ALBUQUERQUE, N.M. (KRQE) – It’s a City of Albuquerque expenditure so obscure only a handful of public officials know about it, yet it’s costing taxpayers millions of dollars. It involves the state’s largest utility. A KRQE News 13 investigation finds the Public Service Company of New Mexico is accused of gouging taxpayers with inflated bills and excessive charges.
“In no uncertain terms we let PNM know that we thought that a lot of these charges were questionable,” says Albuquerque Chief Administrative Officer Rob Perry. “We need to change things going forward because we (aren’t) going to be paying them,” Perry said.
What’s this all about? Street lights.
You see, whenever an Albuquerque street light is damaged, PNM does the repair and then bills the city. For example, in January 2014, a motorist crashed into a street light pole at 12th Street and I-40. PNM repaired the damage then invoiced the city $4,467. Then, in October 2014, thieves stole the copper wiring from a street light at Coors and Old Airport Road. PNM’s repair bill was $20,032.
Street lights are damaged more often than you think. Since 2012 PNM has billed the City of Albuquerque $3,806,412 to repair 718 city owned street lights.
But if you take a close look at PNM’s invoices you will find hidden among the nuts and bolts, insulators and cables, some unusual extras.
For example, PNM routinely has taxpayers pick up the tab for PNM employee benefits like payroll taxes, pensions, worker’s comp, vacations, even employee meals. These extra charges commonly add hundreds of dollars to each repair bill.
“Those indirect types of charges (look) pretty questionable and in certain cases (are) unsupported, probably improper,” CAO Rob Perry said. “(Those charges are) not in the best interest of PNM and certainly (not) the city taxpayers of Albuquerque.”
And it’s not just fringe benefits.
PNM also hits up Albuquerque taxpayers for unexplained overtime pay even though street lights are rarely repaired during off hours. For example, in November 2014, thieves stole the copper wire from a street light in the 7100 block of Jefferson NE. PNM repaired the damage three months later and then billed the city $2,218 in overtime pay.
No Explanation Charges
Albuquerque’s Risk Management Director Peter Ennen tells KRQE News 13 the city should not be paying time and half for PNM employees to do non-emergency repairs. Ennen says PNM has not provided an explanation of its overtime charges.
PNM also tacks something called “A and G loads” on all of its Albuquerque repair bills. “We don’t get any explanation of how they calculate that charge or what it is. We just get the expense on the invoice,” according to Peter Ennen, who thinks ‘A and G’ is a charge for overhead.
Is that a legitimate expense? Ennen says, “It could be. And if it is we’re willing to pay it. But we don’t get any explanation for it. It’s just there.”
PNM also includes a charge for “outside temp services” on its street light repair bills. “We think that’s paying temporary clerical people to prepare the bills. It just doesn’t seem right. It is a part of their cost but I don’t know that we have to pay extra just to have our bills put together,” Ennen said.
It’s not just the money. There’s also a public safety problem with PNM’s repairs and it has to do with the crime of copper theft.
Unreported Copper Thefts
Since 2012 copper thieves have ripped out the valuable copper wire from 248 street lights across the city. PNM has billed the city more than $2,000,000 to repair the damage done by copper thieves. However, these crooks are rarely caught. They operate in the dead of night, and, PNM usually does not notify the police that a crime has occurred.
“That’s a problem because (the city) may not find out about (a copper wire theft) for six or eight months until we get the bill from PNM,” Peter Ennen said. “They just go do the repairs and send us a bill. APD may never get a report on a copper theft. And that’s a major problem for APD.”
“There’s all kinds of problems with delayed reporting (of copper theft), the biggest of which is we simply don’t know that the crime is occurring,” says APD Commander Paul Szych, who oversees the police department’s copper theft investigations. “It’s very difficult to stop something that you don’t know is happening. It makes it very challenging to make an apprehension and therefore stop the problem. So for us it’s a real big deal,” Commander Szych told KRQE News 13.
“An Urgent Matter”
According to Peter Ennen, PNM has shown no interest in explaining or justifying its billing practices. “We’ve had questions about the billing for many years and couldn’t resolve them,” Ennen said. “We decided that we were just going to refuse to pay for things that we questioned.”
In February, the Albuquerque Legal Department sent a strongly worded letter to PNM calling the utility’s billing practices “an urgent matter.” Assistant City Attorney Jane Yee wrote, “…the City will no longer pay any amounts on the invoices not allowed by law.” Yee added, “PNM is submitting these invoices in an untimely manner, that is, consistently more than six months after the incident… In addition and most problematic, PNM is submitting these invoices without police and dispatch reports.”
City administrators say they have not received a written response to the Legal Department’s February 2 letter.
A spokesman for PNM declined KRQE News 13’s request for an interview. However, in a written statement, the utility said it “…bills the City only for the actual costs for street light repairs and does not mark up those costs for a profit.” PNM defends its practice of billing the city for employee fringe benefits by calling the charges “completely appropriate.”
According to Risk Management’s Peter Ennen, since the February letter, PNM has stopped itemizing its bills.
Rob Perry says, “We’re at a point now where it’s time to fix the problem and to ensure that (PNM’s) invoices are fully supportable, that they’re timely and that they’re done in a prudent and justifiable way on behalf of the taxpayers.” Perry adds, that has yet to happen.
Statement from PNM to KRQE News
We understand the City has questions regarding costs associated with streetlight repair. We have been actively engaged with the City of Albuquerque since 2016 to resolve issues and recently have been working even more closely to ensure a more collaborative and positive process going forward and we feel that good progress has been made.
Per our long standing agreement with the City, PNM bills the City only for the actual costs for streetlight repairs and does not mark up those costs for a profit. In addition, PNM does not charge any other customers for these amounts.
As a fully regulated Company, PNM’s accounting for costs is reviewed through the rate review process and PNM may therefore itemize the costs incurred in greater detail than other businesses. As an example, while other businesses include any costs of employee retirement and benefits and workers’ compensation in their overall labor rate, PNM separately tracks and identifies these costs. While these costs may be presented separately when invoicing the City, the costs are billable under the agreement and completely appropriate.
Given the public safety priority associated with repairing and replacing inoperable streetlights, PNM must sometimes incur over-time costs. These over-time costs, when undertaken by PNM union employees, are billed in accordance with the union agreement and subsequently passed through to the City under the agreement.
We will continue to work with our partners at the City of Albuquerque on resolving this and any other issues. PNM strives for excellent customer service and we value our partnership with the City.