It was an exciting game whose thrills were lessened by endless commercials. I tend to DVR everything except the news, so it drove me crazy. It also made the game 7 1/2 hours long. #SARCASM.
If I had known Clemson’s mascot costume was so lame, I would have been even more confident about the outcome:
The Clemson mascot looks like the love child of Bloom County‘s Bill the Cat and Hobbes of Calvin and Hobbes fame:
The low point of the big game was when they allowed the Impeached Insult Comedian on the field before kickoff. The cheers were muted in comparison to Saints games in the Dome. Some media outlets reported that there were chants of “four more years,” but people who attended the game insisted that it wasn’t so. Whatever. I refused to allow Trump’s presence to ruin such a festive occasion.
I also refused to allow LSU’s White House visit wreck my enjoyment of their perfect season. Mercifully, the Tigers were spared the junk food buffet served past champions by this president*. They went in the morning for a relatively quick photo-op, listened to Trump babble incoherently, ate steaks at their hotel, and beat a hasty retreat to Red Stick. Trump, of course, mispronounced Coach O’s name as well as the parish from which he hails. Hopefully, that will cost him a few votes in Lafourche Parish but I’m not holding my breath.
It’s time for people to stop letting Trump ruin everything. Times *are* terrible and everything he touches turns to shit BUT as my First Draft publisher, Allison Hantschel, is wont to say, Not Everything Sucks. We need not wear sackcloth and ashes and take a pledge of misery because of President* Pennywise. That’s particularly true in the Gret Stet of Louisiana. Carnival is an excellent time to kick the Current Occupant out of your head. Don’t be like the dude in Being John Malkovich,and let him take up residence in your brain,expel the evil fucker.
There was a bizarre post-game subplot involving former Tiger great Odell Beckham, Jr.Apparently, he felt stupid-happy after the win: handing out cash to LSU players and spanking a Superdome cop in the locker room. Here’s a rule to live by: NEVER TOUCH A COP WHILE THEY’RE ON DUTY. An unwanted touching is simple assault under Louisiana law. Ya feel me. Odell? Leave the spanking to experts like the Krewe of Spank:
The cop pressed, then dropped assault charges, and the NOPD arrest warrant has been rescinded. Here’s video of the incident:
There was consensus among New Orleans lawyers on Twitter that this was a prelude to a civil suit as Odell has the deepest player pockets in the NFL. I wonder if there’s already been a settlement.
Spanks for the memories, Odell. Don’t do it again.
That concludes my last hurrah (for now) as a sports columnist. Let’s move on to a perennial subject: dysfunction in New Orleans.
TFC REDUX
The endless saga of the Hard Rock Hotel collapse is in its fourth month. City government is posturing, preaching, and posing but acting slowly as usual. It’s more than an eyesore or mark of civic shame, it’s a reminder of why I say TFC: This Fucking City every time something like this happens.
It’s not just the current mayor who is to blame for this latest catastrophe: the original sin of project approval occurred when Mitch Landrieu was in office. And City Hall’s love affair with real estate developers has been going on forever, but LaToya Cantrell is mayor so the buck stops with her. I wish she would stop speaking in jargon and gibberish. Her latest strange statement came last week: “The city of New Orleans has been unzipped.” Say what? I didn’t know the city wore pants…
At least the City rejected the developers’ preposterous plan to dismantle the collapsed structure piece by piece, which would have left this symbol of civic dysfunction standing until the end of 2020. Implosion is the new plan. It’s supposed to take place sometime between Mardi Gras and the French Quarter Festival. Oops, I forgot to say allegedly. Time is an elastic concept in New Orleans. There will be delays and dithering. TFC: This Fucking City.
There was a macabre twist to the Hard Rock Hotel story after I thought this column was finished and ready for submission. A tarp at the collapse site fell, exposing the remains of a dead worker. It’s unclear as of this writing if it’s one of the accounted for dead or a previously unknown casualty of this calamitous clusterfuck. What *is* clear is that the developers lied when they claimed they didn’t know the whereabouts of the bodies. What else are they hiding? TFC: This Fucking City.
The Cantrell administration is already making excuses as to why nothing can be done to cover the exposed corpse. Instead of trying to solve the problem, they’re scolding us not to take pictures of the remains. I, for one, am tired of City Hall addressing the citizenry as if we’re stupid children. I’m having flashbacks to Ray Nagin after Katrina and the Federal Flood. TFC: Same as it ever was, same as it ever was.
It’s time for a proper investigation of this disaster. The city cannot allow such wanton disregard for human life to go unpunished. I hope City Hall will learn something from this tragedy but given its track record, I’m skeptical that they’ll take a tougher line with real estate developers in the future. TFC: This Fucking City.
Finally, during the 1979-1980 Iran hostage crisis, legendary CBS anchorman Walter Cronkite augmented his usual closing words by referring to the hostage crisis. It’s time to paraphrase Cronkite and apply his closing to TFC in 2020: And that’s the way it is on the 102nd day since the Hard Rock Hotel collapse.
UPDATE: After the Cantrell administration spent almost 24 hours telling us how hard it would be to cover the body, another tarp was deployed:
A new, yellow tarp replaces the old red one at the Hard Rock. It appears to block the body of one victim still inside. The red tarp jext to it had blown aside, exposing the remains and sparking outrage among many after the city admonished those who took pictures of the remains. pic.twitter.com/QtFo4hPMkE
In 1942, in the aftermath of Japan’s attack at Pearl Harbor, Harry B. Silver, a wiry, 20-year-old Jewish kid from East Orange, New Jersey, enlisted in the Air Force and began preparing for World War II. At the time, he was a law student at nearby Rutgers, intending to follow his father David, his uncle, and his brother into the family business, but like most men of his generation, the universe had different plans.
On Sunday, Jan. 19th, Silver, now a four-term city councilman in Alexandria, Louisiana, celebrated his 98th birthday. He is believed to be the nation’s oldest elected official and is one of only two 98-year-olds to ever hold elected office in Louisiana history. He is two-and-a-half years older than Jimmy Carter, the oldest-ever former living President, and he arrived in Alexandria when he was 22, two years before the current President, Donald Trump, the oldest person to win the presidency, was born.
Silver, a Democrat, was reelected without opposition in 2018.
Silver had been a standout football player and a talented swimmer in high school, and a few months after joining the military, he packed up and moved to Abilene, Texas to work as a swim instructor. “I would teach the soldiers how to swim through burning oil and how to survive by resting their chin on their helmet to keep them afloat,” he told CenLa Focus in 2012.
