HL&P Commercial Rates

While HL&P raised residential rates across the board by 6% (including the monthly base charge), the commercial rates are presented as a 6% in each "class."
However, the monthly bills show a large variety of results.  The Cost of Study analysis reports small commercial (about 1,000 accounts) example changes of -26% to -7% (Lower rates).  For medium (120), increases of 7 to 12%; and Large Commercial (21) all at 7%, or so.   They failed to seriously consider suggestions from the public to correct the inequities.

However here are a few examples of specific accounts provided by HL&P.  NO large Commercial examples were provided (to protect the identity of the 21 users)

					OLD RATES					NEW RATES
	Monthly Usage kWH	Average demand kW	Peak demand kW	Monthly Base Charge	Energy - first 500 kWh	Energy -next 500 kWh	Energy - all addditional kWh	Total	Base Charge	Energy - first 10,000 kWh	Energy - all add'l kWh	Demand Charge per kW	Total	% change vs. current rate
med	840	1.17	64	$6.50	$74.60	$52.25	$(12.78)	$120.57	$15.20	$50.74		$640.00	$705.94	486%
med	960	1.33	49	$6.50	$74.60	$52.25	$(3.20)	$130.15	$15.20	$57.98		$490.00	$563.18	333%
small	454	0.63	1.15	$6.50	$74.60	$(4.81)	$(43.63)	$32.66	$8.00	$35.41		$10.24	$53.65	64%
small	433	0.60	4.62	$6.50	$74.60	$(7.00)	$(45.30)	$28.80	$8.00	$33.77		$41.12	$82.89	188%
small	1,120	1.56	3	$6.50	$74.60	$52.25	$9.59	$142.94	$8.00	$78.00	$5.52	$26.70	$118.22	-17%
small	974	1.35	4.95	$6.50	$74.60	$49.53	$(2.08)	$128.55	$8.00	$75.97		$44.06	$128.03	0%
small	1,260	1.75	3.96	$6.50	$74.60	$52.25	$20.77	$154.12	$8.00	$78.00	$11.96	$35.24	$133.20	-14%
small	2,923	4.06	2.27	$6.50	$74.60	$52.25	$153.65	$287.00	$8.00	$78.00	$88.46	$20.20	$194.66	-32%

Heber Light Proposed Rate Increase

Update: The rate increase WAS approved at a postponed  August meeting on 2 Sept.  As a result of some data supplied it appears some commercial users may get increases of up to 400%, while others may get a reduction.  All residential users will get a 6% increase.   The rate increase will occur in  the next billing cycle.

A word to the wise, it may be very appropriate to carefully check your bills.  One user recently found his residential account had been billed in error for several YEARS
*************        *******************
Heber Power Board Members and Heber City Council

As this epistle is too detailed for presentation at the Public Hearing, I'm sending it to the decision makers (Board) in the hope that you will take it under consideration in your decision on the rate increase.

My two major concerns are raising residential rates and the possible reduction in larger commercial, that may not be offset by necessary Peak Power purchases. A minor concern is also the lack of time based rates and its affect on peak power.

At last year's Rate Increase hearing, Mr Pender talked about the concept of “Cost of Causation.” “means that those who cause the utility to incur its costs should be responsible for payment of such costs.” pg 4, COS Study

The imposition, or continuation, of a service charge further hurts those least able to pay bills – the low residential user. But that IS being addressed somewhat, relatively, with the new proposed rates.Removing it or reducing it, with a per kwhr adjustment, might be a better alternative to an increase.

The Board decision to increase impact fees from 40% to 60% was a step in the right direction, in my opinion. I believe last year 75% was recommended.

That does mean, however, that 40% (rather than 60%) of the 'caused' cost burden must be still be borne by the remaining current ratepayers. While this was a good decision, it appears that this proposed rate increase may further the inequitable burden on the residential ratepayer, rather than those who have benefited from the past lower impact fees.

Last year's rate increase presentation used 'examples' showing a standard 4.5% for all users. A closer look showed that not to be true. Smaller commercial faced a larger relative burden that larger commercial. That appears to have been corrected in this year's proposal. All small commercial seems to be getting a rate REDUCTION. This is probably a positive step, for the existing 1185 small businesses, who may have been beneficiaries of the lower impact fees of the past.

It appears that an original 4.5% residential increase has been increased to 6% for all nearly 10,000 users. This does seem strange to me as one of the avowed reasons for municipal (user owned) utilities is lower rates for the 'owners' (municipalities and their residents and taxpayers). The supposed advantage of lower impact fees was encouragement for

$238,005.54 HLP GM Severance

Recently the General Manager of Heber Power retired. Thanks to a GRAMA request by a Heber 

resident, ratepayers are now able to read the pertinent "Early Retirement Severance Agreement."   

To entice the GM to leave earlier than his requested Mar 2015 departure, he was able to cash in 

unused vacation (11.5 days or $8,286),  sick leave (57.38 days or $41,339), which appears to be 

normal HLP policy.  

Note that HLP gave 8 sick days per year, for many years until it was 'returned' to 12 days last 

year, for the 36 employees.  There is now nearly $1 Million in UNFUNDED accrued benefits.

That total accrual of $49,623.06 was accumulated in his 7-8 years of employment with HLP.

He was also awarded $150,000 in "severance" pay, $30,000 donation to his retirement fund 

AND $4,780.08 for in-lieu-of health insurance payment.   Provisions were made to allow him to 

"use" up his 551 hrs of "2014 vacation and sick leave allotment to extend his retirement date 

(for retirement pay purposes) until November - thereby increasing his retirement pay by over 3%.

