The Electric Rates Stabilization Fund
Mayor: Where is $4M in electric rates money?
The City of Clinton should have about $8 million in a fund designed to stabilize the costs to consumers of electricity. The fund actually sits today at $3.4 million - Mayor Bob McLean on Monday evening asked a simple question, “Why?”
City Council was meeting in called session to give final approval to its new $30 million budget (FY 2022-23). McLean used a mayor’s report time at the end of that meeting to asked for a forensic audit of the rate stabilization money.
McLean said without $16 million in this fund, the City of Clinton stands to face bankruptcy in 2029 - 2035.
That’s when an electricity provisions agreement with the PMPA expires (PMPA = the Piedmont Municipal Power Agency, based in Greer).
Five members cities voted to get the excess profits from PMPA back to their coffers. Five cities voted to allow PMPA to keep the money in its reserves (180 days of working capital).
McLean said as he has left the PMPA board, he asked the treasurer how much money Clinton had gotten back - the answer: over $7 million.
In addition, within this year, an addition $577,000 is due back to Clinton.
Why then, McLean asked, does the city budget show $3.4 million in the rates stabilization fund?
The answer he got from former city manager Bill Ed Cannon was that the fund was tapped to pay the city’s bills. “I didn’t know the city was running deficits. Did you?” McLean asked his fellow council members.
He was told the money would be returned to the rates fund after temporary use - 4 years later, it has not been returned, McLean said.
“I would like to have an audit,” the mayor said.
Since this was not a listed agenda item - and it involves the expenditure of funds - McLean’s request could not be acted on. City Manager Tom Brooks will submit a RFP to council at its next meeting (July 11, RFP = request for proposals) and a funding request to have the audit conducted.
Brooks said there are no written policies for how the electric rate stabilization money should be collected and used.
Mayor Pro-Tem Ronnie Roth said those also should be developed. Roth said he understood the 2029-35 reference but added there was an understanding that future councils could determine future uses the multi-million electric rates account.
McLean said this is not reflection on the current city administration.
“This was not of their doing,” he said.
McLean said Brooks and others are facing tough questions about next year’s $30 million budget, and will face many more tough questions in the future. He said the city needs to know where this money went, and why the city was paying late fees to PMPA for electric expenditures.
Brooks has replaced McLean as Clinton’s representative on the 10-cities PMPA board. Public Works Director Joey Meadors is the city’s alternate member.
PMPA owns a portion of a nuclear power plant that supplies electricity-for-resale to its members cities, including Laurens and Newberry.
McLean said before the city began tapping the rate stabilization fund to pay its bills, it had almost half of the $16 million it would need to forestall bankruptcy in 2029-35.
Now, the fund is less than $4 million.
“We weren’t told we were having deficits,” McLean said.
In addition to acting on the $30,305,165 budget (that portion of the meeting is inaudible on the city’s meeting video) and having a closed session about city court personnel, council tabled final action on an ordinance pertaining to the DE Tribble building.
It has been sold to an investor - a bar, The Lumberyard, is proposed to go there - but time is running out before a buy-back option is available to the city.
The large, three-sections building was sold for $75,000, but there were “other consideration” such as having a business there that would pay taxes and business license fees. Now, council members are concerned about the mechanics of that investment.
Second reading of an ordinance releasing the buy-back option was tabled, and McLean expressed a desire to see inside the building, now that the city has stabilized it with roof work and repairs to a back wall (funded by a grant).
McLean said, “I'm excited about the project. It is similar (inside) to the Museum in Laurens. It is a really, really beautiful structure. I just want to make sure city is protected.”