Two years later, he was told to report to Esler Field in Central Louisiana. All told, more than 500,000 men cycled through the hastily-constructed camps in the area, including the military’s top brass and a young German immigrant named Henry Kissinger. Nearly all of them left for good, either for another assignment, a combat deployment, or back home, when the war finally ended. But Harry Silver had fallen in love with a girl from Alexandria he’d met at the local temple, the 16-year-old daughter of a department store manager, Marilyn Levy.
Alexandria City Councilman Harry B. Silver.
He’d return to New Jersey but only briefly, finishing his law studies by double-enrolling at Rutgers and Columbia. During his final year, Levy’s father, Louis, offered Silver a job at his Alexandria department store, Weiss & Goldring, and at that point, his mind was made up.
Nearly as soon as he received his degree, he enrolled at an executive training course at Bamberger and Co. in Newark and then bolted back to Louisiana, working as an intern at a store in New Orleans for nearly a year before heading back to Alexandria.
Marilyn Levy Silver has remained by her husband Harry’s side for more than 72 years. She will turn 92 in March. This portrait of her accompanied the announcement of the couple’s engagement in December of 1947.
Mr. and Mrs. Louis Levy announced the engagement of their daughter Marilyn to Harry B. Silver of East Orange, New Jersey in the pages of the local newspaper on Dec. 27th, 1947. The couple tied the knot the following August in a “brilliant” ceremony, brimming with blush pink, at Alexandria’s Jewish Temple, with a reception in the Venetian Room of the Hotel Bentley, a spectacular Beaux Arts building that Silver would briefly co-own in the 1970s. During their honeymoon in California, the newlyweds were featured in the nationally-televised show “Bride & Groom” on ABC.
While Silver had been a civic and business leader in Alexandria for decades, he joined the City Council at the age of 83. In October 2005, Silver was appointed to serve out the unexpired term of District 4 Councilman Rick Ranson, who had resigned that August. At least two councilmen, Myron K. Lawson and Charles Frederick Smith, Jr., claimed that they had only supported Silver because they believed he would not stand for election the following year. Marc Lampert, a local attorney, was also upset by the selection of Silver. He had been lobbying hard for the appointment, securing the endorsements of two neighborhood groups, and had presented himself as the consensus candidate. But before he was even sworn in, Silver made it clear that he wasn’t ruling out anything. “I think it’s premature (to discuss whether or not he would seek election),” he told the Town Talk after the City Council unanimously approved his appointment.
The following year, Silver trounced Lampert, winning 56% of the vote. At the time, Silver was a registered Republican, but in 2007, he defected back to the Democratic Party, later explaining that he had been a Democrat for most of his life due, in large part, to his admiration of Camille F. Gravel, Jr., the legendary Louisiana lawyer and Alexandria native. Silver claimed he decided to become a Republican in 1980 because of his disaffection for former Gov. Edwin Edwards, who had left office earlier that year after term limits prevented him from running for a third consecutive term. Gravel, Edwards’ executive counsel, resigned from his position in 1979 following the death of his first wife Katherine.
Silver and his father-in-law Louis Levy in 1967.
“I’ve been a Republican long enough,” Silver said. (News of his decision was reported in a Jan. 2007 Town Talk story about changes in Alexandria City Hall headlined, “Blogger, PR person to join Mayor Roy’s staff”).
He would win reelection as a Democrat in 2010 by a landslide 76.8% against fellow Democrat Mary Wardsworth, and four years later, he squared off against Wardsworth and Republican Kevin Cavell, winning in the jungle primary with 58% of the vote. He did not field any opposition in 2018.
Thirty years before he won his first election to the Alexandria City Council, Silver was one of 20 people appointed to the Alexandria Citizens Advisory Committee, a group of local business leaders that quickly became a thorn in the side of the city’s notorious mayor, John K. “Tilly” Snyder, who Silver once sued, along with several others, including Town Talk publisher Joe D. Smith, for defamation.
While he can point to a lengthy list of accomplishments on the City Council, for most Alexandrians, Harry Silver will always remain synonymous with Weiss & Goldring, the department store that his father-in-law had managed for decades. Like Silver, Weiss & Goldring is a local institution.
Founded in 1899 in Many, Louisiana by Dave Goldring and his brother-in-law Morris Weiss, Marilyn Levy Silver’s maternal grandfather, the store moved to Alexandria in 1907.
“We had to make a decision about whether we were going to give our children a Jewish education or stay in business in Many,” Weiss later recalled. “It wasn’t a difficult decision. We knew before we started. But it was still difficult to leave our good friends and customers.”
The original Alexandria location of Weiss and Goldring.
Weiss and Goldring decided to set up shop on the corner of Second and Murray streets, but within only a few years, their success convinced them to expand to an even larger location; they bought the enormous, 30,000 square-foot Hemenway Furniture building on the corner of Desoto and Third streets, transforming it into a showcase store.
In early 1920, less than two years after moving into their new location, Goldring moved to Shreveport and sold his interest in the store to New Orleans businessman Sam Bonart for $155,000, the equivalent of $1.98 million today.
Goldring would later become a wildly successful entrepreneur and the nation’s largest department store owner, operating 31 stores across the country at the time of his death in 1943. Incidentally, Goldring brought along his nephews Bernard and Milton Weiss, two of his brother-in-law Sam’s three boys. (Goldring was married to Rosa Weiss, Morris and Sam Weiss’ sister).
Sam’s third son was perhaps the most famous member of the family: Seymour Weiss, the owner of the Roosevelt Hotel in New Orleans and confidante and loyal foot soldier of Gov. Huey P. Long. Seymour began his career working as a clerk for Weiss & Goldring in Alexandria. (They were not related to Dr. Carl Weiss, the man who almost certainly is responsible for the assassination of Sen. Huey P. Long).
The Weiss & Goldring water tower perched atop the store’s former building in Downtown Alexandria.
Today, Weiss & Goldring is a boutique, upscale men’s store located outside of the Alexandria Mall.
Morris Weiss’ 98-year-old grandson-in-law, Harry Silver, still shows up every day, when he’s not working at City Hall.
As Alexandria Mayor Jeff Hall, a former Cleco executive, floats the possibility of selling the city’s 126-year-old nonprofit municipal utility, it’s worth remembering that this wouldn’t be the first time Alexandria considered privatization.
Two years after his ill-fated attempt to turn a public swimming pool into a catfish pond, Alexandria Mayor John K. “Tilly” Snyder was finally, mercifully out of City Hall, leaving in his wake a spectacular mess for his successor, a dapper, charismatic Ivy Leaguer and former two-term state Senator named Ned Randolph. The City’s finances were in shambles, and its municipal utility system, which had long been its most reliable source of revenue, somehow couldn’t even figure out how many customers it had.