 
 


   

   

   
rate
   
amount
  

   
Vacation, sick hours
   
551
   
$90.06
   
$49,623.06
  

   
Paid Holidays
   
5
   
$90.06
   
$3,602.40
  

   
In-lieu of insurance
   

   
$1,593.36
   
$4,780.08
  

   
Consultant services
   

   

   
$0.00
  

   
Severance
   

   

   
$150,000.00
  

   
401K
   

   

   
$30,000.00
  

   

   

   
TOTAL
   
$238,005.54
  


As there are 5 paid holidays during that extra period before officially 

retiring, he will be paid an additional $3,602.40 for not working on those 

days, while on vacation.

What will Mr. Stewart, the now retired HLP GM, be required to do? Nothing!  

Mayor Releases HL&P Board Members

Yesterday in a brief letter, Heber Mayor Alan McDonald dismissed two members from the Heber Power Board of Directors.

Why?   Apparently because he COULD!  

Here's the letter dated 21 May 2014 sent to Heber City Council members Heidi Franco and Kelleen Potter

No explanation, no 'thanks' for your service, just you're gone!  The two board members were appointed TO the Board only a few months ago.

After the three new Council members took their elected positions in January.  The meeting of 16 Jan began some of the controversy of HL&P Board appointments: (incumbent members felt the need to remain on the board, Mayor McDonald disagreed)    "Mayor McDonald indicated he spoke with Blaine Stewart who felt new members would adjust fine. Also, the Heber Light and Power Board bylaws indicated that the Mayor didn’t need the consent of the Council in order to assign other Council members to the board. Council Member Rowland asked to seek clarification on that section of the bylaws. Mayor McDonald read from the bylaws. Mark Smedley stated that language would hinge on

No HL&P Rate Increase - (for now)

In a split decision, the Board of Directors for Heber Power decided NOT to approve the proposed 4.5% increase in electricity rates.

Starting the discussion leading to the 3-3 defeat of the motion, Chair Alan McDonald, Mayor of Heber, made an impassioned plea to crowded board room for passage as necessary to continued operation of the public utility.  He also made pointed comments towards his two appointees for releasing information for 'political' purpose.  He had been very quiet for most of the meeting up to that point.   A substantial number of ratepayers were in attendance.

Unsure of his meaning, Heidi Franco and Kelleen Potter, of the Heber City Council, replied they were simply looking out for the ratepayers, the ultimate owners of the utility.  Both indicated they have been frustrated in their attempts to gather financial and operating information, they felt was necessary to fulfill their duties.

They have called for managerial and operating changes to rectify some recent problems with fraud and bad publicity which had lowered the company's credit rating and had led to distrust in management capabilities.

 Earlier in the meeting, they had questioned the issuance of bonus payments to management and excessive pay and benefits and called for what they felt were needed corrections.

Midway Mayor, Colleen Bonner, called for passage of the increase and emphasized they were a new board and were work hard to make changes and patience while they worked though the problems.  County Council Chair, Jay Price agreed with the need for an increase.

Bob Kowallis, Charleston Mayor, became the swing vote decision maker, by declaring, 'the proof is in the pudding,' and he needed to see more action before approving any more revenue.   He further called for a budget and expense review in the near future.  That idea was accepted to be discussed in the next meeting.

The mechanics of the propose rated increase, which has raised some questions was not discussed.   Mr McDonald stated they had the required Public Hearing a month ago and everyone had enough time to review it.   The WTPA (Wasatch Taxpayers) held a meeting on Tuesday to discuss the rate increase, more information from that meeting here

An earlier financial report by the new CFO, Bart Miller, indicated that costs were rising and power cost were out of their ability to control as were current wages and benefits.   In answer to questions, he stated that, yes, bonuses had been or were being paid.  He said they were doing their best to control costs.   Kowallis said, it doesn't take to many 10's to make 100's and there was room for reductions.

The first hour or so of the meeting was spent on bond explanations, with a lot of questions, mainly from Franco on interest rates, debt philosophy and bond costs.  The bond expert from GKB explained that the decisions were made by the board, and a budget 'cap' on payments had been made of $700K per year requiring longer terms for the debt but judicious management and save a lot of money, despite costs and the longer terms.  

That conclusion seemed to be questioned by some and opinions were expressed that debt should be paid off as soon as possible.  The bond team responded that might be difficult because of the characteristics of municipal bonds in general and the specific particulars of the bonds themselves,

A discussion was also held on the effects of the lower bond rating, ranging from 'it's not really that important' to 'it will raise interest rates for future loans.'   Later in the meeting it was mentioned that more bonding may be required in the near future,

Impact Fees Could Raise Hundreds of Thousands

As Heber Light and Power considers increasing rates on the smaller rate payers, they should FIRST consider raising Impact Fees.

Hired consultant ($20K ?) Pender's Cost of Service study report explained that part of any rate determination was to consider 'Cost Causation.'  Impact fees are designed to do exactly that - recover some of the the cost associated with new development, either commercial or residential.

The current Impact Fee rate collected by HL&P  is reportedly 41% of  the maximum allowable.  A simple raise to 60% would garner $230K, 100% would have yielded $700K.  These rates have been in effect since at least 2006, during some of the largest growth period.  This could be considered the cause of the current shortfall AND debt incurred,

If the cost of new infrastructure is not collected from the developments which are causing it, the remaining costs must be borne by current ratepayers.

