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Competition vs. open government drives debate concerning Austin's electric utility

Tuesday, May 9, 2000 by

Utility pushing for blanket resolution, consumer advocates ask for public debate

Whether the City of Austin's electric utility morphs from an aircraft carrier that operates in full view into a submarine whose strategic operations are mostly hidden was to have been debated by the City Council this week. But Austin Energy pulled the item off the agenda and canceled a special-called meeting of the Electric Utility Commission (EUC) that was to have been held last night.

Both the EUC and council were scheduled to discuss a resolution that would identify "competitive matters" exempt from disclosure under the Texas Open Meetings Act and Texas Public Information Act. The new level of secrecy is permitted by electric utility restructuring legislation, Senate Bill 7, enacted into law in 1999. A competitive matter is defined as "a utility related matter that the public power utility governing body in good faith determines by a majority vote is related to the public power utility's competitive activity, including commercial information, and would, if disclosed, give advantage to competitors or prospective competitors."

The EUC was briefed on the generalities of the proposal Feb. 28 ( In Fact Daily Feb. 29). The EUC first considered the details of the proposal May 1, in the form of an eight-page draft resolution that identifies the competitive matters that Austin Energy proposes the City Council make exempt from disclosure. These proposed competitive matters are broken down into three broad areas, as follows:

• Energy supply–This encompasses 25 separate items under the subheadings of fuel; generation; wholesale power; and acquisition, disposition or exchange of generation-related or fuel-related assets.

• Retail activities–The includes 18 separate items under the subheadings of customer information; sales and marketing; market research; product/service development and pricing; and supply contracts/arrangements for retail products and services.

• Corporate planning and strategy–The includes 11 separate items.

Not everything will be kept secret. The proposed resolution lists 15 specific items that will always be made available upon written request. Among these are substantive rules, aggregate information about receipts and expenditures, minority contracting performance, amount and timing of transfers to the city's general fund, and environmental compliance.

General manager pushes hard for resolution

Austin Energy General Manager Chuck Manning made a presentation to the EUC on the resolution. Manning conceded that deregulation and competition, which is going on in 24 states simultaneously, are misunderstood topics. In Texas, he said, municipally owned utilities (MOUs) have the right to opt for customer choice after Jan. 1, 2002, meaning to open their service areas to retail competition.

"We at the utility do not take this resolution lightly," Manning said. "I worked for investor-owned utilities for 26 years," he added. "They're not having this discussion. They are looking at every customer we have."

Manning said that seven MOUs had already adopted the resolution. These are San Antonio, Lubbock, Brownsville, Greenville, New Braunfels, Boerne, and Kerrville. "I'd hate to be the only MOU in Texas not to adopt this," he said. "We're not asking for secrecy but to make decisions as allowed by SB 7." (The Lower Colorado River Authority adopted a board policy to protect competitive electric information Aug. 18, 1999, but In Fact Daily's comparison of that document to Austin Energy's draft resolution shows great differences, in part because the LCRA sells only to wholesale customers.)

Manning said a number of competitors already are making customers aware of choices in electric power and doing their best to pick off Austin Energy's accounts. "If we're not at least equal to other MOUs, we're putting the utility, the general fund, conservation and everything else at risk," he said.

Manning urged the EUC to recommend the resolution as-is, arguing that it would be easier for the attorney general (AG) to make decisions regarding requests for information if the MOUs adopted consistent resolutions.

Competition is already here," he said, noting the kinds of requests Austin Energy has been receiving, including one that asked for the names of customers with addresses and phone numbers. The AG ruled Austin Energy did not have to disclose the information. "All kinds of intelligence is being gathered. IOUs have a different set of loyalties and it's not to citizens or customers, it's how to make a return on their investment. Rebates, low-interest loans don't happen."

Manning said under the resolution, the City Council would be able to take action in executive session, not just discuss matters for action in open session.

What the critics said

The proposal drew criticism from consumer advocates who addressed the EUC, including Tom "Smitty" Smith, director of Public Citizen Texas; Scott McCollough, an attorney who was formerly under contract as the city's consumer advocate for the electric utility; and writer and energy activist Paul Robbins, author of The Austin Environmental Directory.

"I have a number of concerns about the resolution before you today," Smith said. "First and foremost, the electric utility is our largest single asset and this (resolution) makes it difficult for those of us who own it to evaluate its performance." He said instead of the staff sending to the AG requests for information it wishes not to disclose, the City Council should decide those matters; information should be considered open unless, after a public debate, the council decides otherwise; and only as a last resort should matters be referred to the AG.