Across the Red River at the headquarters of the Central Louisiana Electric Company (or the acronym CLECO, as it was known in the years before the company began demanding that the word Cleco was, in fact, a proper noun), executives realized they’d need to act quickly.
A year before, the company had made two separate offers to buy Alexandria’s nonprofit utility system, claiming their effort had been motivated by a sense of civic duty and promising to rescue the city from financial disaster and reduce utility bills for its residents by an average of more than $100 a year.
But Tilly Snyder, while publicly expressing support for the idea, hadn’t taken action after CLECO’s first entreaty, and the majority of the City Council didn’t share his enthusiasm. By the time the company came back with a bigger number, the City Council and the nine candidates who were running to replace Snyder had agreed it’d be best to leave the decision up to the next mayor.
Randolph, who had lost his seat in the state Senate in 1983 due, in part, to Tilly Snyder’s meddling, found his redemption, bolting past the other eight candidates and winning outright in the Sept. 27th primary. He was sworn into office in Dec. 1st, 1986.
“Our pride is back,” he proclaimed, and he wasn’t wrong. Alexandria had been humiliated by the increasingly erratic Snyder, who had been involuntarily committed to a mental health facility earlier that year and then spent nearly two months locked in a legal battle in order to regain control of his office.
But Randolph’s honeymoon wouldn’t last long.
On Christmas Eve, the Town Talk reported on what then-Acting Utility Director Darrell Williamson had revealed the day before: It was impossible to know how much Alexandria was losing- or making- from its utility services because there were “no accurate numbers on the number of electric, gas, and water meters in use.” The accounting was nearly incomprehensible.
“There are no records anywhere,” Williamson said. “Nobody knows (which meters) are there.”
Perhaps this shouldn’t have been much of a surprise. That October, the Rapides Parish District Attorney’s Office began investigating the city’s utility after allegations of fraud and political corruption had surfaced, and there were other reports that a city staffer had mistakenly written off $900,000 in accounts receivable. Ultimately, the investigation didn’t turn up much evidence of deliberate law-breaking, but it, along with a separate audit, did reveal staggering incompetence. Apparently, no one seemed to understand its newly-computerized billing system. As a consequence, it appeared as if Alexandria was bleeding money.
Scott Brame, then a CLECO VP, appears in a 1987 promotional segment on Alexandria’s KALB News. Source: YouTube.
CLECO, which had lusted over Alexandria’s system for decades, smartly understood they’d need to act in a hurry, recognizing that the city’s financial issues were caused by the negligent leadership of the previous administration, not because the utility business itself was inherently unworkable for a municipality.
Knowing their second and most recent offer of $86 million over 11 next years, including $15.8 million upfront, had been rejected by the City Council and criticized for being woefully insufficient, particularly considering the company was only interested in the electric utility and didn’t want anything to do with operating its water and wastewater services, CLECO decided to try again.
During Randolph’s very first month in office, CLECO came back with a third offer: $4.5 million per year for 15 years (or $67.5 million), a 4% franchise fee, and the repayment of all of its bond debts. But the new mayor hesitated.
During the late 1980s, CLECO aired an informational ad during the Saturday morning “cartoon hour” that warned children to stay away from power lines. Source: YouTube.
It’s hard to blame CLECO for pursuing a deal. The previous mayor, despite his experience in government, didn’t have any desire to run a utility, which resulted in a series of missteps and unfavorable deals, and the majority of the City Council and the public had no concept of how valuable the system was or could be. CLECO, on the other hand, understood the business better than anyone in Central Louisiana, and at the time, they were running a smooth and ever-expanding operation. Moreover, because of the poor decisions made by Snyder, the City was looking at the distinct possibility of needing to raise rates, whereas CLECO could commit to keeping their rates the same for the next three years.
Still, with Randolph balking at their offer, they quickly realized that they were dealing with a much more sophisticated leader than the last guy. Snyder, by the way, had converted the pool into a catfish pond because he legitimately believed the City could make a fortune by getting into the catfish farming business. If they were serious about buying Alexandria’s utility system, then they would need to show their cards before Randolph knew exactly what he was holding.
The head honchos at CLECO spent the entire month of January and nearly all of February crunching numbers and preparing for a public relations blitz, and when they came back to Randolph on Feb. 27th, their offer was dramatically more generous: $158 million ($355 million in today’s dollars) in total, with $8 million upfront, $6 million per year for the first five years, and another $6 million annually for the next twenty years plus a franchise fee of 4% (albeit without covering the City’s bills). They pledged to ensure everyone employed by the City would keep their jobs for at least five years and that their retirement accounts wouldn’t be touched. They’d pay off all of the City’s bond debts, and crucially, they’d take the water and wastewater operations as well, giving the City a 2% franchise fee for those services, which they planned on handing over to a third-party manager.
In hindsight, the deal CLECO was now proposing had appeared to be good, at least initially, because their other offers were significantly lower and because the City still hadn’t sorted out its finances.
Only five weeks later, it’d be off the table. But in the interim, both the City and CLECO were scrambling. By law, selling the utility required approval of the voters through a referendum, and so, nearly as soon as the bid landed on Randolph’s desk, he rushed to the City Council, requesting approval to place the referendum on the May ballot.
For its part, CLECO put its PR operation into high gear, commissioning a push poll that showed 60% approval for the deal, hosting multiple public meetings, and churning out a series of ads and press releases touting the benefits.
However, not everyone was buying their sales pitch. When the City Council met to discuss the proposed referendum, they heard from 38 residents. 15 people spoke in opposition, but of the remaining 23 who were there in support, most were CLECO employees. The Council narrowly approved the measure, but at the same time, they also approved hiring their own third-party experts to review the deal.
Not surprisingly, the union that represented City employees sued to prevent placing the referendum up for a vote. Councilman Bob Lawrence emerged as one of the leading critics of CLECO’s proposal, helping to finance a campaign to counter the company’s claims and talking points.
The Louisiana Electric Power Association (LEPA) also sought legal intervention. Then-Sec. of State Jim Brown piled on as well.
When the experts came back with their assessment, they didn’t pack any punches: CLECO’s offer didn’t even come close to what the City would be able to make simply by hanging onto its utility system. By then, the numbers were finally being sorted out, and it became evident that Alexandria’s utilities were in far better shape than had been previously believed.
In early April, a few days before the Louisiana Bond Commission effectively prevented the City from placing the referendum on the ballot, CLECO rescinded its offer.