Is that 'fair and equitable'? - another determining factor for rate calculation.

"For (HL&P) infrastructure projects beginning in 2012 through 2015 amounting to $6,959,000, only $3,542,000 is eligible for impact fees.  Of this eligible figure only about 41% is being recovered in impact fees. This is the same percent impact fee recovery for new businesses, subdivisions etc."

That means only $1.45M will be collected, increasing to 60% would raise $700K, to 100% = $2Million over 3 year. Why should current rate payers be subsidizing new developments????

A brief Impact Fee overview for the first five months of 2014 can be seen here.

HLP Rate Increase, Part II

The Public Hearing was held last week, a few questions were answered by HL& P management.  The Fact Sheet presented by two board members is available here, some meeting videos can be seen here

HL & P DID post some salary and benefit info on their website, however it's projected 2014 figures, rather than actual 2013 which for many individuals was much higher.   The figures are also only Gross pay and benefits.  For a clearer presentation of the benefit package see a more complete view here showing how generous the benefit package really is.

In that hearing on the rate increase, the consultant listed some criteria for determination of the rate.   One was to be "fair and equitable," another was "cost causation."

The proposed increase was portrayed as a straight 4.5% increase for all rate payers.  In fact, it would be - for residential customers ONLY.   For small commercial users, that is only true for the example given (3600 Kwh/month) for the "average" small commercial.  Those using LESS power would get a HIGHER percent rate increase, all using MORE get a SMALLER percent increase.  

Similarly, for this "average" LARGE commercial user it may also be true for the given parameters, but that it somewhat complicated by understanding, and determining, their "peak power" demand.

However, it appears that for the eleven large customers involved there, could and probably will, be SAVINGS of perhaps $50,000 per year.   Is it "fair and equitable" for a 4.5% residential increase and $50K decrease for large commercial?

Then, of course, the last rate increase (a service charge, imposed three years ago) imposed a larger relative burden on the LOW usage customers.    That regressive fee is ALSO proposed to be increase, in addition to imposing one one the small commercial user.

Finally, the rate consultant suggested that rates should be used to decrease peak power and to cause use in the off-peak hours.   How will lower rates for MORE usage, decrease the use or switching to lower use time periods.   HL&P spent over a million dollars on new 'smart meters' which apparently have not yet been 'trained' to offer the supposed benefits.    Time of service use charges might effect tim of usage,

The "Fact Sheet" indicated that only 41% of possible impact fees are being charged.  The impact fee is the cost to Heber Power CAUSED by NEW service.   If less than half of that cost, which is directly attributable to new construction, that means the remainder of the cost is being borne by the current rate payers! 

Increasing the impact fees would garner 100's of thousands of revenue, thus minimizing, or eliminating, the need for a rate increase.

I won't even mention the large amounts of money lost in the credit card fraud and investigation and resultant bonuses, nor will I comment on the faux health care pay fiasco again, but I would mention this comment from HLP management in the recent audit:

3. "We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud."

See all the new proposed rates here

HL&P 4.5% Rate Increase

Heber Light & Power is proposing a RATE INCREASE for all users.    (Well, it may be for all users, except the large ones.)  
PUBLIC HEARING   May 29

Apparently , this increase was approved in the budget by the previous Board (You know the one with the faux PAY increase, which they were required to return.)

While analyzing the proposed rate structure a few questions arise:

Why are rates for residential going up by 4.5%, while commercial seems to be less?

In the rate examples given, residential rates are a constant 4.5%, 'small' commercial increases 4.5%, but that percentage decreases with increases usage above the 3,600 Kwh example.   The 'large' commercial' example at 4.3% increase also appears to decease with increase usage.   In fact, in the given "large" commercial example showed a peak of 250 kW vice the 370 kW used the monthly rate

I'm unsure of the rate increase goals (except for revenue increase) of this complex rate structure are (other than the general "shift demand, green energy supply, economic development"), nor am I certain how, when or if the proposed changes will accomplish those goals.

It appears the examples given might have been chosen to demonstrate an 'equal' % increase, but usage will modify that.  The rate increase appears to benefit increased usage.

(HL & P  Interactive rate computer  This spreadsheet should allow you to create your own suggested rate structure and SEE the results.)

Columns K, L and M of the rate spreadsheet, compiled from the proposed rates, offer a simple two tiered systems which creates a similar proposed rate schedule and a third tier could be added to further reduce the high end users' costs, if needed for 'economic development' and accomplishing your goals.   (Various cells can be modified to determine the results.  As the formulas achieved the same results as the HLP presentation, I assume they are correct.).

It appears the intent is to lower modify the peak DEMAND, but not necessarily the usage.  There could be a HUGE disparity between a 249kW demand and a 251kW (small vs large) bill at marginal rates of $0.0805 vs $0.037 per kWh, thus benefiting a larger peak demand.

It seems like the small households get the most relative dollar hurt - mainly because of the Service charge. 

Rather than raising that service charge by 4.5%, lowering it to, say $5, would help out the 'average' resident by 10 to 20%, -  AND would only decrease HLP revenues by $70K (assuming 10K accounts)

Last comment/question: do hookup, or impact, fees for new connections cover the actually increased cost or is new growth being subsidized by current residents?

