Vernon Chamber Objects To ‘Hasty’ Bond Deal, Electricity Rates

By Elizabeth Hsing-Huei, EGP Staff Writer

Vernon electricity users are upset by what they call a hasty move by the city to adopt a “pass through” rate meant to fund compliance with state renewable energy requirements.

Four members of the city’s electricity rates advisory committee, made up of labor and business representatives, reviewed the proposal before it reached the city council on Tuesday, and rejected it at their own meeting.

The city said it needed to approve the pass through rate in order to obtain a $70 million bond to fund infrastructure repairs and improvements.

Representatives of Vernon’s business chamber and several members of the city’s electrical rates advisory committee attended the Vernon City Council meeting on Nov. 15 to object to the recommendation.

They said they were not given a chance to review the proposal closely or to get more information on it before it went to the city council. During Tuesday’s council meeting, the city’s ethics advisor, John Van de Kamp, also recommended the city wait until the next meeting before considering the rate.

This latest rate hike comes just a few months after an increase approved by the committee in June. At the time, the committee thought it was taking care of the renewable energy requirements by approving the rate increase, but it seems the funds were used to cover debts and other expenses, according to committee member Peter Corselli, who is an engineering manager at U.S. Growers, a cold storage company.

The proposal the electricity rates advisory committee endorsed in June was an 8 percent increase this year, another 8 percent in Jan. 2012, and five percent increases for each following year. “Nobody was happy [with the increase]… we basically figured it was as good as we could do, and we would be done with it,” Corselli said.

The city had run out of the reserves that were previously used to subsidize electricity rates, he said. As a result, city services such as police and fire that had always been dependent on light and power funds are still in place. In order to maintain both city services and to account for increasing electricity rates, the city resorted to raising fees in June.

Corselli feels this increase could result in the cost of electricity going up at an alarming rate, prompting businesses to start leaving the city and California. Meanwhile, the consultant who recommended the move would be pocketing $350,000 off of the deal.

“Ask someone who sells bonds whether you should buy a bond, and they will say yes. These people who stand to make money will say yes,” Corselli said.

Light and Power Director Carlos Fandino promised that the “pass through” rate would not go into effect until 2013, but members of the business community are nervous that the rates can still be put into effect at any time, with a potential increase of 10 percent added to their bill.

Vernon spokesperson Fred MacFarlane said in order to start charging the pass through rate, the council would actually have to vote on it again.

The members of the electricity rates advisory committee are Greg Longstreet, President of Farmer Johns in Vernon; IBEW labor representative Stan Stosel; Peter Corselli of U.S. Growers Cold Storage; and Bob Gutterman of Crown Poly. They all voted against the pass through rate.

On Tuesday night, Eric Fresch, the city’s controversial former city manager, who currently works as a city consultant on bonds, public finance, and energy matters, requested to terminate his contract with the city, effective next May.

“I believe by tendering my notice at this time it will enable you to help me wind down my participation in the various projects in which I am involved for Light & Power and provide an orderly transition to other firms,” he wrote in a letter to the city.

According to MacFarlane, Orrick was the bond counsel on the bond approved Tuesday morning. “Orrick, Bond Logistics and Mr. Fresch provided advice and counsel to Light and Power regarding its bond proposal,” he said.

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November 17, 2011  Copyright © 2012 Eastern Group Publications, Inc.

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