The City’s utility system, the Town Talk reported at the time, was simply “too lucrative” for it to be sold to anyone.
It is worth noting that the late Scott Brame, a beloved Alexandria civic leader and long-time Cleco Vice President, who had coordinated with the Mayor’s Office, was enthusiastic and completely supportive of the City’s efforts. When it became clear that the City’s numbers were off- and as a result, so were Cleco’s, Scott Brame appeared with Mayor Randolph at a joint press conference, lauding Randolph for his leadership.
Today, the City’s finances are in vastly better shape than they had been when Randolph took office in December of 1986, and regardless of the vague platitudes offered by Mayor Jeff Hall about “long-term trends” or the spurious claims that Alexandria’s municipal utility system is somehow headed in the wrong direction, the truth is that if there is a crisis, it’s the one being manufactured by the current occupants of City Hall. In their haste to justify a superfluous contract with a PR consultant and a Republican lobbyist, they are undermining the goodwill of the most important asset in the City’s portfolio.
On average, Alexandrians pay less for their combined utilities than all but one other community in the state, according to an independent analysis conducted by a local engineering firm, and that community, incidentally, is served by a nonprofit electric cooperative. Unlike Mayor Randolph, Jeff Hall inherited an award-winning, vastly more modernized system and a budget surplus, which is why many are rightfully perplexed and alarmed by plans that anticipates potential job losses and privatization.
If privatization was a a flawed idea in 1987, when the City was in the most dire financial situation in its history, then it’s an even more absurd idea today.
Since at least October of 2019, Alexandria Mayor Jeff Hall and members of his administration have been in discussions with John Kyte, a “crisis communications” consultant, and Adam Terry, a D.C. lobbyist who once worked as Chief of Staff for former U.S. Reps. Rodney Alexander and Vance McAllister, about formulating a multifaceted public persuasion campaign that anticipates privatizing the city’s 126-year-old nonprofit municipal utility system, according to records obtained by the Bayou Brief.
The extent of their efforts had not been previously disclosed to the press and key documents were withheld from the Alexandria City Council earlier this month, as the administration sought approval of a formal contract with the two men through Kyte’s Ruston-based consulting company. These documents contradict Hall’s recent public assertions that he has not yet discussed the “option” of selling the utility system.
In a “confidential” memo dated Oct. 28th of last year and subsequently sent, via email, from Kyte to Ken D. Nolley, the head of Mayor Hall’s newly-created “Internal Audit” department, the consultant outlines a communications strategy centered around the possibility of either “leasing the city’s electric utility assets to an operator, franchising the operations, or an outright sale of the assets.” Susan Broussard, Hall’s Chief of Staff, had been kept apprised of the proposed strategy, according to internal email records.
The documents were all obtained earlier today, following a public records request filed by the Bayou Brief two weeks ago. On Tuesday, the Alexandria City Council’s Finance Committee will discuss finalizing a contract with Kyte Consulting. Last week, I reached out to Kyte directly, after three individuals contacted me personally to express concerns about the proposed contract. Since then, we have exchanged multiple emails, and Kyte has repeatedly and adamantly denied the implication that the outcome of any potential “evaluation” of the city’s utility has been predetermined.
However, the communications plan he provided to Hall and Nolley is essentially a playbook on how the City should approach selling the public on a potential deal. Indeed, privatization seems to be the only contingency being seriously contemplated.
Among other things, the plan discusses first considering any legal or regulatory obstacles, conducting surveys and focus groups, investing in paid advertising, reaching out to potential “influencers,” and addressing the possibility of job losses. According to Kyte, he was personally recruited for the work, which was never advertised through a competitive RFP or RFQ process, after an acquaintance had mentioned him to Mayor Hall, who then initiated discussions. Previously, Kyte told me his proposal had been based on those discussions.
The memo contains numerous inaccuracies, faulty assumptions, and misrepresentations about the city utility system, including the number of customers, the ways in which it purchases power, how many people it employs, the structure of its debt obligations, and the recent and planned investments in infrastructure upgrades. Although Kyte has been in discussions with Mayor Hall since at least October and had hoped to begin officially on Dec 15th, his contract wasn’t sent down to the City Council for approval until two days before the New Year. In the interim, at no point did anyone in the Hall administration issue written concerns or corrections to his initial plan; in fact, Kyte actually sent the same document back to the City more than a month later.
Prior to providing the City Council with a draft version of Kyte’s contract, Hall had agreed with his suggestion to also include a project description and biographical information as well, which Kyte decided to “intentionally” keep brief.
This week, on two separate occasions, Mayor Hall has inaccurately claimed the City’s most recent evaluation of its utility system did not consider anything after 2019, perhaps confusing a section of an engineering report by RDS Associates concerning revenue projections based on the price of natural gas as singularly significant. The study actually considered the City’s energy needs until the end of 2031.
This document, for example, is still accessible on the City’s own website:
Source: City of Alexandria, Louisiana.
Hall, Broussard, and Nolley all arrived at City Hall after previously working for Cleco, the privately-held utility giant headquartered in nearby Pineville. Hall had risen through the ranks to become a company Vice President and its first-ever Chief Diversity Officer; Broussard was its longtime spokesperson before eventually being promoted to General Manager of Human Resources, and Nolley was once listed as its Assistant Treasurer. Of the three, Nolley has been away from the company the longest, though, notably, his time with Cleco overlapped with Hall and Broussard.
Alexandria’s Internal Auditor, Ken D. Nolley, is coordinating a communications plan that anticipates recommending the privatization of the city’s municipal utility. He once worked for Cleco’s Investor Relations Division. Photo source: Cleco.
15 years ago, the City of Alexandria filed suit against Cleco, alleging that it had systematically defrauded Alexandria customers from 1995 to 2005, a period in which time the City had spent a total of $107 million to purchase power from the utility giant. Alexandria alleged both that Cleco had passed on improper costs to Alexandria customers and used Alexandria capacity to defraud the City its portion of shared profits. The City accused Cleco of inflating the price it charged Alexandria ratepayers, entitling them to at least a partial refund.
However, a separate and ultimately unsuccessful class action case, in part led by now-Councilman Joe Fuller, prevented distributing rebates until 2017, a year before Hall took office.
From left to right: James “Jim” Davison, Jr., Kellyanne Conway, and Adam Terry. Source: Facebook.
Both Kyte and Terry are associated with Jim Davison, the mega-wealthy scion of the Ruston family who made its fortune by building a trucking, banking, and energy empire. The Davisons are reportedly the controlling shareholders of Genesis Energy, a $2.7 billion oil and gas company headquartered in Houston, and Jim Davison has a substantial stake in Origin Bank, which recently became Louisiana’s largest land-based banking business.
