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Beware of the Board of Water and Light

July 31, 2020

The people of Lansing should keep close watch on the Lansing Board of Water and Light. Not that they don't do a great job, and not that their rates aren't competitive. They did, after all, replace all our lead pipes, a two-year project that began in 2014, before the Flint catastrophe. Sure, there have been a few slip-ups, like the December 2013 ice storm that left thousands without power for up to 11 days in sub-freezing temperatures. (We've been assured that steps have been taken to prevent that from happening ever again.)

The problem is that oversight is not very strong. Executive and policymaking responsibilities are delegated to the Board of Commissioners. This from the City Charter:

Board members are appointed by the mayor to 4-year terms. Again, from the City Charter:

The BWL makes a huge yearly contribution called "return on equity" to the City's general fund. While not voluntary, I'm sure it is appreciated by City leaders. This is from Note 7 on page 44 of the Board of Water and Light's financial report for the years ending June 30, 2018 and June 30, 2019:

 

Return on Equity - Effective July 1, 1992, the BWL entered into an agreement with the City to provide payment of a return on equity in accordance with a formula based on net billed retail sales from its water, steam heat, and electric utilities for the preceding 12-month period ending May 31 of each year. The return on equity represents compensation to the City for a permanent easement granted to the BWL. Effective March 1, 2002, the formula to calculate the amount owed to the City for return on equity will also include wholesale revenue generated from the BWL's electric, water, steam, and chilled water utilities for the preceding 12-month period ending May 31 of each year. Subject to the provisions of Act 94 Public Acts of 1933, as amended, and the BWL’s various bond covenants, this amount is payable to the City in semi-annual installments. Under terms of this agreement, the BWL paid to the City $21,110,884 in 2019 and $20,561,871 in 2018 of operational cash flow in excess of debt service requirements.

 

Update: The Lansing City Pulse reports in its September 2, 2020 edition that the BWL has added $2 million to its annual "return on equity": The City of Lansing’s financial struggles will be a bit less taxing thanks to an agreement inked in June between the city and the Lansing Board of Water & Light that increases the utility’s return on equity payment to the city for the next two fiscal years. Mayor Schor deserves credit for negotiating the deal, which will enhance the city’s bottom line by nearly $2 million in Fiscal Year 2021, which started July 1, and again in Fiscal Year 2022. The extra cash will help cushion the blow of COVID-related financial distress that is expected to wreak havoc on the city budget over the next few years. The agreement includes a provision that will bring the city even more money if the BWL sees unexpected growth in revenues derived from water, steam and energy sales.

And to stay in the good graces of the mayor, BWL employees have made generous contributions to mayoral campaigns and slush funds. They've made none to Andy Schor's mayoral campaign committee (that I've found), but they do contribute to his 527 account:

(It appears that the suggested donation is $250. Whether the suggestion comes from the Mayor or BWL leadership, we don't know.)

Contributions to former mayor Virg Bernero went to his campaign finance committee rather than his 527 account:

This BWL generosity discourages City leaders from meddling in BWL affairs. Oversight is left to the Board of Commissioners who, being unpaid, may not take the job too seriously. It was a little over a year after the December 2013 ice storm that Mayor Bernero and the Board of Commissioners decided to fire general manager J. Peter Lark, and it was only then that the public learned how much Commissioners had allowed Lark's salary to increase over his eight years on the job. He started out in 2007 with a base salary of $190,000 and it grew with each new employment agreement until the total in 2015 was $334,543 (including deferred compensation and the employer contribution to his defined contribution plan). Not only that, he'd been granted a 5-year contract and a severance pay provision that paid him his salary for the remainder of the term should he be terminated. His termination could have cost $900,000; he settled for $650,000.

The Board's superficial oversight may be to blame for BWL management's hostility to requests from the public, as shown by their recent denial of my FOIA request for employee payroll information. It was not just the denial - affirmed by Board of Commissioners Chairman David Price - but the disdain. When I asked a simple question about the documents they were offering, I was told "FOIA does not require a public body to answer questions." And my complaint about my emails not getting through was stonewalled.
This wasn't the first time I've asked for BWL payroll information. I did so eleven years ago, in 2009.	Price
The information was provided on two paper listings and it took me two weeks at my computer to type it into an Excel worksheet. It revealed that 2008 earnings of 86 employees exceeded their salaries by $30,000 or more and earnings for the entire workforce exceeded salaries by $6,547,334.02. I looked at other areas as well - including J. Peter Lark's compensation - and posted five reports on this website:

• 2008 employee wages

• Other employee benefits

• J. Peter Lark compensation

• BWL campaign contributions to mayor Bernero

• The July 2007 massacre

• Rate increases and BWL extravagance

I'll wager that I knew more about the BWL than any of the commissioners did at that time.

We can't count on the Board of Commissioners to look out for us; all they know about the utility is what Management chooses to tell them. We must insist that any information of public interest be posted online so we can see for ourselves, including rate history, detailed payroll information, the employment agreements of managers, the employee handbook and union contracts. And Commissioners must insist that Freedom of Information Act requests be complied with promptly and respectfully.

Send comments, questions, and tips to stevenrharry@gmail.com or call or text me at 517-730-2638. If you'd like to be notified by email when I post a new story, let me know.

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