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Council tentatively OKs new Austin Energy governing board

Friday, February 15, 2013 by Michael Kanin

A proposal from Council Member Bill Spelman, Mayor Lee Leffingwell, and Mayor Pro Tem Sheryl Cole to take the first step toward an independent governing board for Austin Energy passed on a surprise 7-0 vote Thursday night.


Spelman and Council Member Chris Riley opened the door to unanimity. The pair worked a handful of suggestions from Public Citizen’s Tom ‘Smitty’ Smith into the ultimately successful resolution that paved the way for Council Members Laura Morrison and Kathie Tovo to join the party.


Still, it remains unclear whether a vote on March 21 – when an ordinance drawn up by city staff is due back – will be as clean. Indeed, Tovo – who declined to even call the board an independent body – continued to express concerns about a move toward a new governing model for the utility.


“The ability to really look carefully at what authority the Council currently has and determine which of those are appropriate to delegate to…some sort of mid-level board that would make some level of decisions outside of Council approval could work,” Tovo said.


On the other hand, the sponsors were unqualified in their support. Leffingwell has made the change a top priority for 2013, as evidenced by his state of the city speech earlier this month. And Spelman offered frank comments about what he sees as the limitations of the Council’s watch over Austin Energy, and called for the sort of help that only a professional board could bring in keeping the utility in the sweet spot between conservation and price.


“I am not an expert on the production of energy. I am not an expert on the operation of businesses – particularly in an industry as brutally competitive as the electric industry has become in Texas,” Spelman said. “I need some help, and one of the reasons that I helped to propose this with the Mayor and the Mayor Pro Tem is that I believe that we can get some help in exactly the right way.”


Leffingwell raised the specter of deregulation. “I’m in this, and I think Council Member Spelman and Mayor Pro Tem are in this, for the simple reason that we want to save the utility as a municipally-owned utility,” he said. “Right now, we’re not – I don’t believe – on a sustainable course.”


Riley touched on each of these points before he made sure that Smith’s list of suggestions was included in the resolution.


He pointed to the words from veteran Electric Utility Commissioner Shudde Fath. “I’ll repeat (her refrain) verbatim: ‘The EUC knows what is going on and recognizes it is unable to oversee Austin Energy. The City Council does not know what is going on and believes the EUC is capable of overseeing Austin Energy,’” he said. (Shudde Fath contacted In Fact Daily after this story appeared to tell us this: The EUC knows it doesn’t run the electric utility, and the City Council thinks it does.)


Spelman said that, in his mind, the intent of the resolution was to instruct City Manager Marc Ott to come back to Council with a board that would provide oversight of the majority of day-to-day utility operations. But the resolution would reserve final say over such major decisions as ratemaking, eminent domain, asset control, and large purchases for the City Council.


Though Morrison and Tovo got behind the empowering resolution, their support may only extend as far as an independent board with very limited powers.


So built, the body would not meet a proposal offered by Electric Utility Commissioners. That document called for ratemaking powers to be left in the hands of a board. (See In Fact Daily, Feb. 13, 2013.)


(This section has been corrected.)

In addition to those points, the resolution passed by Council members is very specific in its instructions to Ott. It orders a board with 7 members including the sitting Mayor, where each representative serves four-year terms. The board, made of professionals, would be selected by a subcommittee of the Council and would be approved by the Council.


There would also be an advisory board, perhaps like the Electric Utility Commission, with members appointed directly by the Council and giving advice to the board. The size of that body is expected to grow to include representatives from the larger Council that will be seated in 2015.


The resolution also calls for provisions that would allow removal of any board member by a two-thirds majority vote. Board members would be compensated, and would have to take public comment.


A final vote on an independent Austin Energy board will be set for March 21. Austin Senator Kirk Watson has introduced legislation that makes it clear that the City Council can appoint a governing board for the utility. Without that legislation, there could be a legal challenge to the Council’s authority to do so.

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