John Kyte. Source: Kyte Consulting.
Kyte had been a registered federal lobbyist for Somid Resources, a company that purportedly is involved in renewable energy though the only publicly-available documentation concerning its activities are its ownership of a small private airplane and a pending claim in Bankruptcy Court it has against Approach Resources, an oil and gas operation that owns more than 800 wells in the Permian Basin.
Yesterday, in response to the first installment in this series, Kyte attempted to assert that he was merely hoping to help Mayor Hall follow through on the recommendations of a “transition” report that was released nine months after Hall took office, implying that it justified the work he is being asked to perform. However, while the report included a broadly-worded statement about the need to consider the utility system’s long-term infrastructure requirements and cost containment strategies, it did not promote the idea of funneling everything through a private PR firm or developing a concomitant “public information campaign.” Moreover, the report had specifically identified water and wastewater operations as infrastructure priorities; Kyte’s plan, on the other hand, emphasizes the city’s “electric utility assets.”
If the campaign does include a recommendation to dismantle the half-billion dollar nonprofit utility system, it would not be the first time the City has entertained the idea. In 1987, Cleco aggressively pursued buying the city’s utility for $158 million, and its effort also included a “public information campaign” that touted push polls the company had commissioned and industry-friendly talking points.
Ultimately, however, Cleco withdrew its offer only a few days before the Louisiana Bond Commission ruled against allowing the City to proceed.
Now that the fanfare of Louisiana’s quadrennial oath-taking is done, the posing and flexing toward selecting the state’s House and Senate strongmen is finished, and the college football championship has been decided, could we please start making a concerted effort to consider and prepare for what Louisiana’s future could (and should) be?
How many years have we been hearing the litany of “Louisiana is at the bottom of all the ‘good’ lists”? The statement itself no longer packs the punch of a wake-up call, having – by way of frequent repetitions – been transmuted to a slogan of sorts, with more than a few officials almost seeming perversely proud of that distinction, rather than becoming energized to try and change the rankings. In the most recent election season, some campaigns used it as a talking point to blame their opponents for having brought us to this sad state of affairs. Not surprisingly, though, none of the candidates using this trope offered any visions of methods or modalities that could improve Louisiana’s standings in quality-of-life metrics.
Our
state’s dismal standings in all those metrics, when viewed as an
outcomes-based evaluation, emphasizes the lack of time and effort
Louisiana policymakers and lawmakers have devoted to envisioning the
future. Ask them what they see this “gret stet” looking like, as
of 2025, or 2030, or 2050, and they haven’t a clue. Instead, as has
been the case for the past several years, the vast majority appear to
be focusing exclusively on the here and now, except when focusing on
the past, as they actively try to turn the clock back.
Gov.
John Bel Edwards, in his second inaugural address, did offer some
forward-thinking goals.
“I want to challenge this new legislature and the people of Louisiana to think boldly and to envision a Louisiana with a fully diversified economy, a steady reduction in poverty and an educational system that prepares our people for jobs and careers that will keep them here at home,” he said on Monday, January 13, 2020. And he also listed specific paths that could get the state closer to those goals.
“We know that education is the key to economic opportunity and that a pathway to prosperity must begin at the earliest stages of life. That is why the highest priority for new investments in education of my second term will be early childhood education,” the governor said. “We are also going to better fund every level of education.
“We also know that $7.25 an hour is not a meaningful wage,” he continued, then noted that 21 other states had increased their minimum wage for 2020. “Congress has made it clear that they are out of the business, so if we want our workers to get the pay they deserve, it’s up to us here in this Capitol. Yet we can’t stop there. Louisiana has the largest gender wage gap in the country. That offends me and it should offend you too. I will continue to advocate for equal pay for equal work.”
In addition, Edwards voiced support for prioritizing funding ongoing needs such as transportation infrastructure, coastal restoration, workforce development, and cybersecurity – nearly all of which he endeavored to address during his first term, so they aren’t new goals. Yet they’ve remained unaccomplished mostly as a result of the Edwards’ administration having been hamstrung by the fiscal crises left by his predecessor, and exacerbated by the recalcitrance of an ultra-conservative faction in the state House.
Many of those anti-taxers have returned for this term, and while the make-up of the House money committees remain to be seen, some of the returning lawmakers have already started talking about rollbacks of the 0.45 of a penny of sales tax, presently set to expire in 2025. Their reason? They are offended by any state revenue surplus. (Remember, these are members of the Republican Party, whose tax policies, when implemented at the federal level, where there’s no requirement for a balanced budget as there is in Louisiana state law, result in massive deficits. The federal deficit is presently in excess of 23-trillion dollars.)
It’s
not a matter of the GOP-faithful, the power-brokers and their
lobbyists not knowing what awaits Louisiana in the future, if
policies continue on their present course. They know. But that future
can be frightening for those desperately grasping to retain power and
control, and so the only direction they want the state heading is
backward, to a time when “everyone knew their place.”
Think
I’m joking? Louisiana’s lawmakers have provided so many policy
examples of their romances with retrogression, their love affairs
with looking back can be seen as the legislative equivalent of the
Hallmark Channel.
Since
2006, Louisiana has had a “trigger law” on the books, designed to
go into effect when
(not if)
the U.S. Supreme Court overturns Roe
v. Wade.
It reinstates the criminal penalties in effect in 1973: ten years at
hard labor for anyone performing a termination of pregnancy, except
to save the life of the mother. With subsequent anti-abortion laws
continually facing challenges to their legality, they’ve have had
to be carefully placed in other sections of the law books than the
trigger law. If placed in the same section of Louisiana statutes as
the trigger law, then when the newer laws are struck down (as many of
them have been), as expressions of the “most recent will of the
Legislature”, they don’t take the trigger law down with them.
In
1987, the U.S. Supreme Court, in its Edwards
v. Aguillard
decision, struck down Louisiana’s 1981 “Balanced Treatment Act,”
which required equal public classroom time be given to the teaching
of creationism and evolution. Since it had been ruled
unconstitutional, in 2013, 2014, 2015, and 2016 efforts to do some
housecleaning, state Sen. Dan Claitor (R-Baton Rouge) brought a bill
to remove the law from the books. In 2016, Sen. John Milkovich
(D-Keithville) argued against the repeal, saying, “The U.S. Supreme
Court has been known to change their mind: look at ‘separate but
equal.’ We need to keep this on the books just in case.”
Milkovich prevailed.
