February 6, 2006
Lincoln Journal Star
Algis J. Laukaitis

Despite pleas from human services agencies and others not to burden the poor with late charges and other fees, the Lincoln City Council on Monday passed a rate package to help the Lincoln Electric System pay for more than $9 million in unexpected power costs.

Beatty Brasch, executive director of the Center for People in Need,  told the council that low-income families and those on fixed incomes  are having a hard time making ends meet this winter.

They already are compelled to make serious choices among heating their homes, putting food on the table, filling needed prescriptions and affording transportation to and from jobs, she said.

Brasch pointed out that 23,000 people in Lincoln now live below 100 percent of the federal poverty level. For a family of four that™s an annual income of $19,350, she said.

One-half of these, or 11,500, live on ¦ $9,500, Brasch said. You can readily see that any additional expenditures have a dramatic  even traumatic  effect on low-income individuals and families, including the working poor.

Brasch urged the council not to impose new or increased fees in three categories: service reconnection after a disconnect, collection of payments in the field and for writing an insufficient funds check.

The Lincoln Action Program and the Nebraska Appleseed Center also opposed the fees, saying they target low-income families.

 After a lengthy hearing and discussion, the council voted 5-2 to approve the LES package. Council Chairman Ken Svoboda and Councilman Jon Camp voted no.

Before and after the vote, several council members urged business leaders, who offered to help during the public hearing, to find ways to financially help the poor.

Said Councilwoman Annette McRoy: This will hurt quite a few people in the community.

Bob Caldwell, chairman of the Lincoln Employers Coalition, which represents about 14,000 local workers, suggested a task force be formed to address the issue.

LES contributes about $90,000 annually to the Lincoln Action Program through a heating assistance program that helps those who have difficulty paying their bills.

Caldwell praised the council and the mayor™s office for negotiating the rate package with LES.

We believe the compromise protects jobs and helps us to build an economy that benefits everyone, he said.

The rate package includes a 4.5 percent rate hike and a 5 percent increase in the monthly customer and facilities charge for all rate classes, beginning Feb. 13.  A typical residential customer would pay $3.43 more per month. The fees go into effect March 1.

LES also will cut $530,000 in costs from its current budget and eliminate $230,000 in deferred costs from 2005. The rate package is designed to help the utility cope with more than $9 million in unexpected power costs this year due to hurricane damage along the Gulf Coast and a volatile wholesale power and natural gas market.

This, we believe, is a workable package to assure our financial integrity in 2006, LES Administrator and CEO Terry Bundy said.

Svoboda and council members Dan Marvin and Jonathan Cook crafted the package with the help of LES staff after the council turned down an earlier utility proposal to implement a power cost adjustment, or flexible surcharge. The council wanted LES to look at alternatives, like reducing costs, and increasing service fees and rates.

But it was the fees, particularly the aid-to-construction charge, that drew the most attention from the public and the council. The fee is charged to customers or developers for installing underground power lines in new residential areas. It went up from $180 to $400 per lot.

The aid-to-construction fee was opposed by the Lincoln Chamber of Commerce; Nebraska Housing Resource, a nonprofit group that develops affordable housing; the Homebuilders Association of Lincoln; and the Lincoln Independent Business Association.

Fred Hoppe, director of Nebraska Housing Resource, said the aid-to-construction charge burdens developers who have pre-sold lots.

Lincoln attorney Mark Hunzeker, speaking on behalf of the Homebuilders Association, said the aid-to-construction fee was increased last October by 20 percent and would hurt first-time homebuyers.

It's unfair at a time when we are down 40 percent in this community, said Hunzeker, referring to a 40 percent drop in housing projects started over the last two years.

Councilman Camp made a motion to delete the aid-to-construction charge from the LES package, saying it should be studied further. After being seconded by Svoboda, his motion lost on a 4-3 vote.

Before the vote, Svoboda, who had earlier supported the aid-to-construction fee as part of the package, said he changed his mind after learning more about escalating interest rates and how the fee would affect first-time homebuyers.

Svoboda  wanted the council to take another 30 days to come up with a proposal that would meet the needs of everybody.