By Paul Ciampoli
APPA News Director
Posted November 7, 2018
The Lafayette, La., City-Parish Council on Nov. 5 approved a resolution expressing its opposition to any possible sale, lease, third party management agreement, partnership, “or disposition, in whole or in substantial part,” of public power utility Lafayette Utilities System.
After hearing from several speakers who voiced support for the resolution, including Terry Huval, who until recently served as director of LUS and LUS Fiber, the council approved it by a vote of 7-0.
The backdrop for the vote was a proposal put forth by private equity management firm Bernhard Capital Partners for managing the electric division of LUS.
“Since any contract to manage LUS would need council approval, the council effectively ended Bernhard's and any other attempt to manage LUS,” the Lafayette Daily Advertiser reported on Nov. 5.
Council members also voted on second resolution
In related action, council members rejected a resolution that would have required a transparent solicitation process for transactions involving LUS.
At issue was a resolution offered by Council member Kenneth Boudreaux. The resolution, which was defeated by a vote of 3-1, would have established that the Lafayette Public Utilities Authority (LPUA) “will not consider any possible sale, lease, third party management agreement, partnership, or disposition, in whole or in substantial part, of the City of Lafayette Utilities System without the use of a transparent request for proposals process.” The LPUA is the governing authority of LUS.
“Point blank, I am asking that we reject any management, lease or ownership proposal for LUS because none of the options are good ones for Lafayette,” Huval said prior to the vote on the RFP resolution. Huval in July announced that he was retiring from LUS.
Huval pointed out that “we’ve had the lowest rates in the state for years” and that LUS has a strong reliability track record.
His message to council members was to “stop the anxiety” for the citizens and businesses of Lafayette.
Huval also said that he had received several offers from Bernhard’s team to become the director of NextGen and he had rejected all of them. “To make it clear, Terry Huval is not for sale or not for lease,” he said.
“Public power has a sterling reputation of very competitive rates, great reliability and excellent customer service delivered by people who know their customers,” said Andrew Duhon, who previously worked at LUS.
“We already have a great, well managed utility system. We don’t need to do an RFP for sale, lease or private management,” he said. “Support LUS now and let the staff get back to work without this huge distraction.”
Another speaker said that she “has been involved in this community for over 50 years and for all those years that I’ve been in Lafayette or involved in the community, the one constant has been the shining jewel in the crown of Lafayette and that is our utility system.”
Private equity management firm withdraws proposal
Prior to the council meeting, NextGen Utility Systems withdrew its proposal for LUS. The Nov. 5 letter from Jeff Baudier, managing partner for NextGen, pulling the proposal was sent to Robideaux and members of the council.
LUS “is certainly an asset for this community that is treasured by many, and any decisions regarding its future must be made with great care and deliberation,” Baudier said in the letter. “In response to the many discussions that have been held since submitting our proposal, as well as the importance of this decision, we are respectfully withdrawing our proposal.” He added, “We appreciate your consideration, and we look forward to any related discussions that may arise in the future.”
In a recent speech, Jim Bernhard, founder and partner of Bernhard Capital Partners, outlined his firm’s plans for managing the electric division of LUS, as well as the firm’s broader strategy to invest billions of dollars in public power systems across the Southeast U.S.
“We are going to invest in about $15 to $20 billion in municipal utilities throughout the Southeastern part of the United States,” Bernhard said in the speech. Bernhard Capital Partners would manage public power systems through a subsidiary called NextGen Utility Systems.
Last month, investor-owned utility Cleco, which is headquartered in Pineville, La., announced its interest in partnering with the City of Lafayette “to serve the needs of Lafayette Utilities System (LUS) customers.”
According to local press reports in Louisiana, Entergy, also an IOU with operations in the state, as well as cooperative Southwest Louisiana Electric Membership Corporation, also expressed an interest in submitting management proposals.