In
1956, during the “Red Menace” paranoia of McCarthyism, Congress
voted to start putting “In God We Trust” on U.S. money. In 1962,
the U.S. Supreme Court ruled (in Engel
v. Vitale)
against official prayers in public schools. But in 2018, Louisiana’s
Legislature passed SB 224, which requires instruction on, and display
of the motto “In God We Trust” in public schools.
And
one only needs to review a small portion of the legislative committee
and floor testimony and debates on 2018’s SB 243, by Sen. J.P.
Morrell – the constitutional amendment to require unanimous jury
verdicts in felony trials – to recognize how difficult it is, even
in this 21st
century, to get Louisiana’s clocks turning forward and away from
19th
century Jim Crow laws, rather than letting our clocks continue to
spin backward.
What
can we do to prepare Louisiana for the next decade, for the next
quarter century, when the future is so uncertain?
In
upcoming installments of this series, we’ll look into what we know
– and what is suspected – for this state’s future, as well as
some major and minor policy proposals to address some of those
things.
“They’d (Cleco) been trying to run me off. Instead, they ran me in.”
Alexandria Mayor Jeffrey W. Hall, Jan. 7, 2020.
THE ELECTRIC SLIDE
Alexandria Mayor Jeff Hall. Photo credit: Lamar White, Jr., Bayou Brief.
Part One of an ongoing series.
This is the first installment of the Bayou Brief’s newest, ongoing series, “An Exercise in fUtility,” about Alexandria Mayor Jeff Hall’s nascent, behind-the-scenes effort to push through the partial or complete privatization of the city’s most important asset: its 126-year-old nonprofit, $500 million municipal utility system, also known as AUS.
On Sept. 8th, 1894, Alexandria voters approved a plan providing for the municipal ownership of utilities, and by April of 1895, a waterway system had been completed and its downtown streets were awash with city-powered electric lights. Almost immediately, Alexandria’s prescient and progressively-minded investment began paying huge dividends. Six years later, at the turn of the century, its population had doubled, and during the following decade, it doubled again.
The Times-Picayune reported on Alexandria’s decision to build and operate its own power plant in June of 1894, only three months before the municipal utility was formally created. After three years of working with unreliable and expensive swindlers, the City Council wisely realized they could cut out the middle man and build the infrastructure themselves.
The Times-Picayune, June 6, 1894
In 1909, Alexandria Mayor J.P. Turregano traveled around the state at the invitation of other cities to deliver a presentation on the benefits of a municipally-owned system. 100 years later, Mayor Jacques Roy took home the Louisiana Municipal Association’s top prize for policy innovation in recognition of the city’s forward-thinking approach in expanding and renovating its power plant.
Today, AUS provides around $10.5 million a year in-lieu-of-tax contributions to the city, funding its public transit operation, its award-winning and AZA-accredited zoo, its public golf course (which has been hailed as the best public course in the state by Golf Digest), and a number of capital projects and infrastructure improvements. A privatized system, even in the best case scenario, could only provide a fraction of the current revenue.
During the past two years, utility companies and private start-ups have ramped up efforts in Louisiana to acquire nonprofit municipal systems and nonprofit electric cooperatives, either through making a lucrative, cash-only purchase offer or by proposing long-term management agreements or some combination of the two.
During its meeting last Tuesday, which lasted a mere eight minutes and for reasons not yet made clear was not broadcast to the public, the Alexandria City Council voted to move discussion over a proposed, no-bid contract with John Kyte of Ruston, a veteran PR and crisis communications consultant, to its Finance Committee. Their next meeting is scheduled for Jan. 21st. According to a draft agreement obtained by the Bayou Brief, Mayor Hall hopes to have Kyte assist with an evaluation of the utility system and to then lead a “public information campaign” that would educate citizens on their utilities “options.”
This series is based on a comprehensive review of court filings, public records, financial documents, expert studies, and news reports, spanning across the course of more than 140 years, as well as interviews and discussions with more than a dozen individuals, including those with personal knowledge of the city’s municipal utility system and its contentious history with Cleco. In addition, I exchanged numerous messages with the presumptive consultant, John Kyte, via email and text, though, to be sure, he has only an ancillary role in a political saga that has stretched out for nearly 30 years.
While the facts contained in these reports have been exhaustively researched, I want to make it abundantly clear from the very beginning: I have an opinion on the subject, which is informed by my experience working as the special assistant to the previous mayor, during which time I had a direct role in crafting, negotiating, and managing contracts with planning consultants. Although I left city government to enroll in law school in August of 2011, I continued to serve as an informal policy advisor until 2018 and had briefly returned in a part-time capacity in 2016.
Alexandria’s D.G. Hunter Power Plant. Photo credit: Lamar White, Jr.
Although there is now a substantial body of scholarship that suggests privatization of municipal utility systems, particularly electric power systems, rarely, if ever, results in better outcomes and disproportionately harms communities of color and those living in poverty, the temptation of receiving a large infusion of cash, especially in cities where revenues have dropped precipitously due to diminishing demand, can be hard to resist.
Last July, the City of Opelousas voted to renew its lease with Cleco, but not without opposition and criticism from citizens. “Several people who spoke during the meeting said CLECO’s utility rates, which they claimed have risen to $400 monthly in some cases, are a burden on the city’s poor and retirees who are living on a fixed income,” the Daily World reported.
“They (Cleco) are getting over on you,” Wilbert Levier, an Opelousas resident and Cleco customer, told the City Council. “I really don’t care how much they have helped the city. You need to find someone else.” Levier wasn’t buying it, and he was hardly alone.
Last October, Jacksonville, Florida, which owns and operates the eighth largest public utility in the nation, announced the nine finalists selected to bid on purchasing the system. One of those nine, Macquarie Infrastructure and Real Assets, is the parent company of Cleco.
And just yesterday, at a press briefing, Hall was asked directly whether selling the city’s nonprofit system to Cleco was an option.
“No, that’s not an option yet,” he said. “We have not discussed the options yet. We are going through the process of determining, evaluating our situation first, and once we evaluate that- because of the changing dynamics of the utilities systems, the markets themselves- then we’ll identify what are some of the options at the proper time.”
I asked Kyte how exactly he had been recruited to Alexandria.
“I became involved with the City of Alexandria when a mutual acquaintance of Mayor Hall and mine, who was aware of the City utility issue, suggested to the Mayor that if the City needed someone with a utility background to provide communications counsel and support, he might consider contacting me,” he wrote in an email.
“The Mayor did contact me, and we discussed the electric utility situation in Alexandria. I outlined what I thought the communications needs might be around the City evaluating the utility system and options, if any, for a better approach and the communications challenges in explaining those options, and any potential action on those options, to the Alexandria community,” Kyte stated.