One response: "For infrastructure projects beginning in 2012 through 2015 amounting to $6,959,000, only $3,542,000 is eligible for impact fees.  Of this eligible figure only about 41% is being recovered in impact fees This is the same percent impact fee recovery for new businesses, subdivisions etc.  We would never charge %100 because at least 25% of necessary upgrades for these new builds benefits the whole system."
 
If HLP had NOT spent $200 (?) for the new "super" meters ($2,000,000), it may not have needed a rate increase.   Are they really paying for themselves?  If so, how?

My second guess is that there are areas are continuing costs that might be reduced.   Has the money from the loans and credit cards misuse been recovered? 

Reports are circulating that some higher echelon employees receive high six-figure salaries with bonus and 'comfortable' benefit packages.

If HLP had NOT spent $200 each (?) for the new "smart" meters ($2,000,000?), it may not have needed a rate increase.  Have they actually proven their value?  If so, how?

Have the dividends to the cities increased for 2014?   (apparently not = $300K)

Who is actually paying for street lights?   Is the $73,819 'donated' by HLP?  For what lights? What determine who pays the other $20K? (see *below)   Do 'rural' developments get donated light electricity?   If so, why not let the HOA pay?

 *WHEREAS the Heber Light & Power Company (“the Company”) practice is not to
charge municipalities or the county for the energy charges for street lights (“energy charges for
street lights”).
 
 WHEREAS, to implement this practice, the Company records the estimated energy
charges for street lights but annually writes-off these charges.
 
 NOW THEREFORE, BE IT RESOLVED BY BOARD OF DIRECTORS OF THE
HEBER LIGHT & POWER COMPANY AS FOLLOWS:
 
 The Company hereby writes-off the 2013 energy charges for street lights in the amount of
$66,963.

 I appreciate slide 29 ("? ? ?") pg 54

In short, my suggestions are reduce expenses, eliminate the service charges, implement a simpler rate structure and ensure that growth is covering its costs.   All these proposals for no extra cost.

PUBLIC HEARING   May 29 6:00 PM,   Heber City Council Room      Click on the link for MORE info.

Has HL & P raised Board Pay to Cover Fake Insurance

Heber City, Wasatch County:    On July 16, the Utah Attorney General's Civic Review Committee issued an opinion and directive that the fake retroactive Board pay taken by the directors must be returned or face possible "formal enforcement actions."

Today, 652 days after approving this action, a year and half after terminating it and a month and a half since the AG letter, it still has not been effectively determine whether compliance in returning the tens of thousands of dollars has been completed.  In fact, other than a response letter from HL&P declaring the money WILL be returned, it can not even be determined if any action has been taken to accomplish this.

However, in the July warrant list (pg 6 payments) for HL&P this item is found:

This INDICATES is that HLP paid Heber City  $950.64 for the  two councilmen on the Board ($475.32/month/man) for "JULY BOARD STIPEND" to share with all councilmen per their internal city agreement.    HL&P then paid an additional  $1,901.28 for  "BOARD STIPEND JULY & EXTR"   as July Bonus pay (perhaps for all those extra meetings?)

It may be coincidental that these "extra" payments were listed as paid two weeks AFTER the AG letter.  As the warrants do not delineate individual payments to the other board members, it can only be assumed that similar TRIPLE payments were made to the entire Board.

At this time it is unknown if similar payments have been made in the past or are planned for the future.  If repayments of fake pay of, say, $10,000 were required, an extra $1,000 per month were certainly soften the blow.

In April, a smaller bonus was also given (only double pay)
601000 SALARIES ADMINISTRATIVE
601000 480 HEBER CITY CORPORATION BOARD STIPEND APR 13 EXTR 04/13 04/01/2013 950.64
601000 480 HEBER CITY CORPORATION BOARD STIPEND APR 13 04/13A 04/25/2013 950.64
Total 601000 SALARIES ADMINISTRATIVE: 1,901.28

Who knows how many more payments have been (will be) made. 

(for more history on this issue click on "H L & P" in the column on the left or here for a slightly different list.)

HL & P Board agrees to RETURN money

1 August 2013, 624 days after approving a retroactive in-lieu-of "health insurance" payment scam, the final few elected officials on the Heber Light and Power Board have reluctantly agreed to return their ill-gotten gains, totaling about $40,000 of taxpayer or ratepayer money.   (BTW, the increase was 362% - not 262% as the faux pay was ADDED to their ~$500 monthly directors' pay) (CRC = Civil Review Committee in the Utah Attorney General's Office)

The full 11 page report from the Utah Attorney General can be found here.     Here's an excerpt from the response from Heber Light:     Full letter found here

HL&P Board - AG says Return the Money at Once

As a result of follow-up to the State Auditor's Office report on the citizens' filed complaint, the AG's office has issued a letter on the faux health pay asking for HL&P Board members  to "return the funds at once."      A more detailed report should be out soon.
(see HL& P link to left for more history)

Open Letter to HLP Faux Pay Recipients

Dear Mayor Philips (and Council),

I apologize that I forgot our anniversary on February 22. It has now been over a year since you personally promised me, and other Heber Valley residents, in a video taped HL & P meeting to refund your February in-lieu-of faux “health care” benefits from Heber Light and Power as a pittance of unacknowledged remorse. (primarily for getting caught)

It was recently discovered that, in addition to refusing to return the ratepayers money you received for a few months in 2011 and 12 AND retroactively for six months, you also did not fulfill your vow to return the February $1687 “insurance” payment. Instead you merely did not accept your regular monthly pay of $596, thereby pocketing an extra $1091 for you monthly 90 minute meetings, and 'direction'.

