LAFAYETTE, LA — Did the Lafayette Utilities System (LUS) misspend millions of its customers’ dollars and break fair competition laws?
The city government finalized an internal audit this week that found without the help of LUS and the Lafayette Consolidated Government, LUS Fiber would be $130M in debt.
When LUS Fiber was created a decade ago, the Lafayette Consolidated Government lent the fledgling company $28M dollars. LUS also paid 34 million dollars for fiber services, and after Tuesday’s presentation, Mayor-President Joel Robideaux said it is getting close to half of that $34M being questioned.
District 5 Councilman Jared Bellard asked, “Is it a fair conclusion that LUS was basically helping LUS Fiber with their books?”
“I think that it was clear that the prices that were being charged were what could be justified as opposed to what was in the best interest of the ratepayers, ” answered Mayor-President Robideaux.
At least seven different recurring payments from Lafayette Utilities System to LUS Fiber were questioned during Tuesday night’s city-parish council meeting.
From some services considered not needed, to needed services with inflated price tags, the implications are that LUS may have given fiber an unfair advantage over other internet providers.
“They show a pattern of revenue manipulation to benefit Fiber that is hard to ignore,” admitted Robideaux.
News 10 reached out Former LUS Director Terry Huval about presentation criticizing the payments made during his tenure. He released a statement saying:
“As to the recent presentations, it should be noted that all LUS and LUS Fiber activities were brought to the City Administration, the City-Parish Council, and the Lafayette Public Utilities Authority (LPUA) for budgetary and overall approval.
In addition, all LUS and LUS Fiber concerning the telecommunications network were in accordance with the State of Louisiana Local Government Fair Competition Act, where they were annually reviewed by the Louisiana Public Service Commission (LPSC).”Terry Huval, Former LUS Director
Regardless, Robideaux suggested more action be reviewed by LPSC, like dark fiber payments.
When LUS created fiber they sold all their internet lines to LUS Fiber. Fiber paid for them with a loan from LUS, but Fiber turned around charging LUS triple the market price at $68 dollars per fiber, per mile, per month on a month-by-month lease indefinitely.
“We can bring up the lawyers, and we can bring up the accountants, and we can bring up the engineers and the consultants, and they can confuse the hell out about why this was structured this way, but at the end of the day it’s important to remember that at this point and time when it happened, Fiber didn’t have any customers, and it had to pay its bill and it needed monthly revenue,” concluded Robideaux.
Huval did hold a press conference in November where he addressed the internal audit. At the time he said, “Everybody who lives in the city of Lafayette is an owner of this system (LUS), and they deserve the best treatment and services available.”
The Lafayette Utility System first self-reported to the Public Service Commission in April 2018. In July, LUS reported themselves a second time. Those self-reports launched an internal review and audit which began in October. That review concluded with the presentation in December.
At November’s audit presentation, councilwoman Liz Hebert said she’d feel more comfortable if the council hired an external auditor to thoroughly review the entirety of LUS and LUS Fiber. She did repeat her concerns Tuesday.