Lafayette Utilities System (LUS)


I. Power

Status as Government Enterprise
As a governmental business enterprise, LUS is not a profit-driven entity and, by law, must recoup its costs and operate within its budget.  It does not earn profits for public shareholders.

Governance of LUS Over Time
In 1896 the majority of the City of Lafayette's property owners petitioned its mayor and governing body to call an election to create a municipally-owned utilities system for water and electrical services. The vote was unanimous in favor of the proposition. The Lafayette Utilities System (LUS) was governed by the legislative body of the City of Lafayette until consolidation of the City and the Parish of Lafayette. Later wastewater treatment was added; and in 2005 the City of Lafayette voted to establish municipal telecommunications services (Internet, telephone, and video).

In 1992, with the passage of the Lafayette City-Parish Consolidated Government Home-Rule Charter, the voters of the City of Lafayette and Lafayette Parish created the Lafayette Public Utilities Authority, the LPUA, as the governing authority for the Lafayette Utilities Department. This new structure of government went into effect in June 1996.  [See the Lafayette Public Utilities Authority, the LPUA, entry also under Lafayette Consolidated Government in this web guide.]

LUS produces and submits a proposed annual budget to the Lafayette Public Utilities Authority and the City-Parish Council which, after review and amendments by both bodies, then must also be approved as part of the annual budget of Lafayette Consolidated Government.  

LUS presents proposed ordinances to the Lafayette Public Utilities Authority and to the Council for passage.  Due to conflicting language in the Charter, all issues regarding budgets, rates and issuance of debt must be approved by both the LPUA and the City-Parish Council, as stated by the City-Parish Attorney in the Council’s meetings.   While nearly all proposed ordinances have received approval from both the LPUA and Council, for the first time in January, 2015, the Council vetoed a majority vote by the LPUA. 

Contracts for professional services for the Lafayette Utilities System, as the utilities department is called, or LUS, like the other departments of the Lafayette Consolidated Government, are reviewed by the Professional Service Review Committee.  The LPUA and the City-Parish Council approve the budget for all other contracts and bids.  

The Lafayette Public Power Authority
The Lafayette Public Power Authority (LPPA) was established, by legislative act, in 1977 to facilitate the joint ownership of the Rodemacher power plant.  The LPPA is governed by the legislative body of the City of Lafayette.  The legal department has opined that, under the current charter, all 9 councilmen must vote on LPPA issues.

Director of LUS
The City-Parish President appoints the Director of LUS, subject to the approval of the Lafayette Public Utilities Authority. According to the Charter, “The director of the utilities department shall be appointed by the President, subject to approval by the authority (LPUA), in accordance with provisions included in the current future bond resolutions and covenants.”  The current bond covenants require the utilities director to be approved by a Consulting Engineer, secured to advise the City-Parish Government regarding the Utilities System.    There are no other professional requirements for the director, but the current director is a Registered Engineer.  The director does not come under Civil Service.  

Other Employees of LUS
LUS is the largest department of Lafayette Consolidated Government.The other full-time employees of LUS are under Civil Service. There are currently more than 500 employees of LUS. Services are largely measured in terms of capacity--billions of gallons, thousands of miles of lines, billions of kilowatt hours to meet customers’ needs.

Federal and State Mandates
The Lafayette Utilities System must follow the mandates of federal and state agencies, such as the Federal Energy Regulatory Commission (FERC), the Environmental Protection Agency (EPA) and the State of Louisiana Department of Environmental Quality (DEQ).  The LUS telecommunications enterprise (LUS Fiber) must also follow requirements of the Federal Communications Commission (FCC), and some oversight from the  Louisiana Public Service Commission (LPSC).  The LPSC oversight is mandated as part of the State of Louisiana law, the “Local Government Fair Competition Act”  LUS, as a municipally owned utility must comply only as to its telecommunicatons operation.  In addition, LUS and LUS Fiber must adhere to  state codes and local ordinances.    

 
II. Services to City of Lafayette Residents and to Contracted
Municipalities


LUS provides electric, water and wastewater services generally within the City of Lafayette. An exception includes annexed areas which were previously receiving electric service from SLEMCO or Entergy. LUS has a contract with SLEMCO to purchase such customers after annexation and has also purchased Entergy customers as the result of an expropriation suit. In both cases, it may be some time before these areas are served by LUS. Other exceptions are generally in the wastewater area where, after annexation, certain homes and businesses either continue to maintain their own treatments systems, or subscribe for sewer services to an independent provider. 