When I pushed him on the name of the individual who connected the two men, he made it clear the acquaintance had nothing to do with the work and reiterated his decision to keep the person’s name confidential.
”Was it Jim Berhard or an associate of Jim Bernhard?” I asked.
“No, and no,” he replied curtly.
I told him that Bernhard had previously made some preliminary inquiries about structuring a deal in Alexandria around the same time he had been pitching Lafayette, which earned a brief mention in the Current’s coverage. Did he know anything about that?
“No.”
WHEN THE PAST IS PROLOGUE
In early 1973, shortly after he earned a Bachelor’s in Accounting from Grambling State University, the storied HBCU in North Louisiana, 22-year-old Jeffrey W. Hall returned home to Alexandria and quickly landed himself a job at City Hall, where he could put his degree to use.
His parents, Willie and Florice, were both widely-admired public school teachers who had instilled in their children and their students a belief that an education opens doors. (When Willie died from a tragic fall while attempting to film a Peabody High School football game in 1983, the local school board voted to rename an elementary school in his honor; today, the school is known as W.O. Hall Sixth Grade Academy).
But had it been 1963 and not 1973, someone like Hall, despite his education and a brief stint working for the Rapides Parish Police Jury, wouldn’t have ever been considered for an administrative job in city government. John K. “Tilly” Snyder had just been swept into office, however, and the new mayor had agreed to open up more opportunities for minorities.
For the past half-century, Alexandria has never had a population of more than 51,000 people, but because it’s situated at the literal crossroads and in the geographic center of the state, it serves a region nearly eight times its size, which means the decisions made by its mayor can occasionally reverberate far beyond the city limits.
That was the case when Jeff Hall, in 1973, became one of the very first African Americans with a desk at City Hall, working as an accounting clerk in the city’s Internal Audit Department. Within a year, his supervisor, Velda Lee, had recommended him for a $1,200 pay raise and a promotion, something Snyder, an erratic and mercurial man who was later involuntarily committed to a mental health facility, nearly prevented when it came up for consideration in front of the commission that had governed the city at the time.
By 1977, with a new administration taking the reins, Hall was the only employee in his department who stayed put, though eventually he’d move over to the city’s legal services division.
In 1981, Hall left the public sector for a new job with Central Louisiana Electric Company, better known as Cleco (a proper noun, not an acronym), the utility giant that monopolizes much of rural north and central Louisiana.
By then, compared to his colleagues in city government, he was already a veteran, and he was just 29.
Nearly four decades later, Jeff Hall, now a millionaire and a two-term state representative, would return to City Hall, after winning election as Mayor, the first African American to hold the office in Alexandria’s 215-year history.
A genial, bookish man who spent much of his career at Cleco living in South Louisiana, with a stint in Amarillo, Texas, and had shuffled around various management positions before being named the company’s first Chief Diversity Officer. Hall had largely remained out of the local spotlight until 1999, when the state legislature approved the creation of a new political subdivision, the Alexandria City Economic Development District (ACEDD).
ACEDD had been established as a way for proponents of inner-city redevelopment projects to attract independent funding from the federal government and national foundations.
Jeff Hall would become its chairman and biggest champion. (ACEDD’s enabling legislation was sponsored and introduced by state Rep. Israel “Bo” Curtis, a longtime political powerhouse who, notably, had actually opposed renaming a school after Jeff Hall’s late father Willie, when Curtis served on the local school board).
The first mock-up of a riverfront marina in Alexandria. Credit: Barron, Heinberg, and Brocato.
The second mock-up of a riverfront marina in Alexandria. Jeff Hall championed this plan when he was the chairman of ACEDD. Credit: Barron, Heinberg, and Brocato.
ACEDD, unfortunately, never achieved any tangible successes, aside from an earmark from then-Sen. David Vitter that provided around $800,000 to develop preliminary plans for a new recreation and entertaining destination near the Red River. Hall, as the organization’s chair, had been pushing for a city marina on the Red River, and as chair, he was able to enter into a no-bid contract with a local engineering firm to begin studying and designing sketch mock-ups of the proposed marina. Hall’s push for the project seemed to be largely based on his own assumptions, which were reinforced by presentations by the firm being paid to design the facility.
After Hurricane Katrina, the Army Corps of Engineers implemented more onerous requirements for construction projects near levee systems, making Hall’s proposal much more unlikely, and when Gov. Bobby Jindal signed a new ethics law that required members of state boards and commissions to submit personal financial disclosure documents, Hall resigned rather than reveal any details about his finances.
With its chairman gone and other members rolling off, ACEDD went dormant, with $400,000 in federal funding left unspent. Though Hall would intermittently express interest in restarting the organization, he’d hoped to circumvent the mayor, who had no desire to resuscitate the organization, which could only establish a dedicated source of revenue by raising taxes. For reasons that have yet to be explained, Hall no longer had concerns about complying with the state’s personal financial disclosure requirement, though he never officially rejoined the defunct organization.
Hall’s first campaign for office was in 2014, when he challenged incumbent Mayor Jacques Roy. But Roy remained popular and Hall had run a lackluster campaign. Roy won outright in the primary; Hall finished in second, earning 33.6% of the vote. He wouldn’t have to wait long before catching a break. In mid-December, state Rep. Herbert Dixon vacated his seat, and Hall quickly declared his candidacy. Two months later, he clobbered his two opponents, Alice “Red” Hammond, a perennial candidate, and Daniel Williams, the city’s Community Services Director, winning 84% of the vote.
Hall’s years as a state legislator in Baton Rouge were largely forgettable. He had been well-liked by his colleagues, though many assumed he wasn’t ever really in the job he wanted.
With the exception of a couple of failed attempts at restructuring ACEDD, he steered clear of controversy and stayed out of the news. He introduced a staggeringly small number of bills, and during his final session, perhaps realizing that his name wasn’t yet on a single piece of legislation, he brokered a deal with a colleague, amending a bill his colleague had written to replace the author’s name with Hall’s, according to two legislators familiar with the maneuvering.
As a mayoral candidate in 2018, Hall had the benefit of deep pockets and an open field when Roy, the three-term incumbent, decided not to seek another four years. The election was relatively sleepy, and Hall ran a quiet, middle-of-the road campaign. Meanwhile, his two opponents, Kay Michiels and Catherine Davidson, battled for what each had anticipated would be a runoff election against Hall.
In public appearances, Hall sidestepped questions about potentially privatizing Alexandria’s utility system, something that had been raised as an issue because of his three decade-long career at Cleco, the private energy behemoth headquartered in Pineville, Louisiana. This deserves emphasis, because well before he had ever taken office, there had always been an implicit understanding that Jeff Hall could try to privatize the municipal utility system if he was elected.
