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Utility commission wants voters to decide on Austin Energy’s governance

Tuesday, July 24, 2012 by Michael Kanin

The City of Austin’s Electric Utility Commission approved a resolution Monday evening urging the Austin City Council to place a question on the November 2012 general election ballot that would ask area voters for a thumbs up or down about whether Austin Energy should be governed by an independent board.


The commissioners’ vote, a 4-0 tally, continues the push to a date with the November ballot for a quickly assembled question about how the city-owned utility should be governed. As part of the Monday session, Austin Energy’s director of governmental and regulatory affairs Mark Dreyfus told commissioners that Aug. 16 is the deadline for Council members to make their decisions about what will go on the ballot this fall.


Members of the Electric Utility Commission and city staff said they believe that the question of governance is a binary one; meaning that state law mandates that Austin Energy can either be governed by City Council members – as it is now — or by a five-person independent board that must include the city’s mayor. And, indeed, their thinking is grounded in a state law that specifically states that fact.


However, In Fact Daily has learned that an existing section of the Texas local government code – which seems to predate the harsher limitation – somewhat muddies the picture. According to that portion of law, a subchapter titled “Management of Certain Encumbered Municipal Electric Utility Systems,” “a home-rule municipality that owns an electric utility system” could determine both “the number of members” and “the qualifications for appointment to the board.” (See Sec. 552.122, Subchapter G.)


The Electric Utility commissioners’ vote came as part of a special-called meeting, after the board was unable to field a quorum at their regularly scheduled meeting last Monday. All four commissioners present on Monday had to vote to approve the motion on the ballot question.


Board Chair Philip Schmandt’s original motion was culled from one pitched by a 1996 blue-ribbon committee which had called for the city to change Austin Energy’s governance from the current one, with council members serving as the governing board, to one that would create an independent board for utility oversight.


However, Commissioner Gary “Bernie” Bernfield wanted softer language. The language finally adopted says, “The Austin City Council should hold a Charter election in fall 2012 to determine whether an Electric Utility Board to govern Austin Energy should be established,” Schmandt read as his final motion.


As part of a parallel process, City Manager Marc Ott has been instructed to come up with a report on the pros and cons of a switch in utility governance. But that report is not due to Council until after the date they have to set the items on the November ballot.


Schmandt was adamant about the need for a question about the utility’s governance on this year’s ballot. “Otherwise we’re going to have, in the fall of 2012, a full-blown report that is going to sit on the shelf for three years,” he said. “What a waste of time and effort – just like the 1996 one – suitable for framing. Why spend the money if it’s just going to sit there for two more years?


“Everyone is going to have forgotten about it,” Schmandt continued. “Then it’s going to be a new (Electric Utility Commission) who wants to do a new process and they’re going to start it over again.”


Governance became an issue as the utility finished a lengthy process to enact a rate increase that is now scheduled to go into effect in October of this year. Mayor Lee Leffingwell and State Senator Kirk Watson (D-Austin) have each come out in favor of the mandated independent board model.


If any of the charter amendment questions on this year’s ballot are successful, the city would have to wait until 2014 to conduct another charter election. There is some fear that inaction on the governance question would lead to a harsher response to the utility’s rate increase from state legislators when they return in January.

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