At least four Tacoma City Council members want to order a new audit of Click Cable TV’s books before voting on spending millions to expand the system.
Councilman Conor McCarthy proposed the audit last week. He said the city should hire an independent consultant to figure out a “reasonable” method for apportioning the costs of Click’s network, which has some benefit to Tacoma Power. He also called for the consultant to “evaluate the expansion of the Click network in the context of an evolving telecommunications and cable industry.”
McCarthy said Monday that some facts have remained hazy as the council prepares to vote on how to fund Click’s planned expansion into retail internet and phone service. Among those are what the actual value of Click’s coaxial and fiber network is to Tacoma Power, whether the current cost-sharing method is fair, and whether it’s legal for electric ratepayers to fund Click’s projected losses as it moves to an all-in business model.
The Tacoma Public Utilities board voted 3-2 last month to approve a funding plan that would have Tacoma Power paying for Click’s losses as it shifts to selling internet, phone and cable TV directly to customers. Mayor Marilyn Strickland, who has favored this plan, said shortly after that decision that she expected the City Council to take up the vote this month.
McCarthy’s request, if approved, would likely delay a vote until the independent audit is done.
“I think that there’s obviously concerns with the legal concerns raised, the impacts on ratepayers,” McCarthy said, “but ultimately, central to the debate about the future of Click has been its financial viability, and the determination of that has been largely based on a cost allocation scheme preferred by Tacoma Power, a scheme that has changed over time, and changed significantly, which has impacted the bottom line.”
Tacoma Public Utilities management has said Click is losing millions of dollars a year. A 2015 analysis recommended Click shoulder 94 percent of the costs associated with its commercial operations and that 6 percent be allocated to Tacoma Power for services such as linking the city’s power substations. Prior to that, 76 percent of the costs to operate and maintain Click’s network were borne by the cable system. Some have argued that the new cost allocation plan made Click’s financial situation look worse than it is.
City Councilman Keith Blocker agrees that an independent look at Click’s finances is needed before the council votes on a plan that would have Tacoma Power spending $6 million to $10 million per year on Click as it adopts a new business plan and upgrades to gigabit internet speeds.
Blocker, Councilman Anders Ibsen and Councilwoman Victoria Woodards have signed on to McCarthy’s request.
“There’s a lot of confusion with the numbers as it relates to Click. Is it making money? Is it losing money? Who pays for it? Who’s responsible for paying for it? Myself and other council members just wanted to know from a third party what the reality is before we make a big decision,” Blocker said.
The growing debate over who can pay for Click has also given some council members pause. Strickland and two members of the utility board, among others, have argued it’s legal because of the benefit it provides to Tacoma Power.
But a law professor, a former TPU attorney and two TPU board members have said forcing electric ratepayers, not all of whom can even get access to Click, to fund it is illegal. A new memo from the former TPU attorney, Mark Bubenik, argues that City Council members could be personally liable for an improper use of electric utility revenue.
“In terms of what’s legal and what’s not legal, again there seems to be some confusion on whether … it’s a utility, and if it’s not a utility, can we as a city legally subsidize the cost of Click with the electric bills from ratepayers? For me, that was one of my biggest concerns,” Blocker said.
McCarthy said waiting to vote until the council gets independent answers on those questions shouldn’t be thought of as a delay.
“Let’s look at this as preparing ourselves for the best decision-making process, which will be more efficient in the long run,” he said.