If your company owns another company that has a $30 million surplus, no one would question you wanting to know as much about the whole thing as possible. And if people in the know say the cash cow is maybe fatter than it needs to be, you'd be remiss if you didn't take a good, long look.
That's the situation the Traverse City Commission faces. Traverse City Light & Power, the city's wholly-owned electric utility, is sitting on a $30 million surplus even as some people question the utility's staffing levels and the amount of money it kicks in to city projects every year.
So what to do? Traverse City Mayor Michael Estes has asked the commission to order a financial study, including a review of staffing levels, which seems eminently sensible. The commission has yet to decide the issue, but putting the whole thing out on the table for all to see would be good public policy.
Light & Power enjoys a unique spot in city government. A few decades ago the city decided to make it a stand-alone entity with its own budget, its own board and its own administration. The aim was to buffer the utility from the day-to-day politics of the city commission and allow the Light & Power board to make policy based on what was best for the utility and ratepayers, not on how the political winds were blowing. The city commission names the members of the Light & Power board, and its annual budget is subject to commission approval.
The system has been a mixed blessing. Light & Power has regularly paid to the city the charter-mandated 5 percent of its gross revenue, which is now about $1.6 million. That money has helped the city weather tough economic times and continued cuts in state revenue sharing funds.
But Light & Power's independence hasn't always satisfied the commission or some city residents. When the utility built the wind turbine west of town, it was criticized because the turbine could never pay for itself. In 2010, Light & Power pushed a proposal to build a $30 million wood-fired power plant near Cherry Capital Airport, a plan that finally collapsed under the weight of much local opposition.
During that drive, Light & Power came under fire for some public relations and marketing hires. Adding new public employees in the midst of the state's economic meltdown was tone deaf, at best; making ratepayers pay someone to sell them a proposal that had already run into stiff opposition was unacceptable.
Overstaffing concerns haven't gone away. Commissioner Barbara Budros, who serves on the Light & Power board, said she'd like to see a "management audit" that examines overhead costs and answers questions about utility staffing and "if the job descriptions make sense."
There is also the fact that Light & Power still has a habit of making policy decisions in a vacuum. The utility went back and forth on a plan to bury power lines along M-72 and Bay Street, including removing a huge power pole it put up just a few years ago. The aim — to reduce power line clutter and streamline service — is great. But the utility must also keep its owners in the know.
Estes, who served on the Light & Power board until he was elected last fall, has proposed other changes: that Light & Power increase its contribution to the city budget by $1 million; and that it freeze city residential rates.
All that is yet to be decided, but there's enough on the table for an "audit" and public conversation about how much of the $30 million surplus — about a third of which is reserved for a "catastrophic event" — can or should be touched by the city.
Let the shareholders — city taxpayers — in on the conversation.
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