Council Members Call LG&E Franchise Agreement Unfair

by Phillip M. Bailey on May 4, 2011

Across party lines, members of the Louisville Metro Council say a plan championed by Mayor Greg Fischer that proposes an increased fee for Louisville Gas & Electric Co. customers is unfair.

The plan is part of the city’s new franchise agreement with the utility company, which hasn’t been renewed since 2003. If approved, the fee would cost natural gas users about $1.50 each month, but would generate $5.4 million in new revenue for the city.

Councilwoman Tina Ward-Pugh, D-9, who sits on the budget committee, says the city needs to raise more revenue to pay for urban services and fill the city’s $22 million shortfall. However, the plan proposed by the mayor is unfair to the majority of residents, she says.

“It only affects people in the urban services district and the formerly unincorporated areas of Jefferson County,” Ward-Pugh says. “And until the administration can bring me a proposal that effects us all equally, I can’t support it and the majority of the Metro Council can’t support it either.”

Under state law, Metro Government can’t force any rate increase on residents who live in smaller, unincorporated cities such as St. Matthews, Seneca Gardens and Shively. That leaves about 20 percent of the city’s population who would not be affected by the administration’s proposed franchise fee.

Council members have indicated if the fee was imposed on all citizens they’d be willing to support the idea, which would require each smaller city to vote on the measure or a change in state law during year’s legislative session.

The city’s current agreement with LG&E generates about $500,000 in revenue each year, which is much less than other municipal agreements. Still, some city lawmakers have criticized Fischer’s plan for putting an additional financial burden on working families.

“I was a bit surprised that they came out of the box so quickly asking for an effective tax increase. I was very surprised at that,” says Councilwoman Jerry Miller, R-19. “There’s no doubt in my mind this is a tax. If walks like a duck, quacks like a duck, then it’s a duck.”

The budget committee has asked LG&E officials to testify at next Monday’s hearing, where they’ll likely vote on the proposal.

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