LUS also has a number of wholesale water contracts, with varying terms, with: 

  • Lafayette Parish Waterworks District North 
  • Lafayette Parish Waterworks District South 
  • City of Broussard 
  • City of Scott 
  • City of Youngsville 
  • Milton Water District 
These wholesale customers buy water in bulk from LUS, then distribute the water within their designated jurisdictions to their retail customers. 

LUS’ website contains a number of details about each service provided. 

Water

  • Built, maintains, and upgrades four water production facilities for the City of Lafayette’s drinking water supply to consumers (source is Chicot Aquifer):  North Water Plant (original 1929 plant), South Water Plant (1980’s), North Booster Plant (1990’s) and South Booster Plant (1990’s)
  • Issues annual Water Quality Reports as mandated by the Environmental Protection Authority and in compliance with the Safe Drinking Water Act
  • Tests cross-connections between drinking water supply and non-drinking water sources to avoid contamination
  • Distributes rain barrels at reduced retail cost, in conjunction with the Environmental Quality Division of the Public Works Department,

to reduce water usage and storm water run-off with surface pollutants into watersheds and rivers

Wastewater

  • Built, maintains and upgrades four wastewater treatment facilities that return the treated wastewater to the Vermilion River: South Wastewater Treatment Plant (1950’s), East Wastewater Treatment Plant (1950’s), Ambassador Caffery Treatment Plant (1970’s), Northeast Treatment Plant (1980’s)
  • Recycles biosolids (sludge) from the wastewater treatment plants to Environmental Quality Agency-approved landfarm sites of LUS that provide fertilizer
  •  Maintains permitting and approval process for industrial users to discharge their pre-treated, non-hazardous wastewater into the LUS wastewater collection system.

Electrical Services to Residential and Business Consumers

  • Offers net metering of electricity to credit customer's account for their use of solar panels or other renewable energy systems
  • security lighting
  • tree trimming of electrical lines 
  • Composts tree-trimming debris as a partner with the Lafayette Consolidated Environmental Quality Division Compost Facility for landfill waste reduction and nutrient-rich soil for residents. 
  • Provides energy audits for mainly homes and online methods for self-monitoring electrical and water usage, as well as specific tips for owners to reduce energy and water consumption


Year Built or Joined      Power Generation           Megawatts Rec’d         Energy Resource

1964 - 1976

Doc Bonin plant in Lafayette

Approximately 45 MW, 90 MW and 180 MW

Steam turbine fired by natural gas

1982

Rodemacher plant near Boise, LA through Lafayette Public Power Authority (LPPA) (Lafayette has ½ ownership). Environmental Upgrades in 2015

Lafayette’s share is about 246 MW)

Coal-fired.  Coal arrives by train from Wyoming

2005

T. J. Labbe Plant

(2) 50 MW units

Natural gas

2006

Hargis-Hebert Plant

(2) 50 MW units

Natural gas

2013

Became member of MISO*

 

Wholesale bulk power system on open market

*MISO (Midcontinent Independent System Operator, Inc.) grid

Divisions within the Lafayette Utilities System:
  • Engineering Divisions (forecasting, system planning & design, GIS) 
  • Engineering Utility Marketing 
  • Civil Engineering 
  • Electrical Engineering 
  • Power Production (operates and maintains the four power plants)
  • Electric Operations (all field activities for operating and maintaining the electrical transmission & distribution facilities)
  • Water Production (at the water plants)
  • Water Distribution (from the plants to the customers ; checks >500 fire hydrants)
  • Wastewater Treatment, at the four plants, industrial discharges with permit limits for heavy metals for landfarming.
  • Wastewater Collection (maintains the flow of wastewater through lines and manhole, and >120 lift stations)
  • Support Services (rate, financial, business and marketing analysis; budget preparation; staff development and public information)
  • Environmental Compliance (management and compliance of water, air, and wastewater discharge, including industrial pretreatment to monitor compliance)
  • Customer and Meter Services 

LUS Fiber

LUS Fiber is  also a governmental business enterprise of the City of Lafayette.  It offers fiber-to-the-home and businesses for video, internet and phone service to City of Lafayette providers, in competition with private providers, as well offering these to the main and branch public libraries and other public buildings LUS Fiber is reported as one of the largest municipally-owned telecom systems in the US and was recently designated as one of the faster Internet providers in the World.

Divisions within LUS Fiber

  • Engineering,
  • Field Operations
  • Business/Marketing/Sales


III. Funding

The Lafayette Utilities System and LUS Fiber are separated in accounting as two governmental business enterprises. 

