BY KEN MILDER
Former Assessor, County Councilor and
Board Of Public Utilities Member

 Robert Gibson wrote a good commentary in support of Question #3 on the current election ballot. Approval will repeal priority 6 in Section 509 in the Los Alamos County Charter: “All remaining operating profits shall be transferred to the County General Fund.” This priority should be repealed. But why was it put in the Charter and why is it no longer needed? Robert’s history of the priority needs clarification.

Voters did indeed defeat the first proposed charter in part because of their concern over utilities. They were right to do so. Experience in other jurisdictions shows citizens suffer when elected politicians have too much control over public utilities, as stated by Mr. Gibson.

The second proposed charter, our current charter, was accepted by voters and creates a semi-autonomous Department of Public Utilities (DPU) overseen by the Board of Public Utilities (BPU). The Council’s interaction with BPU in the Charter is through reasonable checks and balances. In addition, the utilities manager answers to the BPU, not to the county manager. The county manager, however, is an ex officio member of the BPU. This semi-autonomy has served Los Alamos citizens well for nearly six decades and continues to protect utility customers from politicians hiking rates, a tax, merely to finance pet projects.

Over the years, some elected councilors, to their peril, have attempted to get control of DPU by changing Section 5 of the Charter, weakening the checks and balnces. Fortunately, those attempts had failed at the voting booth, so having served 12 years on the BPU and 12 years as a county councilor, when I heard that another change was being proposed to Charter Article V, red flags flew up. The current proposal, however, makes sense and will solve a long-standing budgeting issue. Here is where more history is needed.

Negotiations for transfering the utilities distribution system from the Atomic Energy Commission (AEC) to the County began in 1964. In addition to wanting assurances that the County would properly operate the utilities system, the AEC wanted the system to be used to help finance County operations.

For years, assistance payments were paid to the County by the AEC, (followed by ERDA and finally the DOE). (Separate payments were made to L.A Public Schools.) Those payments had to be justified to Congress every year, something the AEC and its predecessors were loath to do. Revenue from utilities could reduce the need for assistance payments, so transfer negotiations began. In a September 17, 1964, letter, (images below) from Delacroix Davis, AEC Assistant Area Manager, to George Cowan, Interim Utilities Board Chairman, and Ellis Stout, County Commission Chairman, using veiled threatening diplospeak, failure to make a profit “…will effect any assistance payments to which the County may otherwise be entitled.” For this reason, the priority for a profit transfer is in the Charter, along with other vague language in Section 504 regarding “compensatory rates.”

During the 1980’s, as the DPU was adding electric and gas production to its operations, a debate over what constitutes “profits” flared up. Some County Councilors pressured BPU for profit transfers of hundreds of thousands of dollars. One even ventured that “…all remaining profits” meant that all money in DPU should be transferred to the General Fund. Fortunately, the BPU successfully resisted such political pressure to raise rates, but the debate over what constitutes “profit” continued. Finally in 1987 as a County Councilor, I introduced an ordinance (along with John Rogers) defining the profit and how it is calculated. Municipal Code 40-63(c)(12)a sets the profit at 5% (typical for utilities at the time) and 40-63(c)(12)b calculates the amount after completion of the County’s annual audit.

DOE had ended assistance payments in the early 1990’s through a buyout with both the County and schools. The original threat to lose those payments no longer exists and the need for priority #6 in Charter Section 509 is no longer needed. However, it is important to note that the Municipal Codes related to a profit transfer are still on the books. By law, the DPU budget will continue to contain a budget transfer until those codes are repealed. Although 40-63(c)(12) allows the Council to return profits to DPU for selected purposes, are councilors willing to repeal that law?