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Judge could rule today on WG&L class-action suit

By   /   December 8, 2010  /   Comments

By Kevin Hogencamp

At the Albany City Commission’s request, a grass-roots initiative to force the commission to quit spending tens of millions in utility customers’ money over 10 years – a decision that could force the city into a fiscal frenzy — is now a federal case.

The transfer of the class-action suit from Dougherty Superior Court to U.S. District Court could result in the matter not being permanently resolved for years. But a judge will hear an emergency request today in Valdosta by plaintiffs Ardessa Floyd, Dianne Carr and P.J.’s Decorative Fabrics, for a temporary restraining order preventing the city from continuing to spend Albany Water, Gas & Light Commission customers’ funds until a final decision is rendered. Judge Louis Sands will conduct the hearing.

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.

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

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  • Published: 1731 days ago on December 8, 2010
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  • Last Modified: December 8, 2010 @ 6:38 am
  • Filed Under: Government
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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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