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Group seeks independent board to govern Austin Energy

Friday, October 26, 2012 by Michael Kanin

Members of a working group of the City of Austin’s Electric Utility Commission are ready to recommend the appointment of an independent body to govern Austin Energy.


In a draft document vetted by the full commission – but not yet formally approved – the working group offers a transition plan that would put the utility under the control of a seven-member board that would include the sitting Austin mayor. The group calls for the plan to go into effect by the end of 2013.   


The report is blunt in its assessment of the situation. “After experiencing two years of uncertainty regarding the rate case, which remains on appeal, Austin Energy cannot be subjected again to another period of uncertainty and instability regarding the question of governance,” it reads.


Commissioners will discuss the proposal at a special-called meeting Monday night. Their deliberations, an extension of a meeting held on Oct. 15, come in a special session called after some asked for more time to study governance options.


The Austin City Council serves as the de facto governing board for Austin Energy. The idea of an independent governing body for the utility stretches back at least as far as the 1990s (see In Fact Daily, June 4, 2012). It was revived again this past year during City Council deliberations over the now-official Austin Energy rate increase. A measure that would have asked voters to approve such a change as part of their November 2012 ballot failed to pass Council in August (see In Fact Daily, Aug. 15, 2012).


Though there is some belief that a switch in governance could be done through an administrative process, it is unclear how that would work.


“There’s an argument that could be made that, without the charter amendment, a board could be set up that could exercise … perhaps ratemaking authority or debt issuance, or eminent domain,” Austin Energy attorney Andy Perny told Council Members in August. “The problem is that when you get in to the details of the charter, there are any number of places where our city charter would conflict with that statute. And the statute is not at all clear as to what powers that board could have vis-à-vis the administration of the utility as far as what’s already set forth in our city charter about management.”


Perny later told In Fact Daily that a ballot question may be the best approach to a governing board.


As part of an interview process that accompanied their report, members of the Electric Utility Commission’s working group spoke to a number of former city officials. These included former Austin Energy General Managers Juan Garza, Roger Duncan and Milton Lee, and former Mayors Kirk Watson and Will Wynn.


The group also spoke with former Austin Energy deputy General Manager and ERCOT CEO Bob Kahn. Kahn just recently produced a report of his own for City Manager Marc Ott on the subject of utility governance (see In Fact Daily, Sept. 14, 2012).


Under the working group’s plan, members of the new Austin Energy governing body would be compensated to the tune of $43,500 annually for their work. The working group suggested that this was key to the effort. “Every person we interviewed recommended substantial and not de minimus compensation for board members to allow recruiting the best possible candidates,” reads the report.


The group called for board members to have backgrounds that would be applicable to utility oversight. It also suggested that board seats should not be geographically reserved, and no limit should be placed on board members that reside in the portion of Austin Energy’s service area that is not within City of Austin limits.

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