At this point, I would strongly suggest one of three options:

1. With your next Mayor's Corner, offer an apology with a copy of the return check for the $12,900 in faux pay. ('If I knew people would be so upset, we wouldn't have done.' as you said on KUTV, is not an apology.)
2. Donate $17,900 to the Half million dollar Veterans Memorial fund as a return of funds and an appropriate penalty - that might give you a tax deduction.  
3. Join us on the Impact program to offer an apology and explanation.  If you bring a check with you, we would be happy to return the money to Heber Light for you.

I look forward to your positive response. 

For Mayor Tatton, a check for $11,600 and an apology would also be appropriate. or a donation of $16,600 to the Memorial Hill Restoration fund.  It was good to see you did forgo four months of regular pay to offset your Feb 2012 faux pay, better fulfilling Mayor Philips' vow.  You, too, are cordially invited to join us on the radio, you can even come at the same time as your cohort, if you like.

PS to the City Council(s): As two of the members of the current Council have return these questionable funds, two did not receive and one, Robert Patterson, has not, I call on you to collectively pass a resolution of censure for these actions and call for an immediate return of the ill-gotten gains.   Former Councilman Nile Horner's lack of repayment should not be forgotten.

Your fellow Heber citizens may be surprised to learn you have not already taken action to do so. As this is an election year, I would suggest not taking voter apathy as acquiescence or approval.

If a petition requesting such a censure request is needed, that might be arranged. http://www.ipetitions.com/petition/heberlight/

Petition by iPetitions

SAO Report on HLP Board Health Benefits

The Utah State Auditor has reported on the citizens' complaint about the retroactive health benefits.  (highlights added)

December 17, 2012

Board of Directors

Heber Light & Power Co.

31 South 100 West

Heber City, Utah 84032

Dear Board of Directors:

We appreciate the response from Mr. Joseph Dunbeck to our inquiry regarding the allegations at Heber Light & Power. Specifically, it is alleged that Board members: a) planned, prepared, instituted, and accepted compensation for themselves in lieu of a health insurance benefit, and b) received stipends for attendance of meetings, both in state and out of state.

We have determined the following:

1. Heber Light & Power is subject to the laws regulating its government members.

The Attorney General’s Office considered in its Informal Opinion No. 87-31 what laws apply to an Interlocal Cooperation Act entity, specifically, whether the requirements of the Uniform Fiscal Procedures Act for Utah Cities applied to the Tri-City Golf Course Committee, an Entity created by agreement among American Fork City, Pleasant Grove City, and Lehi City.

The Attorney General’s Informal Opinion considered first the Utah Supreme Court case, CP National Corporation v. Pubic Service Commission, 638 P.2d 519 (1981), which addressed not the “negative” application of the laws, i.e., what laws apply to regulate an interlocal entity, but the “positive” application, i.e., what powers an interlocal entity has. The Court held that “the intent of the act [Interlocal Cooperation Act] appears to be to allow municipalities collectively to exercise powers which they already possess individually.” Id. at 521.

Based on the above court case, the Attorney General’s Informal Opinion indicated that the Interlocal Cooperation Act similarly applies to the “negative” or regulatory laws to which an interlocal entity is subject, stating that “[i]t is clear…that an entity created under the Inter-local Co-Operation Act cannot exercise powers in excess of those possessed by its creators….[C]ities may not grant powers to an interlocal agency which they do not possess themselves individually. It necessarily follows that cities have no power or authority to act in contravention to the requirements of the Fiscal Procedures Act and they cannot endow their interlocal progeny with such power or authority.” Opinion at p. 2.

Given this authority, the State Auditor’s Office has always held that interlocal agreements should be subject to the same regulatory environment as the creating entities. However, it is one thing to say laws applying to a municipality shall also apply to the interlocal entity, and another to actually apply them. In attempting to apply municipal statutes related to employee benefits, including compensation, we encounter some legal quandaries, addressed below.

2. We cannot answer the question whether the compensation in lieu of health benefits violates the Municipal Code, and suggest seeking a legal opinion from the appropriate authority.

In regards to whether a municipal officer, regulated by the provisions of Utah Code 10-3-818 with regard to salary, can receive any compensation from the interlocal entity, or whether that result in an inappropriate increase in salary under 10-3-818, or an inappropriate economic privilege under Utah Code 10-3-1304, note the following:

Utah Code 10-3-818 provides specifically:

(1) The elective and statutory officers of municipalities shall receive such compensation for their services as the governing body may fix by ordinance adopting compensation or compensation schedules enacted after public hearing.

(2) Upon its own motion the governing body may review or consider the compensation of any officer or officers of the municipality…for the purpose of determining whether or not it should be adopted, changed, or amended. In the event that the governing body decides that the compensation or compensation schedules should be adopted, changed, or amended, it shall set a time and place for a public hearing at which all interested persons shall be given an opportunity to be heard.

And, the Municipal Officers’ and Employees’ Ethics Act (Utah Code 10-3-1304) provides that:

(2) It is an offense for an elected or appointed officer…to:

….

(b) Use or attempt to use the officer’s or employee’s official position to:

(i) further substantially the officer’s or employee’s personal economic interest; or

(ii) secure special privileges for the officer or employee or for others….

