Background
of the
Board of Commissioners for the Las Cruces Utilities
Ordinance 2400, approved on 9/17/07, An Ordinance amending Sections 20186 and 2-188 of the Las Cruces Municipal Code to add provisions concerning the Board of Commissioners for the City of Las Cruces Utilities.
Ordinance 2342, approved on 12/4/06. An Ordinance establishing the Board of Commissioners for the City of Las Cruces Utilities, and amending Section 2-186 and Section 2-1041(a) of the Las Cruces Municipal Code.
Resolution 07-190, approved 12/4/06. A Resolution approving the By-Laws of the Board of Commissioners for the City of Las Cruces Utilities.
Resolution 08-187, approved on 1/7/08. A Resolution approving the first amendment to the By-Laws of the Board of Commissioners for the City of Las Cruces Utilities.
Resolution 07-189, approved on 12/4/06. A Resolution accepting the final report for Utility Governance consulting services for the City of Las Cruces dated September 18, 2006, as presented by the Mercer Group.
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In 2003-2004, the City of Las Cruces Utilities Department went through the adoption of the Cost of Service-based rates. The eighteen-months process raised questions regarding the City’s ability to adequately handle establishing rates and whether it was being conducted in a business like manner. City Council, staff, and members of the public wondered as to whether there would be a better alternative to rate making.
Council directed Utilities staff to look at other utilities and to develop alternatives for future rate making and to explore governance alternatives. Utilities staff proceeded with retaining the Mercer Group, a well known management consulting firm. The Consultant was asked to explore and recommend the most optimal Governance Structure for the Utility.
In general, the Consultant recommended to the City Council to establish an independent Utilities Board for the Las Cruces Utilities with By-Laws. It was the consensus that through the creation of a Utilities Board, the City could gain greater public access and participation in the Utility matters. Council approved Resolution 07-189 on December 4, 2006, accepting the final report for the Utility Governance, as presented by the Mercer Group. The core purpose of the Board would be to provide strategic policy direction.
Council held Work Sessions on establishing the LCU Board of Commissioners and directed staff to take the proposed changes, specifically the delegation of rate making authority, through the Charter Review Committee. The Charter Review Committee agreed with the proposed changes and recommended the Legislative change through the City Council in order to delegate the rate making process to the Board of Commissioners.
Before 2005, the City Council had the authority to create a Board of Utility Commissioners, but couldn’t delegate the rate making process. In November 2005, the question “should the City Council should be allowed to delegate its authority to regulate the rates charged for services by a City owned and operated public utility to a municipal board of utility commissioners” was asked of the voters. The voters authorized the City Council to delegate it’s authority to the Board of Commissioners.
On December 4, 2006, Council approved Resolution 07-190 approving the By-Laws of the Board of Commissioners. On January 7, 2008, Resolution No. 08-187 approved the first amendment to the By-Laws. In general, the Board would develop a long-range strategic policy direction for the Las Cruces Utilities; set Utility Rates based on Utility basis cost of service methodology; set Water/ Wastewater Development Impact Fees upon recommendation of the Capital Improvement Advisory Committee process. The Board would have authority to seek, apply, and accept grants and apply for small State loans but would not be authorized to accept loans. The Board would be able to contract on behalf of Las Cruces Utilities subject to limitations set forth in the annual budget; Council remains the final authority on the approval on the annual budget.
The main objective of the Board is to provide strategic policy direction to the City-owned Water, Wastewater, Gas and Solid Waste Utilities. There would be more independent oversight and accountability for Utility policy decisions. Board members would have more time to focus on Utility matters with less political or non-business influence in the business decisions making including rate setting.
The Board is not authorized to initiate litigation in the name of the City or the Las Cruces Utilities and approval of extension of utility services to properties outside City limits still requires City Council approval.
The By-Laws also define the membership of the seven Commissioners. Initially it was the City Council. Two Council Members shall always remain on the Utilities Board. Eligibility for membership requires a member to be a registered voter and a customer of one or more of the Las Cruces Utilities for at least one year prior to appointment; not hold any elected or appointed to public office or be a City employee; and not be a contractor or consultant or have a contractual relationship with the City for the benefit of the Las Cruces Utilities. Qualifications require significant technical expertise in one or more of the following fields: banking/finance; business; economics; engineering; and related utility management.
The Board is not compensated, although there could be reimbursements for any reasonable expenses, specifically for any business associated in conducting the Utility business, such as travel.
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