Thursday afternoon, three Water, Gas & Light customers filed a lawsuit against the city and utility company claiming breach of contract. The civil action says the close to $90 million in a Municipal Competitive Trust Fund set up by the Municipal Electrical Association of Georgia is being unlawfully used by the city.
The plaintiffs' lawyers released a statement saying, "We have filed a lawsuit to ensure that the MEAG refund monies have been lawfully used and will be lawfully used in the future solely for the benefit of the rate payers of the Water Gas and Light in accordance with the expressed language of the January 1, 1999, Municipal Competitive Trust and all amendments thereto."
Lawyers say the Trust Fund contract says money must be used for WG&L customers.
"I don't think there's any wasting of money occurring whatsoever. At this point, a third of it's going to Water Gas & Light, a third of it's going to the city and the other third is being put aside as a rainy day fund," says Asst. City Manager Wes Smith.
In 1999 a trust fund was created by MEAG in case of deregulation. The money would help WG&L compete with other possible utility companies.
By 2009, the deregulation threat lessened and the money was split among the city, WG&L and a planning committee to be given back in ten yearly increments to be used for WG&L customers. From 2009 through 2018 the money is being refunded every year by $9 million.
With January 2011 rate hikes looming, the lawsuit says money is not coming back to rate payers.
The complaint says the government changed the city charter so that the city would receive two-thirds of the MEAG funds to benefit what they wanted instead of going to the benefit of the rate payers as initially intended. According to the lawsuit, this change in the charter "constitutes breach of contract and violates the Plaintiffs' rights as protected by the Constitution of the State of Georgia," referencing the Equal Protection Act.
Wes Smith says the city government would not do anything that wasn't considered legal.
"We're comfortable, reasonably comfortable that we wouldn't have entered into this arrangement if we didn't think it was legal in the first place so we will prepare to defend ourselves appropriately," says Smith.
Smith says the money has helped with elevator and physical repairs at WG&L. He also says $1 million of MEAG funds was used by the city to establish the Gang Task Force.
"The monies are coming back. They may not be coming back as a rate payment, but it's funding things that would have to be paid for otherwise. These are things that are necessary. None of it's being frivolously spent," says Smith.
The lawsuit requests that credit for the alleged misused monies be given to customers for bills.