Revenue Returned to Lafayette Consolidated Government from LUS
In the 2015-2016 proposed budget, utilities and fiber sales and the ILOT (in lieu of taxes) make up 47.6% of the entire revenue side of Lafayette Consolidated Government.  

This amount totals approximately $295,190,000 of Lafayette Consolidated Governments' revenue out of a $620.0 million budget.

 Utilities sales 38.01%             $236,006,333
 Communications sales 5.95% 16,238,680
 ILOT (in lieu of taxes) 3.64% 22,600,000

The ILOT or in lieu of payment represents 23% of  the City of Lafayette's Total General Fund.  This ILOT is a payment from the Lafayette Utilities Systems to the City of Lafayette's General Fund that would be otherwise required of a private provider(s) as a franchise fee.   The maximum ILOT calculation is based on provisions in the bond covenants.  The LPUA and Council have the authority to reduce the ILOT payments below the designated calculation.  Although the maximum ILOT payment could be as high as 12% of gross revenues, the current LUS ILOT payment is less than 10% of gross revenues.


Expenditures by LUS and LUS Fiber
The Lafayette Utilities System and LUS Fiber account for 45.2% of Lafayette Consolidated Government's total expenditures and 46.5% of the City of Lafayette's total debt service. Because LUS is a governmental business enterprise which serves customers, it must maintain a rate level adequate to cover the cost of operation and debt service, have sufficient revenues to make its ILOT obligations and to fund capital projects. From time to time, the system issues tax-exempt revenue bonds to support its capital program.  Generally, the issuance of bonds is authorized by LPUA and Council action, in accordance with state law. In the case of the telecommunications initiative, a referendum vote was required, according the “Local Government Fair Competition Act.”    

The budget for the Lafayette Utilities System is included in the Lafayette City-Parish's annual budget and that budget’s 5-year capital improvement plan, as well.  Peak demand periods, fluctuating fuel costs, emergency services following storms, and federal environmental standards affect LUS’ budget and actual year’s expenditures. 

Public Oversight
Public oversight is through the Lafayette Public Utilities Authority’s twice-monthly meetings and the City-Parish Council. There is an agenda item at the LPUA’s  meetings for public comments and a 5-minute time limit per person.

The City-Parish Council and Lafayette Public Utility Authority’s meetings are broadcast and streamed live through Acadiana Community Media and replayed later again.    

[For the issue of confusing language in the Lafayette Consolidated Government’s Home Rule Charter as to the LPUA’s powers vs. the City-Parish Council’s power, go to this web guide’s Lafayette Public Utilities Authority section under Lafayette Consolidated Government.] 

Long-term Planning:
LUS contracted with a private out-of-state firm to develop its IRP (Integrated Resource Plan), a public document completed at the end of  2011.  The firm was asked to address supply and demand and provide scenarios as options for LUS over the next 20-year planning period, 2012-2032.   Public engagement was not sought in the planning process.  While a recent Louisiana law requires an Integrated Resource Plan every three years for private utilities, there is no such requirement for municipally owned utilities in the energy areas.  LUS completed an Integrated Resource Plan in 2012.

 

Sources:

 Individual interviews with the five members of the LPUA, 2014.

 Review of the 2013 LUS capital improvements and operation budgets with LUS Director Terry Huval.

 Printed materials of the Lafayette Utilities System

 www.lus.org

 www.misoenergy.org

 Annual Report, Lafayette Consolidated Government, 2014

 Synapse Energy for the Regulatory Assistance Project, “Best Practices in Electrical Utility Integrated Resource Planning _RAPSynapse_Wilson_Biewald_BestPracticesinIRP_2013_JUN_.pdf

 Burns and McDonnell, LUS’ Integrated Resource Plan, 2011.

 Lafayette City-Parish Consolidated Government, Home Rule Charter, 1992.  

 Review of several other municipally-owned utilities’ public process for their integrated resource plans (Tuscon, Arizona; Colorado City, Colorado; Austin, Texas; New Orleans, Louisiana; Lincoln, Nebraska; Pasadena, California.)

2015-2016 Proposed Operating and Capital Budget, Office of Finance & Management, July 23, 2015.

Rick Jervis, U.S. Today, “Louisiana city blazes high speed web trail, 2-1-12, http://usatoday30.usatoday.com/news/nation/story/2012-02-01/broadband-telecom-lafayette/52920278/1

Angela Simoneaux, “To Boldly Go,” The Independent, July 1, 2015.

Review and edit for accuracy with Mr. Terry Huval, , P.E., Director of Lafayette Utilities System, September, 2015

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