Lafayette Utilities System of Louisiana went to that state's Supreme Court in an effort to overturn lower-court rulings that ban the utility from underwriting broadband-system-construction bonds with utility revenues.
The municipal utility has been trying for more than two years to develop a broadband system in competition with Cox Communications and BellSouth. The latter two entities went to the state legislature in 2004, and lawmakers passed a bill that severely limits the ability of municipal entities to get into competitive broadband businesses.
LUS went back to the drawing board on its process, holding a referendum on the project in order to comply with the new state law. In July 2005, that was approved overwhelmingly by voters.
But this past May, a local resident, Elizabeth Naquin sued in district court to block the project. She alleged that the funding for the broadband system -- based on bonds guaranteed with revenue from utility customers -- violates the 2004 law. She lost in lower court, but the state's Third Circuit Court of Appeals ruled that the utility's bond ordinance violates state policy.
In the opinion of the appeals panel, a municipality may not use revenue from captive rate payers to support a broadband project, even if the broadband division pays back the utility division with interest.
The appeal asserted that the bond program adheres to state law, and attorneys will argue that the lower court's interpretation of the state law is a barrier to community progress and to recovery from Hurricane Katrina.
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