There has been a lot of talk lately, and not so lately, about utility bills in Piedmont. The recent rise in energy costs from the Alabama Municipal Electrical Authority (AMEA), which supplies Piedmont with electricity, could have meant a rise in residents’ utility bills. But Mayor Brian Young said the rates would not change.

Still, it has been a cold winter, and many found their bills to be higher than they could afford. The Journal tried to speak with a few of those residents but they declined to comment on the record. It is not easy to air your troubles in a newspaper.

What did come of the uproar was the fact that the city itself has not always had a good record of paying the bills. Records show that during former Mayor Charlie Fagan’s administration, the city amassed a debt of $438,414.57 for unpaid electrical bills to AMEA. Fagan says it was his city council that failed, putting the city well into the red. The Journal spoke with three council members who served with Fagan. Two of them say they knew nothing about the debt, and the third says he just can’t remember if he was ever told of it or not.

It has taken some time, but Mayor Brian Young says the loan the city took out to help pay off the debt was just recently paid off itself.

Just exactly what happened?

To begin you have to trace things back to when the debt first began creeping into Piedmont‘s books. It was during the drought of 2006-2007, when the price for generating electricity shot through the roof.

“AMEA started charging the city a fuel surcharge,” Fagan said. A fuel surcharge is an added cost due to the rising price of generating energy. The cheaper hydroelectric power ran out as the rain did, and the more costly natural gas generated power filled in the gap. Eventually that cost is usually passed on to the consumer in the form of raised rates.

But Piedmont never raised the residential rates. Not for three years. “Some months it would run as much as $100,000, just the fuel surcharge alone,” said Fagan.

Bill Fann was the city clerk during Fagan’s administration.

“We lost hundreds of thousands of dollars,” said Fann. “We were behind, at one point, over $400,000 in loss. Behind on our loss in revenue.”

When asked if the city was paying that money out of the general fund, Fagan said, “Yes.”

“We had a good reserve up until that happened,” said Fann.

Fagan says, “It got to the point that we started having trouble paying the bills, keeping the bills on time because we had run out, so what we done was at that point we then pushed the council.”

In short, Fagan and Fann had depleted the city of its reserve, With no more reserve, they were forced to pay bills with only the funds that came in from utility payments, property taxes and sales tax. And by charging less than the energy was costing the city, the debt started to pile up. Here is where things get a bit fuzzy.

Fagan and Fann, say they discussed this problem with their city council time and time again, beginning in 2006, and the council just decided to do nothing.

“They got a budget print out every month,” said Fagan. Fann supplied The Journal with a copy of one of these budget printouts. “He (Fann) showed them, you know. They knew we had never collected that $240,000. They knew we had been behind. Every council member on there knew that we had been behind. You talk to Millie Bramblett and Eddie Baldwin and they’ll tell you. The rest of them’s against me,” said Fagan.

Fann says Fagan is correct.

“The copies of the reports that I gave the council on a monthly basis are in there that shows fuel adjustment charges and how far behind we were,” said Fann. “The demand rates and how far behind we were. The electrical rated costs. They were given monthly reports. I know two council members who will tell you the truth about that. Mrs. Bramblett and Eddie Baldwin. They’ll admit to it.”

The budget does in fact show that the city is paying more than, in some months, double what the city was charging customers. What it does not show is how much the city is actually behind in payments to AMEA, or the late charges and penalties accrued.

Councilman Ed Hanson was on Fagan’s city council as well. He doesn’t recall ever being told about the debt. As far as Hanson knew, the city was absorbing the loss. “You know when I found out about it? Same time as the mayor (Young) did,” said Hanson. “We never knew it. We voted to pay the bills, that whole period of time. All along we thought the bills were being paid.”

Kenney Kelley was another council member during Fagan’s term. He too says he knew nothing of the debt.

“No, we didn’t know we were that kind of in debt,” said Kelley. “Fagan never did tell us that we was in the kind of in debt. I was with his (Fagan’s) administration for probably 10 months, maybe nine-10 months, and then election came and I got reelected and he lost, so then all this stuff starts coming up. Within three weeks later you’ve got a CEO with AMEA coming up there trying to start collections on us.”

Fagan and Fann said that they were sure that two council members would be truthful. Eddie Baldwin had a difficult time recalling just what happened. Baldwin said that Fagan and Fann both discussed the need to adjust rates, and that the fuel surcharges would have to be passed on, but as for what they planned to do about it, he wasn’t so sure.

“It seemed like it didn’t register with me what was going on,” said Baldwin. “They brought it to our attention. We just didn’t understand what was going on.”

When asked if Fagan and Fann ever told the council members that the city was behind on utility payments, Baldwin at first said no, and then he couldn’t remember. “No. We was just talking about the utilities and talking the electrical rates. It was that fuel adjustment charge. I don’t remember about the debt, and I’m not saying they didn’t do it. I just can’t remember that specifically, but we did discuss that fuel adjustment. The council didn’t take any action on it. Of coarse that was in favor of our customers,” said Baldwin. “I can’t tell you anymore than is in the minutes. It’s right there.”

