By Dennis Brown

Members of the Vanceburg Electric Plant Board met in regular session last week and announced that Bill Tom Stone will be replacing Eric Bloomfield as Plant Board Superintendent effective June 1.

Bloomfield said Stone will be getting his feet wet before then, serving as Interim Superintendent while he learns the ropes. He will begin in that position on May 3.

Stone, a Black Oak resident, is a graduate of Lewis County High School and Morehead State University and has been employed at Emerson Power Transmission in Maysville.

Bloomfield is stepping down as Superintendent to take a job as a controller with American Savings Bank in Portsmouth, Ohio. He has been with the local utility company since January 1, 2009, when he took over the position on the retirement of Phil Kennedy.

Bloomfield told board members last week he had met earlier in the day with officials from AEP, the electric supplier.

He said representatives reported that the true-up for this year will be $187,947, down significantly from the $467,000

 amount last year. He said AEP representatives also presented the utility company with the new rate which will be about the same as the current rate being charged for electricity.

“At this point we do not foresee a rate increase for our customers,” Bloomfield told board members.

Another rate factor won’t be known until later this year when the cost for coal is announced.

Plant Board Member Denver Moore, who serves as the Vanceburg City Council representative on the Plant Board, reported that council had hired legal counsel concerning a finding in an audit report which resulted in recommendations to the Plant Board to cease annual payments to the city. “We’re thinking they’ve found a solution and we should be getting a letter this week,” he told members.

Board members entered into closed session to discuss personnel matters and made a motion to hire Stone as superintendent when returning to open session.

Vanceburg City Council met is special session last week for the purpose of receiving the 2008-2009 audit report from auditor Greg Caudill with Caudill and Associates CPAs in Portsmouth, Ohio.

Caudill distributed copies of the audit report to council members. He said he had good communication with the mayor and other officials at the city offices and had met with two of the council members and the mayor a couple of times concerning where they were at with the audit at those times.

Caudill said a major finding warranted a noncompliance citation. The finding, which occupies the last page of the audit report, has to do with payments the city has received from the Electric Plant Board. The payments received by the city totaled nearly $290,000 the previous year.

The report cites state law that provides for the Plant Board to “pay to each school district and municipality in which its property is located an amount equivalent to an annual ad valorem tax on the fair cash value of the property of the electric Plant Board located in each such jurisdiction, determined upon the tax rate prevailing in such year.”

“During Fiscal Year 2009 the City of Vanceburg received such payments as described above from the Electric Plant Board of Vanceburg (component unit). Contrary to Kentucky Revised Statutes chapter 96.179 the amount of these payments were not equivalent to an annual ad valorem tax on the fair cash value of the property of the board located within the city limits, determined upon the tax rate prevailing in the year. Payments received by the City owere based on flat monthly agreement between the former Mayor of the City and former Superintendent of the Electric Plant Board.

“We recommend that City Council cease accepting payment immediately and negotiate a new payment rate with the Electric Plant Baord based on the amount of ad valorem tax on the fair cash value of the property of the board located within the city limits, determined upon the prevailing tax rate.”

The city response to the finding, noted in the audit report, was that “City Council has engaged an attorney to look into this matter.”

The Plant Board had earlier stopped payments to the city after Caudill presented an audit report to the Plant Board recommending the board cease the payments. The firm’s recommendation to the Plant Board was also to begin charging the city for the utilities it consumes. That recommendation is also being followed by the Plant Board.

“After testing, we spoke with management and a couple of the council members on a couple of different occasions,” Caudill said. He added he had also spoken with the mayor several times concerning the matter and hadn’t yet received a written response from the city’s legal counsel.

City Attorney John Holder questioned Caudill and asked what class of city the state statute covered. Caudill responded that he would have to look up the particulars.

“This is a pretty serious issue,” Holder said. “It looks like you would jump over that hurdle first.”

Holder said Vanceburg is a fourth class city and he understand the statute applies to third class cities. Holder noted other discrepancies with the quoted statute and the way it was applied to Vanceburg and the Plant Board.

Caudill said he had contacted the Kentucky Attorney General’s office and spoke with a couple of people there concerning the matter. “The statute is sort of vague and gray the way it is written,” Caudill said.

“I know it’s a very sensitive issue,” Caudill said. “That’s why we’ve waited for so long to even present the report itself.”

Holder cited earlier payments received by the city and said he and other city officials are continuing to gather facts about the matter.

“Why now?” Holder asked. “We’ve gone since 1995-96 and it hasn’t been mentioned before now.”

Caudill responded that a different auditor and different “set of eyes” had reviewed the records this year.

Holder asked if he had spoken with the previous auditor concerning the Plant Board payments. Caudill responded that he had communicated with the previous auditor, but not specifically about the payments.

He added he was waiting on the city’s legal counsel to respond in writing and give him an answer.

Caudill said the next auditor will want to know if recommendations of the previous auditor have been followed and if not, why. “If the attorney says it is legal, you would have to take their opinion,” he said. “My advice is to follow your legal counsel. I’m not an attorney,” he said.

Caudill said he was aware of the potential financial impact on the city noting that the payments comprise one-third of the budget of the general fund and that changes would have to be made.

“There are no issues that the city is going to go bankrupt or anything like that,” he said.

“No auditor likes to come in and present a finding such as this,” he said. “I feel absolutely horrible about it.”

“We, as auditors, have a duty to do our job,” he said. “The next auditor will ask about this.”

Caudill said there were also three recommendations to the city, including a review of accounts by council on a monthly basis, having a disaster recovery plan and beefing up security on wireless network signals.

Caudill said he would classify the audit as a clean audit and added he had forwarded copies to the State Auditor of Public Accounts as requested.

Mayor Angie Patton said she had received information from legal counsel just prior to the meeting and council members voted to go into closed session to discuss the matter citing proposed or pending litigation for the purpose of going behind closed doors.

No action was taken when returning to open session.