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Council to let voters decide on possible sales of Austin Energy assets

Friday, August 3, 2012 by Elizabeth Pagano

Austin City Council on Thursday moved quickly to approve a charter amendment that would allow the sale of portions of Austin Energy, but not before rejecting three options and settling on a fourth suggested by Council Member Bill Spelman.


The ordinance won approval on first and second reading but must come back for City Council’s final approval on third reading before it can be added to the Nov. 6 ballot. If approved by voters, the charter amendment would allow City Council to sell any facilities belonging to Austin Energy with a two-thirds majority vote from Council and approval of voters. The Council could vote for a resolution stating that a specific facility was unnecessary for providing effective utility service.


After agreeing that any potential sales could be left to voters to decide, Spelman said his concern about the ability to move quickly and take advantage of potential offers was “much, much less than before,” and he moved to create the fourth “stronger” option, which requires both Council and voter approval instead of one or the other.


Council Member Laura Morrison also favored the strengthened proposal. “For me I think that it’s really critical that we maintain something so that it goes to voters,” Morrison said.  “I do think that we just need to understand what a huge issue (this is) and how contentious.”


Currently, the city charter states that City Council has no authority to sell  “any substantial part of the utility,” though the term “substantial” is not clearly defined.


The one vote of dissent for the new protocol came from Mayor Lee Leffingwell, who did not think that it gave enough flexibility in the management of the utility.


“It just doesn’t give us the flexibility I think the utility needs to be able to compete – to maintain a competitive stance, I should say – in the marketplace of Texas today,” Leffingwell said. “My motivation in all this is to ensure that the City of Austin continues to be a municipally owned utility and I don’t think this gets us where we need to be to do that.”


Austin Energy is set to raise its electric rates this October for the first time in 18 years. However, an appeal of the rate hike to the Public Utility Commission – or, perhaps more worrying for city officials, action from the state Legislature – threatens to put the utility in a precarious financial position.


If the Legislature forces the city to deregulate, the city could choose to compete in the deregulated market, although that seems unlikely. Otherwise, the city would have two options: sell off the entire utility; or sell the generation portion of the utility and continue as a provider that purchases energy from the market.


In the case that the city is unable to follow their ruling, the state might step in and force changes.


Also, Leffingwell has mentioned the possibility of selling Austin’s share of the coal-burning Fayette power plant. But the Council currently has no authorization to do so.


Sierra Club’s Roy Waley and Save Our Springs Executive Director Bill Bunch were among the Austinites who spoke in opposition to the proposed charter amendment, citing concern with how quickly the amendment, which was not reviewed by the Charter Revision Committee, had appeared on the Council agenda.


Leffingwell said that he wished that they had addressed the issue much earlier, but with a charter election on the horizon and another one not for at least two more years, it was important to address the question now.


“We’d be left in no man’s land, essentially, for a period of three years. I realize it’s kind of a short notice thing, but it is, of course, subject to voter approval. There will be plenty of time for a lot of discussion,” Leffingwell said.


Council passed on all three readings a separate charter amendment that was originally bundled with the utility sale amendment. This amendment authorizes the sale or lease of park land to independent school districts if approved by voters or if a two-thirds majority of City Council agrees. The charter amendment would allow schools to make capital improvements to adjacent parks, such as building bleachers or installing water fountains.


The amendment was approved 6-0 with Council Member Bill Spelman off the dais. It will appear on the November ballot.


All told, if the 8-2-1 single-member district charter amendment passes on its third reading in an upcoming Council meeting, the ballot could have 11 charter amendments. The city’s legal staff told Council that the charter amendments to be presented to voters would be set by Aug. 16, in a worst case scenario.

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