DA to city: Credit customers

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By David Giuliani

District Attorney Richard Flores this morning urged the city of Las Vegas to credit its customers for some of the time they were overcharged for natural gas.

In a news release this morning, Flores said he has found no criminality in the city’s handling of its natural gas ordinance. However, he said he is concerned with the city’s “non-action” on the issue.

Flores’ statements come less than a week after the state auditor’s office released an independent audit that showed the city violated its natural gas ordinance for six years, overcharging customers by $10 million.

The state auditor can’t prosecute violations of the law; that power is left to the district attorney. Flores said he could find no criminal intent to defraud customers.

“...I feel there is no doubt that city officials mismanaged and misinterpreted the operation of the natural gas utility ordinance,” Flores said in a statement. “As stewards of public funds, city officials have a duty to their customers to ensure fiscal integrity. Their admitted reliance on their consultant resulted in a misapplication of the gas utility ordinance.”

Flores also disputed statements by the city about when the natural gas utility was out of a longstanding deficit. City officials have previously contended they couldn’t reduce the cost-of-gas adjustment on bills until they were out of a deficit, which the city determined to be July 1, the beginning of the fiscal year.

The independent audit shows that the utility’s cash reserves were in the black in May. Flores states that in his discussions with city officials, they confirmed that it was in April that they were first put on notice that they were operating in the black.

“This is important because the ordinance provides that the city shall credit its customers if and when it is no longer operating under a deficit. In this regard, the city failed to credit its customers,” Flores said.

He said city officials contended that they couldn’t verify the utility was out of a deficit until the books were reconciled in July. But he said once such information was verified, customers should have been credited retroactively.

City officials couldn’t be reached for immediate comment this morning.

Last week, Mayor Henry Sanchez thanked State Auditor Hector Balderas for commissioning the special audit, which had been requested by customers.

The next day in a mayoral candidates forum, Sanchez, who is facing four opponents in Tuesday’s municipal election, apologized for what happened with the natural gas rates, but he said the city did everything right.

While a couple of his opponents urged the city to reimburse customers, the mayor said there was no money to give because it had already been spent on natural gas.

He pointed to the part of the special audit that showed that if the city had followed its ordinance, its natural gas utility would have been $10 million in deficit.

The independent auditor, Jeffery McWhorter, said last week that the consultant’s rate-setting decisions were “economically prudent,” but he said the city should have changed the ordinance rather than relying on the consultant.

The mayor has noted that he could have held the release of the audit until after Tuesday’s election, but he said he wanted to be open with the public.

All of his opponents have criticized the city administration’s handling of the natural gas rates.