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City: WG&L lawsuit could create ‘strain’ on taxpayers

By   /   December 17, 2010  /   Comments

By Kevin Hogencamp

Even if a grass-roots initiative to force the Albany City Commission to quit spending tens of millions of dollars of utility customers’ money has legal merit, there’s no irreparable harm being placed on the controversial scheme’s victims – the taxpayers, three city hall attorneys argued this week in federal court.

City Attorney Nathan Davis, Assistant City Attorney Jenise Smith, and Water, Gas & Light Commission Attorney Sam Engram have asked U.S. District Court Judge Louis Sands to reject a request for a temporary restraining order preventing the city from continuing to spend part of an $88 million windfall over 10 years.

The attorneys’ request was made at a Temporary Restraining Order hearing Wednesday and in subsequent memorandums filed with the court. Albany residents Ardessa Floyd, Dianne Carr and P.J.’s Decorative Fabrics filed the class-action grassroots complaint and subsequently asked for a temporary order preventing the city from continuing to spend WG&L customers’ funds until a final decision is rendered. Sands has not yet ruled on the restraining order matter.

The windfall and the City Commission’s tapping into the reserve accounts have enabled the city to significantly increase spending in recent years, as it has enlarged the size of municipal government and boosted salaries, especially those of executive-level staffers and commission members. If the city is forced to quit taking utility customers’ money and return to pre-2009 spending levels, the three attorneys argue, a financial crisis would occur.

“Plaintiffs have failed to show irreparable harm as to defendant City of Albany’s use of monies associated with its utility department,” the city and WG&L attorneys said. “Furthermore, the preliminary injunction sought by plaintiffs would cause defendant City of Albany severe harm given that the money at issue is essential to defendant City of Albany’s daily operations and that the injunction would require the City of Albany to seek other sources of revenue, which would ultimately create a strain on taxpayers of the City of Albany …”

“Even if the movant establishes a substantial likelihood of success on the merits, his failure to establish irreparable injury would, standing alone, make preliminary injunctive relief improper …” the attorneys wrote. “The asserted irreparable injury must be neither remove nor speculative, but actual and imminent … The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation weighs heavily against a claim of irreparable harm.”

At the City Commission’s request, class-action initiative to force the commission to halt its aggressive spending of utility customers’ money became a federal case last week with the transfer of the class-action suit from Dougherty Superior Court to U.S. District Court at the city’s request.

WG&L is receiving $88 million from 2009 to 2018 in distributions from a trust fund administered by the Municipal Electric Association of Georgia (MEAG). According to an agreement between WG&L and MEAG, the funds may be used only to benefit WG&L electric ratepayers.  The plaintiffs claim the City Commission’s decision to increase public expenditures by using millions of dollars of WG&L funds is illegal because the money belongs to utility customers. If the city no longer is allowed to keep spending the WG&L windfall, and particularly if it has to refund what it has spent over the past two years, the city would have to further deplete its reserves and may have to resort to layoffs and ultimately even bankruptcy to balance the budget.

In March 2009, the City Commission “unlawfully amended the city charter in an attempt to use such funds for its benefit, as opposed for the benefit of the ratepayers,” the plaintiffs say in the lawsuit, filed in Dougherty County Superior Court by Albany attorneys Robert Margeson and Patrick Flynn. “This complaint arises out of defendants’ unlawful use of funds intended to benefit citizens of Albany who purchase electricity from the Water, Gas and Light Commission (WG&L) of the City of Albany.”

The plaintiffs are asking the court to require the City Commission to obey the law and to pay fees paid to the plaintiffs’ attorney who are working on taxpayers’ behalf in an effort to require the City Commission to comply with the law.

In the late 1990s, electric utility experts concluded that the electric utility industry ultimately would be deregulated and opened to compensation. As a result, in 1999, MEAG member cities, including the City of Albany, created the Municipal Competitive Trust to prepare the cities for deregulation. The trust was funded over the next 10 years by ratepayers in MEAG-member cities, including the City of Albany.

Deregulation did not occur and in 2009, WG&L began receiving payments from MEAG that will amount to $88 million over 10 years.

Albany Mayor Willie Adams, who chairs the Water, Gas & Light Commission, spearheaded the initiative to use the MEAG windfall for city operations. In 2008, the Albany Journal exposed that the City Commission met secretly and illegally to mastermind the abolishment of the WG&L Authority, the governing board whose members are appointed by the City Commission.

Unable to carry through with that plan, the City Commission decided in 2009 that it will use one-third of the MEAG windfall to help fund its operations, a decision that has enabled the city to increase spending during the past two fiscal years. Another one-third of the money was put in the fund for the City Commission for its discretionary use, and the other third was allowed to be used legally by the WG&L Commission.

Davis has said he agrees that the funds belong to WG&L’s customers, but that it would be too complicated to return the funds to them.

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  • Published: 1718 days ago on December 17, 2010
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  • Last Modified: December 19, 2010 @ 8:02 pm
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  1. Truth B Known says:

    You know it really tells you alot if you ll just look at our Officals.They have to get the money from somewhere to pay for there screw ups.But this is the wrong way.You dont take from people who have put in so much,and you have done nothing but spend,spend.This is not your money.It is the taxpayers.But that does not matter to any of you Officals.By the way,did Nathan bring his gun and knife to this robbery?And the Mayor should have no say so.That is like selling out peter to pay paul.And also a conflict of intrest.I know there is atleast one judge that uses that conflict of intrest thingie,and so it should go for the Mayor also.I know it is not in there Oaths they take.But since when do they listen to us,the People?And would that not be like inbelzelment.(cant spell but you get the jest of it)And last but not least. When have you ever known the Commission to follow the law?I reall hope 2011 will make some changes in our leadership,if that what you can call what we have now.

  2. khogencamp says:

    You nailed it, BillS. Apparently always will be, as we get who we elect.

  3. BillS says:

    City hall is a strain on the taxpayers.

About the author

Owner / Editor / Writer

Tom Knighton is the publisher of The Albany Journal. In November, 2011, he became the first blogger to take over a newspaper anywhere in the world. In August of 2012, he made the difficult decision to take the Journal out of print circulation and become an online news agency, a first for the Albany area.

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