Noting that one provision calls for secrecy regarding the performance of jointly owned generating units, Smith said, "Recall the difficulties in getting operating information about the South Texas Project's (STP) performance." Because questions were raised, the city entered a lawsuit that reformed operations of the STP. "With this (resolution) it will be very difficult for you or the public or newspapers to have a robust debate," he said.

Smith said he had already met with staff and the proposed resolution had been amended to make public, when requested in writing, the salaries and perquisites of Austin Energy employees and the results of management audits and consulting reports, except those portions containing information related to competitive matters.

Noting that he previously had been on a task force with EUC Member Neal Kocurek, Smith said, "I am sensitive to the fine line we must walk in disclosing information to people who own the utility, but this document goes too far." He urged the city to "set a benchmark to err on the side of openness and not on the side of confidentiality," and suggested that the city "sponsor a robust debate to work this out."

Later, Smith said, "We're not like San Antonio. We have an open and robust debate in public. That's part of what made us great."

McCollough said, "There is a great deal of information that needs to be kept confidential. You will not get an argument about that from me." But he complained that there is no provision for the City Council to act on requests for information but instead there was a full delegation to the staff.

McCollough said the standard of review by the AG was to make information public only if the utility has failed to act in good faith or the information is not reasonably related to competition. "That's not going to maintain our traditional open government in Austin," he said. He suggested a procedure to allow appeals to the City Council by putting the matter on the council's agenda. "The staff would have the opportunity in executive session to explain why the information should not be released." As to the difficulty of getting timely decisions from the council, McCollough said the AG typically did not act quickly anyway.

Robbins belittled the proposal to hold secret such matters as the price for a gas contract. "I did research and found out it was available on the Internet," he said. "The Federal Energy Regulatory Commission asks all utilities to post all contracts for gas and the price." He held up copies of such contracts for the city's Decker and Holly Power Plants.

As a conservation advocate, Robbins said he needed to find out what conventional power really costs to produce so he will know if alternatives are competitively priced and feasible, "but with this I will be out of the loop."

EUC Member Shudde Fath said she wanted City Council members notified "each and every time we request an AG's opinion. It's up to the council members if they want to pursue it." Manning said he had no objection to notifying council of what Austin Energy had done with requests for information.

Manning made a strong pitch to go with the resolution. "I don't think anyone understand how difficult the next three to five years will be," he said. "I don't know who all's knocking on doors. I know we provide benefits. I know we're the only ones with a 500-kilowatt inverted-rate structure."

Manning said independent power producers will become a major driving force in the Texas market. "We're going to do our dead-level best to stay on top of every one of these issues, but we need the support of the commissioners, board of directors and stockholders."

Commissioner Kocurek, who like Fath has been on the EUC since it was founded in 1977, said, "If we provide information and we can't get corresponding information from our competitors, that's disadvantageous. If we can't get it from competitors, that's information we should not release."

Follow-up meeting

Smith and Robbins met with Austin Energy staff Friday to discuss details of the resolution.

Robbins tells In Fact Daily the meeting was attended by eight senior staff members. "It stunned me they all attended," he says. "Either they are extremely conscientious, or extremely worried about us, or they wanted to find out what we will protest, in advance."

He pooh-poohs the practicality of notifying City Council members of information requests forwarded to the AG due to the volume of paperwork council members receive already. "I said they should brief the council monthly," Robbins says.

"They're saying Austin Energy will continue to be the city's provider and give you 20 percent to 25 percent of the general fund, but you have to trust them. But as a grass-roots activist, I don't trust them…I don't trust the structure."

Smith tells In Fact Daily, "much of that discussion revolved around our need to be sure we have adequate data to evaluate the utility, plan for the future, and make sure it's performing adequately."

In sum, Smith says, "It was clear they felt they needed to have a blanket resolution and we felt we needed a case-by-case determination of what's confidential. They're trying to figure out a compromise."

Mario Espinoza who heads external affairs for Austin Energy, tells In Fact Daily, "We're still trying to come up with what we can agree upon." He said they're figuring out how to provide information to the City Council on who's requesting information, what information is requested, and whether the utility feels releasing the information would put the utility at a competitive disadvantage.

Espinoza said it's conceivable that such information could be posted to the city's web site for public accessibility but plans are still in the draft stage. "Bottom line, we'd like to continue to work with everyone who has an interest. We'd like to present the council with a resolution to protect information that should be kept from our competition, and at the same time allow for an open process."

Unless the EUC calls asks for another special-called meeting, Espinoza said the resolution will not be addressed again in public until the next regular meeting of June 5, and it will not be taken up by the City Council until the EUC has reviewed it.

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