In conjunction with these two sections are the instructions provided in the Interlocal Cooperation Act (Utah Code 11-13-222) that:

(1) Each officer and employee performing services for two or more public agencies under an agreement under this chapter shall be considered to be:

(a) an officer or employee of the public agency employing the officer or employee’s services even though the officer or employee performs those functions outside of the territorial limits of any one of the contracting public agencies;

….

(3) All of the privileges, immunities from liability, exemptions from laws, ordinances, and rules, pensions and relief, disability, workers compensation, and other benefits that apply to an officer, agent, or employee of a public agency apply to the same degree and extent when the officer, agent, or employee performs functions or duties under the agreement outside the territorial limits of that public agency.

Utah Code 11-13-222 of the Interlocal Cooperation Act seems to support the Attorney General’s Informal Opinion specifically with reference to matters like compensation of officers and employees, underscoring the fact that the employing municipality’s regulations are controlling.

The question of interpretation remains. We know, of course, that the officers already receive compensation, and the question being asked is simply whether the additional compensation is appropriate. That is a legal question that we do not have the authority to answer.

3. At the very least, a hearing should have been held to allow public input as required by the Municipal Code.

If it is determined that a municipal officer may receive compensation as an officer of an interlocal entity, it seems clear to us that the provisions of Utah Code 10-3-818 requiring a municipality to hold a public hearing would apply to the interlocal entity. Based on Mr. Dunbeck’s response, it appears that a public hearing was not held regarding compensation of board members until two months after the board approved the budget which included the increased compensation.

In conclusion, we believe that both the Attorney General’s Informal Opinion and Utah Code 11-13-222 make Utah Code 10-3-818 and 10-3-1404 applicable to Heber Light & Power. However, we recommend that you contact the Attorney General’s Office and/or seek clarification of the laws through legislation.

We can say that to the extent it is determined appropriate for municipal officers/board members to receive compensation for their services to Heber Light & Power, a public hearing should have been held to vet the decision by the board to participate in the entity’s health insurance plan. Because it was not, the policy should be voided until the appropriate procedures have been followed.

We appreciate the courtesy and assistance extended to us by the personnel of Heber Light & Power during the course of the investigation. If you have any questions, please contact Ryan Roberts, Audit Supervisor, at (801) 538-1721.

Sincerely,

Auston G. Johnson, CPA

Utah State Auditor

SAO Audit Requested

As there has been little progress in recovering the remainder of the excessive pay received by the HL & P Board (see posts below) an audit request has been submitted to the State Auditor's Office

"The "State Auditor Hotline" provides an avenue for citizens, including government employees, to report suspected financial improprieties or violations of laws or regulations by state and local governments; waste of public funds or resources; and/or constructive suggestions for improving state and local governments regarding financial-related matters, internal control, or compliance. The Hotline coordinates the efforts of existing resources, rather than duplicating efforts of authority already in place."

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We residents of Wasatch County and Heber Light and Power ratepayers hereby “report suspected financial improprieties or violations of laws or regulations by state and local governments; waste of public funds” and request an audit of Heber Light and Power and/or its owners, Heber City, Midway and Charleston.

We have contacted "the government officials (including the county attorney) directly involved in the issue(s) the chance to take action or modify procedures." They were "not responsive."

HOTLINE REPORTING FORM

Who is the person(s) the complaint is against? (Please provide name, position, agency, division, and phone #) Dave Phillips, Chair (Heber City)(654-0574,davphillips@gmail.com);  Connie Tatton (Midway) (654-2416,midwaycityut.org); John Whiting (Charleston)(654-2343, jcwhiting@yahoo.com) – (Human Resources Committee) - and possibly other members of the Heber Light & Power Board of Directors

Who is the above person’s supervisor? (Please provide name, position, and phone#) They are the governing board of Heber Light and Power.   There does not appear to be any supervision or oversight of the Board.

What is the assertion of improper governmental activity? Please describe in detail. Planning, preparing, instituting and accepting a four-fold plus pay increase for themselves, an annual amount which would have been more that half of the dividend normally paid to the cities owning HL & P and about the same as collected from residents in recently passed service charge fees.

When did the event(s) take place? Please include dates, time, and frequency. Specifically, at a meeting 16 Nov 2011, and some time period before preparing and continuing payments. In that meeting under an agenda item of “Employee & Exempt Employee Manual Amendments” the board (with two absent members) approved an effective monthly pay raise of $1,687, supposedly for “health care benefits.” That agenda item appears to be a violation of the intent of the Open Meetings Act; the discussion on the the pay raise (retroactive “health insurance” benefit) lasted less than one minute. (audio available) These “benefit” payments were made retroactive for a period of several months resulting in a payment in December 2011 of $10,122 per board member and continuing payments in January and February 2012 for $1687. This payment was in addition to their “regular” monthly payments of about $466 ($599 for chair). The board generally spends less than 2 hours per month in a board meeting. One board member refused to accept the payment as excessive and subsequently, after a citizen petition protesting the action, 7 or 8 of the recipients have reportedly returned, or agreed to return, the funds. The online petition collected about 570 signatures a few hundred were collected on paper. Mayors Philips and Tatton and Heber Councilman Patterson have refused to return the money as they indicated they believed it had been “earned.” Mr. Patterson was not even a board member in 2011, but received $4.050 as part of a shared compensation plan among Council members. The remaining Council members returned their share of the money. Charleston Town President John Whiting reportedly is returning the money by not accepting his monthly payment. Phillips, Tatton and Whiting were members of the “Human Resource” Committee and/or the Personnel committee which formulated the so-called health benefit plan over a period of two years. Other board members have reported they were unaware of the proposal until it was presented at the November Board meeting. The two members who were NOT present learned about it after the meeting. At a meeting of the Board in January, public comment were allowed, but no explanation was offered, no discussion on the issue was held and no questions were answered. At the February Board meeting, future payments were suspended. After pointed questioning, Chair Phillips indicated he would not take the February payment, but repayment was a “personal decision.”

