Poor electric customers hurt by Click subsidies

We thank The News Tribune for the editorial of 11/22/2016 informing us of the Tacoma city attorney’s opinion that both the city charter and state law prohibit using Tacoma Power’s electric ratepayer money to subsidize Click’s commercial telecommunications enterprise.

Tacoma Public Utilities (TPU) records show that Tacoma Power has illegally subsidized Click by approximately $21 million over the past three years, which includes imputed debt service towards Click’s $70 million share of the cost to build and equip the system.

This illegal subsidy especially hurts thousands of people who have extreme difficulty paying not only their utility bills, but also paying for food and shelter. This is reflected in TPU’s termination of electric service to about 780 customers each month, and giving notice of potential termination to about 9,000 each month.

Many of our St. Leo parishioners subscribe to Click and would like to continue doing so because they believe it provides very good television programing and customer service. So TPU and Click staff are doing a very good job with the service.

The belief that an adjustment to the allocation of ongoing operating and maintenance costs between Click and Tacoma Power will cure the illegal subsidy problem is wishful thinking. Even a much more generous allocation for Click will never begin to repay the $70 million in Click’s share of up-front capital costs.

Tacoma Power’s original plan in 1997 was to build a system that would enable electric customers to have wired smart electric meters so time-of-day electric rates and other benefits could be achieved. Cable television, internet and voice would have been a side benefit.

However, wired electric meters never caught on, because the industry moved to wireless meters. So now Tacoma Power’s telecommunications system provides very little benefit to the utility, and as television viewers increasingly stream, use smart phones and cut their cable, Click and other cable and satellite TV providers continue to lose customers.

Click at one time had 26,000 customers, but now it’s down to about 15,000. From a business perspective, Click appears to be at a substantial competitive disadvantage because its competitors most likely pay less employee compensation and benefits compared to what city employees receive.

And Click’s competitors have millions of customers, so they undoubtedly purchase programming at substantially reduced prices. It is a very competitive business that will be even more so as Boeing and other firms spend billions to launch thousands of small satellites to compete with cable and satellite TV providers, and as YouTube TV begins its subscription TV service.

Parishioners of St. Leo in Tacoma’s Hilltop Neighborhood have been serving low-income and marginalized people in our community for many years. St. Leo’s Food Connection is one of the largest food banks in the region, and our social services programs provide hygiene provisions, clothing and very limited financial assistance for utility and rent bills.

Since the 2008 recession, we have seen a dramatic increase in people coming to the food bank, and an equally dramatic increase in requests for financial assistance to pay utility bills and/or apartment rent. However, because St. Leo is small and not a wealthy Jesuit parish, we are only able to help a small number.

(In 2016, St. Leo provided more than $3,000 in utility assistance, which is a significant amount for our parish.)

So Mayor Strickland and City Council members, please end this illegal Click subsidy because it is hurting Tacoma Power’s low-income electric customers. And please do not waste more of our money to hire a law firm to contest the lawsuit that apparently will be filed soon to stop the subsidies.

Instead, please work with TPU and Tacoma Power to provide a more generous low-income utility assistance program.

This story was originally published April 2, 2017 at 1:58 PM with the headline "Poor electric customers hurt by Click subsidies."