Charter Changes Benefit Brownsville PUB Customers
By: Oscar Garcia, Chairman Brownsville PUB

By now most of you are aware of the upcoming Special City Charter Election to be held Saturday, September 11, 2004. There has been a lot of information floating around, but not all of it is correct.

The purpose of the election is to do away with certain language in the existing City Charter that conflict with state law. The portions of the City Charter relating to the Brownville PUB were added in 1960. They govern how the utility can operate and can conduct business.

The four propositions in the election amend or rescind only certain portions of the City Charter that deal specifically with the Brownsville PUB operations and City financing. Some of this language would be removed from the Charter. It would be clarified and added into a bond ordinance that contractually spells out how Brownsville PUB debt would be repaid. This is similar to the process implemented in the early 1990s by other major public power systems in the State of Texas, including San Antonio and Austin.

As a municipal utility, our goal is to provide our owners, the citizens, with the best possible service at competitive rates. In 2003, the average Brownsville PUB residential customer saved up to $29.04 per month in their electric bill compared to other private utility providers in the area. Brownville PUB has remained the low cost hometown utility provider and the utility Board intends to keep it that way.

This election is about finding better ways to manage existing debt without impacting rates. Future rate increases are necessary to ensure a viable utility system. Currently, there are over $172 million in capital improvement needs that are deemed necessary over the next six years to maintain current service levels and to meet the projected growth of Brownsville for electric, water and wastewater services.

We live in one of the fastest growing regions in the state and country. This translates into additional jobs and economic development for Brownsville. But, it also translates into various infrastructure needs including utility improvements and line extensions. Some of these improvements are mandated by state and federal laws, while others are simply necessary to keep up with the explosive growth in our city.

The proposed changes do benefit Brownsville PUB customers. If passed, the propositions do away with certain restrictions that would allow the utility some flexibility to find more ways to minimize effects on rates and still allow for improvement of utility services.

The Brownsville PUB is not supported by taxes. All of its revenue is generated through rates for cost of service needs as well as for future utility improvement needs. Any remaining funds at the end of the fiscal year are put back into Brownsville via improvements to the utility or fund transfers to the City.

The changes to the Charter will allow for a smoother transition in the process than is currently required to flow funds from the Brownsville PUB to the City of Brownsville. This change in the process will also give the City a clearer financial picture for budgeting purposes.

Currently, the Brownsville PUB has $338 million in debt that has gradually accumulated since 1986. Some of this debt includes the recent additional purchase into the Oklaunion Power Station, a coal-fired power plant on the Texas-Oklahoma border. This additional purchase helps reduce fuel costs on customer bills since coal is the cheapest source of fuel used to generate electricity. Other major purchases include a new generation unit at the Silas Ray Power Plant and various substations, water and wastewater construction upgrades throughout Brownsville. All of this is done to keep the lights on and to make certain that there are no drops in water pressure.

Whether or not the changes to the charter pass, the plan has always been to refinance the debt in 2005 because that is when some of the debt can be refinanced. Refinancing of the debt under a new charter and bond ordinance opens up new financial possibilities and financial flexibility for the Brownsville Public Utilities Board. That in turn, opens up the possibilities for other financial options instead of relying on the ratepayer.

Refinancing of the debt with the Charter changes and under the new bond ordinance could improve Brownsville PUB’s credit rating, and in turn, decrease the interest rate on the debt. That means there would be less interest to be paid on the debt. Refinancing of debt under the existing Charter and bond ordinance assuredly means accelerated and higher rate increases.

Everyone involved has invested time and effort in putting together a plan that will move the utility and the city forward. The Brownsville Public Utilities Board staff, the City Finance Department, the shared financial advisor and both bond counsels began working on this nearly ten months ago. The Brownville PUB Board of Directors, the Mayor and majority of the City Commissioners, as well as everyone else involved agree that this is in everyone’s best interest. I ask that you vote on September 11th and also support the changes.

If you are interested in learning more, please visit the Brownsville PUB website at www.brownsville-pub.com or the City website at www.ci.brownsville.tx.us.