Internal polling showed that Hall’s connection to Cleco, which eventually settled a lawsuit by the City of Alexandria that alleged the company systematically defrauded ratepayers over the course of several years (which coincided with Hall’s tenure at the company), was his greatest vulnerability.
Had it become more of an issue, the public would have had even more reason to be concerned about his potential plans for the municipal utility.
By the time Hall had retired from the company, he’d risen to senior management, becoming its first-ever African American VP and its Chief Diversity Officer. His remarkable success at the company had made him wealthy. He drove luxury cars, wore expensive suits, and built a large home in what had then been Alexandria’s only gated community.
Until the utility giant had been accused of ripping off city residents, Hall’s association with Cleco had always been considered a positive.
But there was more about his record at Cleco than most voters were aware. More than a decade before he was elevated to senior leadership, Hall had played a pivotal role in brokering two different takeovers of community-owned nonprofit utility systems.
In 1993, Jeff Hall had been instrumental in facilitating a management agreement between Cleco and the City of Opelousas, which I mentioned earlier.
Four years later, he was directly involved with Cleco’s acquisition of the publicly-owned Teche Electric Cooperative, which the company still considers to be one of its most significant achievements.
This is not to assign him with some sort of malevolent intent. I mention these only because both deals shape how Jeff Hall, the mayor, understands the utility business. It also may help to explain why he wants to hire a crisis communications consultant to help him negotiate how to pitch the public on the “options” he hasn’t yet “evaluated.”
Alexandria Mayor Jeff Hall presents a portion of his transition report to members of the city’s utilities customer service department in August of 2019. Source: City of Alexandria, LA.
BEFORE YOU BUY IT, WE BREAK IT.
“We’re looking at the dollars. When we look at the trends from the last audit, the last several audits, the trend is not going in the direction that I think it ought to go,” Mayor Hall said yesterday in response to a question about why he was concerned over the municipal utility. He attempted to clarify what he had just said, but it only made his answer seem more convoluted.
He claimed the City was in a strong position, but that it would need to study “long-term” trends in the future. He also implied that plans for the City’s utility system were now outdated, asserting that it hadn’t considered anything beyond 2019.
It’s nonsense.
There’s no other way around it. The City of Alexandria’s most recent contract with Cleco projects out to 2034, the year it expires, and when the city completed work on the renovations and expansion of its own D.G. Hunter Power Plant, it anticipated a 20-year life-cycle; that’d be 2036.
This is the crux of his justification for hiring Kyte, a PR consultant who, among other things, once worked on behalf of a nuclear power plant as well as three of the world’s largest chemical manufacturers but has most recently served as a spokesperson for the hospital group Willis-Knighton and for a lumber company in LaSalle Parish, to be his lead consultant on crafting a plan and public information campaign about the city’s municipal utility system. I intend no disrespect toward Kyte, who did manage to impress me with his communications savvy, but even by his own admission, he’s never actually done this kind of work for a municipal government before.
A project with a similar scope as the one outlined in Kyte’s draft agreement ordinarily would require the city assembling together a team of people through a competitive process.
It would also involve at least some consideration, upfront, over the possibility that paying a consultant with taxpayer dollars to spearhead a “public information campaign” about utilities “options” could be legally problematic, considering that state law requires any privatization deal be approved through a referendum on the ballot and the state Constitution prohibits the expenditure of public money on campaigns about ballot initiatives.
Hall has budgeted only $50,000 for the work he hopes to give Kyte, and notably, the draft agreement contains no specific language requiring that Kyte disclose any other clients involved in the energy industry.
The new generators installed at Alexandria’s D.G. Hunter Power Plant.
Finally, as any cursory review of the recent audits of the City of Alexandria would reveal, the municipal utility system is in good financial shape. It’s not “trending” in the wrong direction. The confusion, whether it is deliberate or not, seems to be over the fact that last year it budgeted about $8.7 million more in pass-through costs than it should have. That’s primarily because the price of natural gas was lower than predicted.
And sure, that sounds like a big chunk of change, but only if you don’t understand how a municipal utility system operates. Instead of taking in $121.7 million, it took in $113 million. Correspondingly, it spent less money than it budgeted as well.
But only 5% of the revenue generated from fuel costs winds up in the city’s General Fund. There are a few nuances, but they’re largely inconsequential to the bottom line. In simple terms, the city utility buys energy for its customers, and because it’s a nonprofit, its margins are thin. Customers are charged only a fraction more than what the city pays for its energy supply, and because the city buys from the same pool of energy as private utilities like Cleco or Entergy, that means a city ratepayer almost inevitably will pay less for their electricity than a private customer, all other things being equal.
It’s a solid model.
Last year, when the city budgeted more for energy costs than it ended up purchasing and billing to its customers, it showed a loss of $8.7 million, though the net result was that it wound up with around $435,000 (5% of $8.7 million) less than anticipated (again, along with a corresponding decrease in expenditures).
It’s worth noting that, somewhat ironically, Mayor Hall’s decision to hire five new employees for his office, who now comprise the Internal Audit Division, a throwback to Hall’s first job under Tilly Snyder, will cost the city government $496,000 more every year, a 47% increase in spending for the Mayor’s Office.
I realize this is wonky and somewhat in the weeds, but it’s important because Mayor Hall’s recent alarmism about “trends not going in the (right) direction” seems to be nothing more than a pretense used to justify “evaluating” “options” for those interested in privatization.
The real existential threat to the municipal utility isn’t a reduction in energy costs, which is why they weren’t able to hit their projections last year. As outgoing Finance Director David Crutchfield outlined in a cover letter affixed to the current budget, it’s the possibility of increased energy costs, which would be more difficult for folks living on a fixed income.
AUS employees survey a downed tree in the aftermath of a severe weather event on Jan. 10. 2020. Source: City of Alexandria, LA
As of the time of publication, you can still find a series of objectively true statements about Alexandria’s 126-year-old municipally-owned utility system buried in the archives of the city’s social media accounts.
“Unlike for-profit, investor-owned utilities, the AUS does not pay dividends to shareholders or corporate officers,” the City once explained on Facebook. “All of its earnings in excess of cost are reinvested in the local community.”
But if you wait too long, don’t be surprised if these online posts disappear. There’s a new social media policy in place and a crisis communications professional waiting in the rafters.
Clarification: In an earlier version, I listed the value of the city’s utility system as $300 million. According to three industry experts, the value is approximately $500 million.