The minutes from Fagan’s council meetings (and he supplied The Journal with several highlighted copies) are full of talk about utility rates. In them, passages like “In other business the clerk discussed the pending increase in electrical demand rates due to the summer peak,” (June 23, 2008) and “the mayor also discussed the utility rates and advised that rates would continue to escalate for the foreseeable future due to fuel adjustment related charges,” (Sept. 24, 2007), but in none of the minutes supplied by Fagan does it show where the city council was made aware that the city was delinquent with AMEA.

Records show that beginning in 2006 the city started to accrue interest and penalties from AMEA due to late and partial payments. In 2006 the city was charged $4,671 in those penalties alone. In 2007 the city racked up another $6,200.58 in charges, and in 2008 the total rose to $28,328.52. These figures do not include what the city actually owed on utilities, rather just the interest and penalties. In three years the city made one payment to AMEA on time.

As to why the city council failed to raise the rate way back in 2006, when it would have saved the city, Fagan said, “They’re just nonchalant. That’s just the way they are. They just didn’t want to do it.

“People’s having a fit because they can’t afford to pay their bills. And the reason they can’t pay their bills is that they are 3 cents a kilowatt higher than other utilities,” said Fagan.

When confronted with the argument that the rate is higher to pay off the debt that he left, Fagan said, “I got that, but like I told you they would catch it up in January and February.”

Fagan said that city revenue runs in cycles, with the majority of funds coming in the months of January and February. Fagan says that all Mayor Young would have had to do was to wait until the funds came in and pay the bills then. He then said that the debt wasn’t as serious as some made it out to be.

Fagan and Fann had other reasons why the city council simply refused to listen to their pleadings for three years. “We had discussed before about the need for an electric increase, but your city council members wanted to get re-elected, okay,” said Fagan.

Councilman Kelley says that is just not true. “If we approved to pay a $300,000 electric bill, we thought it was being paid,” said Kelley. “No sir, they didn’t tell us that, and that’s what we we’re so upset about.

“I think they’re just passing the buck to us. I’ll take some of the blame, because I was stupid and didn’t go and ask questions but it won’t happen any more because I do go up there and ask questions now.”

Kelley says the council members would have done whatever they had to do to make sure the city stayed out of debt, if only they had been told.

As for the current rates, Fann said he feels residents are being charged too much.

“It’s not that they raised the rates too high, it’s that they did not lower the rates when their rates were lowered,” said Fann.

When asked if that could be because the new mayor has to pay down on debts left by the previous administration, Fann said, “That’s not true either.”

Fann went on to say that the debt wasn’t as large as some had said. Fann stated that the city was actually only behind for the months of August and September.

Records show Fann is correct. According to a letter sent from J. Marlin Wade, Chief Financial Officer for AMEA, the city of Piedmont owed AMEA $438,414.57. In the letter Wade says that “AMEA needs to get this balance due on this billing as soon as possible. Fred Clark, AMEA’s president and CEO, will be in Piedmont to meet with Mayor Young on Thursday of this week. One of the things they will discuss is this amount owed AMEA.”

So the city was only nearly a half million dollars behind when Mayor Young took office. Much less, says Fagan, than the $600,000 figure some had heard. Fann and Fagan both say the problem was never as serious as some had said.

When asked what the letter from Wade to Franklin, the one saying Fred Clark was coming to discuss these matters with Young, could have meant, Fagan said, “That’s because they’re had been a new administration.”

“He always came to visit new administration,” said Fann.

When pressed, Fann admitted that “certainly if you’re behind on a power bill it’s an issue. That’s what I’m telling you and he (Fagan) is telling you. We kept telling the council that. That it was an issue. From 2006 on, but it was not as big an issue as they’re making it out to be, and it wasn’t his (Fagan’s) fault,” said Fann.

When asked what Mayor Young could have done other than raise the rates upon taking office, Fann said he had no comment on that.

“I don’t want to get into what he should have done or what he shouldn’t have done. The responsibility lies, and the proof is right there (Pointing to papers), with the city council from the previous administration not passing on the costs. Had they passed on the costs in a timely manner, this city would have never been behind on the power bills,” said Fann.

In a document dated May 23, 2007, given to The Journal by Fann and Fagan titled “confidential, utility rate information” Fann writes to Council Members regarding the fuel adjustment situation. Fann sites to this report as proof the council members were told of the problem. The memo does refer to anticipated problems with fuel surcharges, but on the last page Fann writes about a rate increase the city enacted in 2002.

“That rate increase did exactly what it was supposed to do,” writes Fann. “And we have been operating efficiently since that time.” The problem is, at the time Fann wrote the document, in May of 2007, the city had amassed $5,505.61 in interest and penalties alone from AMEA. Council members say they were not informed of this debt, and this document does seem to indicate that they were not, at least as of May 23, 2007, informed of the debt.

Shortly after Mayor Young took office in November of 2008 a resolution was drafted giving Lee Young, the current utility manager, the authority to change utility rates. The rates were changed, and now the city is out from under that debt. When asked why Fagan and Fann could not have made similar arrangements well before the city got so far in he red, Mayor Young said he just didn’t know.

“I don’t know why they could not have. They would have been under the same rules I would have been under,” said Young.