City Council Agenda Briefing – PWC’s response to consultants study

City Council Agenda Briefing – informational meeting only
August 21, 2013

What Happened:

Steve Blanchard (Public Works Commission General Manager) presented the utilities position on the DavenportLawrence Report that was submitted to the City Council at the August 5 work session.

Blanchard said the consultant does not have the history that has taken place between PWC and the city.  He also said, PWC is not violating the city charter.  Blanchard – “The consultant didn’t have all the information to make these comments.”

PWC passed out a 40 page booklet to address the DavenportLawrence Report (DL) Report.  Some of the talking points below are from the report and pertain to disagreements that PWC has with the report. To view the entire PWC report go to www.ci.fayetteville.nc.us

DL Report claim – We identified charter violations for required actions between the City of Fayetteville and the Fayetteville Public Works Commission

PWC response – The most recent Charter Review was completed in 2006 jointly by the City and PWC.  The City found no violations of the charter, and our working relationship has not changed since then.  The City and PWC have been audited by the same external auditor (Cherry Bekaert) for many years.  They have never identified any areas where the City or PWC have violated the charter.

DL Report claim – The autonomy of PWC has created an internal control culture and “private company” philosophy that reduces public transparency and support to the City as a Commission of the City.

PWC response – PWC has an internal control culture that leads to efficient and effective operations, not a lack of transparency.  PWC complies with all the sunshine laws of North Carolina and welcomes suggestions as to how we can be more responsive and transparent.  PWC staff has regularly scheduled meetings with the City staff and in the past, the Mayor, Commission Chair and executive staff of both the City and PWC have met on a regular monthly basis.  This has been discontinued at the Mayor’s request.

What Was Said:

Councilman Bates – “Is there a way we can televise the board meetings?”

Steve Blanchard – “I’m sure we can look into it.”

Bates – “Then I think we should televise the meetings on our new community channel.”

DL Report claim – Current governance structure yields cooperation between the City and the Commission only to the level required to operate between the City and the Commission

PWC response – The City and PWC have a record of cooperation over the years.  A few examples include: Economic Development Alliance of Fayetteville Cumberland County, City owned parking garage, City’s “Buy Fayetteville First” initiative, Street Lighting Program, Rim Road contaminated water issue, acquisition of the Texfi Industrial site, revitalization of the downtown, Airborne and Special Operations Museum, North Carolina Veterans Park, annexation requirements for receiving water/sewer utility service.

DL Report claim – The City has participated in cost-sharing and “agreements” with the PWC that have directly impacted taxpayers through inequitable terms and conditions.

PWC response – The terms and conditions of any agreement between the City and Fayetteville PWC have been agreed to by both parties and identified as beneficial to both parties when executed.  An in-depth review of each agreement will reflect the benefits determined at the time of the agreement.  Examples are: (details of these agreements can be found in the full report)

  • Fort Bragg Water Supply
  • Phase V Annexation
  • Fiber/Broadband
  • Fleet
  • Purchasing

DL Report claim – PWC utilization of complex cost accounting methods are used as a basis for atypical fees and chargebacks to the City, thereby unnecessarily impacting taxpayers.

PWC response – PWC’s cost accounting methods are not unusual for utilities the size and complexity of the operations of PWC.  Benefits of our cost accounting include:

  • The ability to complete the federal reporting requirements for electric utilities
  • The ability to perform accurate cost-of-service analysis for ratemaking purposes, to ensure that rates are fair and correspond with the costs required to provide the service – a bedrock principle of sound ratemaking
  • The ability to identify the total, all in costs for performing a function.  This has allowed PWC to identify and evaluate areas to outsource, such as:  janitorial and office cleaning, landscaping and lawn care, power line tree trimming, printing and mailing of bills, process credit card statements etc.
  • PWC considers its cost accounting methods to be consistent with the requirements of Local Government Commission and practices

PWC statement – In many respects, we believe Fayetteville PWC is a model of how a successful community utility should be run.  We feel like Fayetteville PWC is a strong organization that is well run and serves our customers well.  We don’t see the need for drastic changes.  But we are more than happy to discuss with the city how we all can continue to improve our service and better serve the community.  As a preliminary matter, we agree that evaluating the true costs – both financial and operational – of combining functions (as we have done for purchasing, fleet maintenance, and radio communications) is worthwhile, but until that is done, no one can conclude what, in fact, is beneficial and in the public interest.

What’s Next:  Discussions will be ongoing in the months ahead.

 

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