Where did the event(s) occur? Heber City, UT

Are there any other persons who might provide information or who witnessed the event? If so, what are their names, positions, agencies, divisions, and their contact information? Other board members at the time: Mike Kohler (Wasatch Co.) (654-3728), mikekohler2009@gmail.com) Alan McDonald, alw_mcdonald@msn.com, Benny Mergist, 801 404-7765, bencajun@yahoo.com and management and employees of HL & P

Is there evidence that can be examined or documentation that can be reviewed? (Please provide any documentation you have) Meeting records, recordings, documentation can be found here with accompanying links.

How do you know about the improper action? Did you see it occur? Did you see documentation indicating it occurred? Did you hear about it from someone else? Documentation, reports from others, failure of response and explanation from those involved. No Board responses from petition submitted at meeting and numerous requests for an explanation. County Attorney was non-responsive in requests from several citizens to investigate the situation.

What specific law or state regulation has been violated? Possibly, Open Meetings Act, Municipal Officers' and Employees' Ethics Act, perhaps more, specifically 10-3-818.   Salaries in municipalities.      (1) The elective and statutory officers of municipalities shall receive such compensation for their services as the governing body may fix by ordinance adopting compensation or compensation schedules enacted after public hearing.      (2) Upon its own motion the governing body may review or consider the compensation of any officer or officers of the municipality or a salary schedule applicable to any officer or officers of the city for the purpose of determining whether or not it should be adopted, changed, or amended. In the event that the governing body decides that the compensation or compensation schedules should be adopted, changed, or amended, it shall set a time and place for a public hearing at which all interested persons shall be given an opportunity to be heard. 10-3-1309.   Inducing officer or employee to violate part prohibited.      It is a class A misdemeanor for any person to induce or seek to induce any appointed or elected officer or municipal employee to violate any of the provisions of this part. 10-3-1304.   Use of office for personal benefit prohibited. (b) use or attempt to use the officer's or employee's official position to:      (i) further substantially the officer's or employee's personal economic interest; or      (ii) secure special privileges for the officer or employee or for others; 17B-1-308.   Boards of trustees comprised of county or municipal legislative body members.      (1) (e) board members may not receive compensation for their service as board members in addition to compensation they receive as members of a county or municipal legislative body. Utah Public Officers and Employees Ethics Act. 67-16-4 . . it is an offense for a public officer, public employee, (c) use or attempt to use his official position to:      (i) further substantially the officer's or employee's personal economic interest; or      (ii) secure special privileges or exemptions for himself or others; 67-16-5 (1)(b) compensation received for private services rendered at a rate substantially exceeding the fair market value of the services. 67-16-11. Applicability of provisions. “The provisions of this chapter apply to all public officers and public employees”. 26-20-6. Conspiracy to defraud prohibited. “ A person may not enter into an agreement, combination, or conspiracy to defraud the state by obtaining or aiding another to obtain the payment or allowance of a false, fictitious, or fraudulent claim of a medical benefit.” 11-13-222.   Officers and employees performing services under agreements. (2) Unless otherwise provided in an agreement that creates an interlocal entity, each employee of a public agency that is a party to the agreement shall:      (b) continue to be governed by the rules, rights, entitlements, and status that apply to an employee of that public agency.

PAY Raise Rescinded, but Payback Refused

Update 28 Feb:  While the HL&P Board "terminated" their "health" benefit, no decision was made for returning the back (and retroactive) pay.  These amounts are what they were PAID for "health" insurance.    This does NOT include their 'regular' HLP Board pay of ca. $500, other board payments, or their regular pay as elected officials. As HC Councilmen "share" their board payments these amounts could be higher.   The HC Council (excl. the Mayor) have informally agreed NOT to accept the Jan and Feb payments per Email.  Proposals are being considered to modify board payments.

An updated list of the amounts received in this pay raise can be found here.

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At the HLP Board meeting, the first action after a (very) brief discussion was a unanimous vote to TERMINATE (rather than rescind) the November stealth four-fold Pay RAISE. (disguised as "health benefits")

After being queried when the raise was terminated, Mayor Phillips finally said it would be for February and it was a direct deposit to him and he would return THAT payment.

When asked, repeatedly, if they would return the pay already received Phillips, Tatton, Bradshaw, and Patterson all refused to answer. (Kohler had already refused payment)    Phillips said it was a "personal decision" - the 50 or so at the meeting expressed their collective displeasure at that response.

The Board members were also silent in response to an invitation to present an explanation onthe radio -but were preparing a written explanation. (justification?) (thereby avoiding pesky questions)

Councilman Alan McDonald explained to his former the error of their ways - and was basically met with vacant stares.  (Click here for transcript of his remarks)

Click here for a recording of meeting comments.

KUTV reporter Dan Rascon was doing interviews and reported live after the meeting.

"From residents, to a radio talk show host, to a city councilman – they’re all angry and upset over what board members who govern the Heber Light and Power Company did at a meeting last year. . . . Hebery (sic) City Mayor Dave Phillips is the chairman of the board – he says he is going to listen to the outcry but doesn't believe the board did anything wrong."


