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Commission recommends independent board for Austin Energy

Tuesday, October 30, 2012 by Michael Kanin

After no small amount of discussion over specific language as well as their role in the process, the members of the City of Austin’s Electric Utility Commission recommended Monday night that Austin City Council establish an independent body to govern Austin Energy. The vote was unanimous.


Much of the discussion came from newly appointed Commissioner Karen Hadden. Hadden, who continued to express concerns about the accountability of the proposed board right up until she voted for the commission’s recommendation, told her colleagues that she would mention her worries to Council members.


“I’m going to vote with you on this, but I will be relaying additional thoughts to City Council,” said Hadden. “I’m very very interested in getting maximum accountability. I would personally like to be able to vote for the people that are on the board.”


The commission’s recommendation is the second report that Council members have on the matter. The first came from former Electric Reliability Council of Texas CEO Robert Kahn, who interviewed a host of former Austin Energy general managers in an effort that was ultimately submitted to City Manager Marc Ott. Kahn offered no hard conclusions (see In Fact Daily, Sept. 14, 2012.)


The commission’s report was different, with a commission working group providing its version of what parameters Council members could use in constructing an independent board. These included suggestions for a seven-member body with each member compensated to the tune of $43,500 a year.


Commissioners seemed also to agree that, whatever form it takes, the board should include members of the utility’s service area that live outside the city of Austin.


Though they were ultimately not specific in how the board should be set up, commissioners offered their thoughts about what sort of candidates might make good board members. Their suggestions included a host of professionals that would know the electric industry, as well as a potential slot for an environmental advocate.


Commissioners were originally set to vote on their recommendations at their regular October meeting, but some commissioners, most notably Hadden, expressed reservations about doing so without having a bit more time to study the document. Commissioners called a special meeting to discuss the issue on Monday.


Hadden’s concerns centered on her experience with the board that controls the municipally owned San Antonio electric utility, CPS Energy. She told her colleagues that, for a time, the CPS board ignored both the city’s elected officials and its citizens. “They had a utility that nobody could regulate. They were out of control,” Hadden said.


Though commissioners’ recommendations certainly held some similarity to the San Antonio board, commission Vice Chair Linda Shaw suggested that their model was based more on the body employed by the City of Greenville, which also has an independent board to govern its city-owned utility.


In response to her concerns, commission Chair Philip Schmandt read what seemed like a prepared addendum. He inserted language that left the decisions about the specific make-up of the new board to the Austin City Council.


However, Hadden continued to push for specific provisions that would reserve at least some seats on the body for City of Austin Council members. She insisted that she had spoken to some Council members who might be willing to serve as utility oversight in some capacity.


Commissioner Steve Smaha reminded her that this was not necessarily the commission’s role. “We are not the public participation process,” he said. “We have been asked to provide a recommendation and we’ve done so.”


After the hearing, Hadden noted that she hadn’t recently spoken to any Council members about the idea of serving on a committee that would look over the utility. Still, she didn’t want them to lose the option. “I am not convinced that all City Council members would not want to, or be willing to, serve on an official incorporated Austin Energy Board,” Hadden told In Fact Daily.


In addition to the governance model, the commission’s recommendation includes references to other frequently debated Austin Energy issues. Chief among these is a suggestion that the hotly discussed set of annual money transfers from the utility to the City of Austin’s general fund be trimmed to only one transaction.


As for a timetable, commissioners suggested that Council members transfer control to independent utility board by the end of 2013. They added that the move should be “commenced through an ordinance adopted by City Council,” rather than “waiting the two or three years that would be required for a Charter amendment election.”


Though utility legal staff have argued that this would be possible, they have also expressed some concern over whether this might be the best approach.

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