Here's the SLTrib report on the meeting  

"Heber City • Rushing to quell a firestorm of angry rate payers, the part-time board of the Heber Light & Power Co. voted unanimously Wednesday to rescind a benefit of $1,687 per month.

Nonetheless, board members got an earful from residents who called their actions "unethical," "self-serving" and "arrogant," among other things."

Questions to HL & P Board

Letter to Editor re:  HL&P Personnel Board votes to recommend termination of payment

While local electricity users may be heartened by the decision of the HL & P Board of Directors' “Personnel Board” to “recommend termination” of their massive pay increase, many are still awaiting the answer to how, and why, this all came about.

Somehow Mayor Phillips' rationale that “If the public is going to be upset we need to terminate this,” does not seem to be sufficient explanation. This answer sounds more like, 'whoops, we got caught enriching ourselves, so we'd better back off a little.' 

There was no mention of an apology or an admission of an erroneous policy, no mention of returning the money being repaid.    

By the time of the Board meeting Wednesday, some members will have received about $15,000 under the guise of health benefits.

One former Councilman has declared this simply a “bonehead decision,” others conclude that it was a calculated plan of greed.

Here are a few questions that need to be asked - and answered: 

• Where are/were checks and balances against this type of action? 
•  By whom was this idea concocted and promoted? 
• Why was there no proper notification or explanation for this action? 
•  When will the money be returned? 
• Why are board members paid for not attending meetings? 
•  Are there other entities who have, or are, doing similar things? 
•  If not paid for by increased electric rates or taxes, how was it paid for? 
• Last, but not least: How do we prevent this type of misfeasance from occurring again?

As Mayor Phillips promised in January, the HLP Board meeting is the proper place for a discussion and an explanation. We will eagerly anticipate that at 4:15 PM today (Wed.) after the petition is submitted.

MANY more comments can be found on the petition by signers.   Here are a few of recent ones, posted in the last two days:

• "This smacks of the outrageous salaries opted by California municipalities. Check out what happened to them. Remember who we are! And what we can do if provoked."
• "Too angry to comment."
• "In my opinion, they should be removed from the board and banned forever from any board, and banned from running for any type of public office. It might help also if their businesses were boycotted. That might help send a very clear message that " ENOUGH IS ENOUGH" 
• "How disgusting that these leaders feel like they deserve such outrageous compensation. The ones that voted for this do not deserve our votes in the next election. If they can be so blatantly unethical on this, what little things are getting by the public where they are cheating on?" 
• 'Doesn't seem ethical at all to me. Let the people who pay vote on such changes. Wow, it sounds about like what is going on in our national government! Hope we can stop this now!" 
• And from an Email in response to this from a Board Member "The personnel committee met yesterday.  No decision was made to make any recommendations to the full board as of yet.  We will be meeting again but not meeting date was set.  No minutes were taken.  There will be a press release to the media in next week’s paper.  I have not seen the press release so I can’t give you any information regarding that.  I am sorry I am such a disappointment to you.  Perhaps you should consider running for office."    ==      "No need to be nasty I only spoke the truth about your responsibilities to your constituents it has nothing to do with whether I run for office, you did run for office and answer to your constituents and ratepayers.   You are showing a great deal of arrogance.  Why was their no minutes of this latest meeting  isn't that something that has to be done.  How can there be a press release that you haven't seen?  Who wrote the press release this just doesn't sound right.  I will pass your response to all the people I know.  You broke the trust and feel justified in being sarcastic to someone who has the right to question you.  When I first called you should have responded with an explanation of why you voted the way you did.  Each time you avoid speaking to the citizens it appears that you can do what you want and just really don't care.   I also asked you to let me know what other boards you serve on and what the compensation is.

Hmm, has anyone seem that press release?

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Here are a few more questions:

How are Board members chosen? 

Is it required that elected official must be members?    If so, by what, or whom?

How often do board members missed meetings?

How long is the average meeting? 

 

Who set up the Human Resources committee?         In which meeting?

Members?    Who chose them?

What is the difference between the HR and Personnel committees?

Are there any minutes of "committee" meetings?

How many other subcommittees are under HLP Board?

When was the comprehensive review study initiated?    When completed?

Why wasn't the item placed on the agenda earlier that November?

When was the item placed on the agenda?

When were McDonald and Kohler excused from the meeting?

In your opinion, did the notice and agenda effectively explain the meeting?

Did anyone suggest that a more informative notice might be required?

Did you have any idea this might be controversial?

When was board eligibility for health benefits discussed?

Is any other Wasatch County entity offering in-lieu of payments?

Has this idea of in-lieu of payments been rejected by any  other entity in the county?

Are in-lieu of payments being made for employees? How many are taking that option?

Where was a notice made of this action so the public would know about it?

Why is there no mention of providing health insurance in the Manual changes?

How were the manual change proposals distributed to the board for their consideration?

Who wrote the press release to the Trib?    Who approved it?

Why did that notice refer to an effective date of July for benefits?

If changes were made for new hires (effective July) to SAVE money, why increase board benefits to SPEND money?

Was there specifically a question asked about the legality of this action? when?

Where, when, and how was the decision made to allow insurance for board members written?

How many Board members took advantage of the health Insurance in 2011?  2012?

Where in the 2011 budget was this item - or was it adjusted in Dec to accommodate the pay raise?

How much input did you receive from the public before approving this?