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Council passes Austin Energy governance measure on first reading

Friday, April 12, 2013 by Michael Kanin

Austin City Council members Thursday passed on first reading an ordinance that would create an independent board for Austin Energy but it remains unclear exactly what powers that board might have. The events kicked off the first segment of debate over the creation of that board – and brought recognizable figures and arguments together at City Hall for what undoubtedly will not be the last time.


The document that came out of last night’s meeting seems markedly less bold than the ordinance proposed by Mayor Lee Leffingwell and Council Member Bill Spelman. In fact, the Mayor said, “We’ve already virtually made this into the Electric Utility Commission.”


However, the final vote was 6-0. It came after a dramatic reconsideration brought by Mayor Pro Tem Sheryl Cole of the heart of an amendment from Council Member Laura Morrison that reconfigures how Council will transfer power to the new board. Council Member Kathie Tovo was on a sister city trip to China.


Morrison pitched a series of changes to how the ordinance does its work. She suggested that she and her colleagues specify which items it would hand to the board – a move that flips the original intent – which would have sent much of the utility’s day-to-day operational oversight to the new board – of the resolution.


Council members are set for the second and third readings of the Austin Energy governance ordinance on April 25. Between now and then Council members will try to specify what exactly they will hand over. That may be hashed out in a work session on April 23.


Morrison’s idea initially failed to pass on a 3-3 vote, with support from Council Members Chris Riley and Mike Martinez. Then, after some clarification, Cole resurrected it without specifying what items would be reserved for which entity. That move passed 4-2, with Spelman and Leffingwell voting against.


Morrison passed a series of other amendments, including one that would reserve the right to approve any future large industry contracts for Council. That had been a major issue for governance opponents who set up the debate as one of large industry versus low-income and/or residential users.


That measure passed unanimously with Leffingwell off the dais.

Riley tried an amendment that would grant expanded review of some board decisions for City Council via the commission that would advise the governing body. Spelman suggested that city legal staff come up with language for that motion and a handful of unspecified others from him for review at a later date.


Council members simultaneously endorsed state legislation brought by Senator Kirk Watson, D-Austin, that would allow it to move Austin Energy’s reporting from under the watch of city management to the board it would create. Though State Rep. Eddie Rodriguez, D-Austin, signed on to carry the bill in the Texas House, rumors circulated Thursday that he may drop it thanks to advocate pressure. However, it seems likely that another legislator will pick up the measure if Rodriguez does not carry it.


The Council vote to support the legislation was 5-1, with Morrison opposed. “There’s a list of 25 departments, offices, and divisions that…Austin Energy participates in,” she said. “If we’re really talking about separating Austin Energy off, we’re talking about a huge job – a huge and probably extremely expensive (effort).”


Leffingwell and Spelman have both vocally endorsed the idea of separating city management from the utility. However, both were also ready to wait until after the passage of the Watson bill to make that change. Thus, if the independent board is eventually approved, a second change – that to management reporting – would likely come after the legislation is passed.


With a nod toward the new approach, Martinez signaled his support of the idea Thursday as he and his colleagues discussed the possibility. “If this legislation passed, and the Council didn’t cede the authority to that governing board to appoint the general manager of AE, we’d retain that authority as a Council – which in my mind isn’t a bad thing.”


That discussion could prove to feature testy exchanges. City Manager Marc Ott argues that the utility should remain in the hands of city management. (See In Fact Daily, April 8)


The evening was prefaced by a Citizens Communication appearance by Public Citizen’s Tom “Smitty” Smith. Smith raised the specter of what became a theme for independent governance opponents: That big industry is behind the move toward an independent board.


Smith’s wife, Karen Hadden, is a member of the city’s Electric Utility Commission. She is also the executive director the SEED Coalition, and has been a vocal opponent of a change to independent governance. Hadden returned to chambers Thursday to rehash her experience with San Antonio utility CPS‘ independent board.


“(San Antonio) struggled for years when their board took off and did everything different from what the citizens wanted and even different from what their City Council told them to do,” she offered.


Hadden wasn’t the only EUC member present. Commissioner and former chair Philip Schmandt also spoke. Schmandt, however, argued for an independent body.


He was joined by Commissioner Steve Smaha. “The whole idea that we’re going to be able to run a $1.2 billion electric utility – which is a very complicated and technical situation – with unpaid neighborhood volunteers, I think that’s an early ‘50s or ‘60s view and I think our sense of nostalgia about that is misplaced.


Smaha also urged Council members to separate the utility from the control of city management. Tom Smith agreed with him on that point.


Commissioners have repeatedly called for an independent governing body for the utility both publicly and formally. Their most recent vote was unanimous in favor of an independent body. Hadden, however was concerned. “I’m going to vote with you on this, but I will be relaying additional thoughts to City Council,” said Hadden at the time. “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.” (See In Fact Daily, October 30, 2012.)


As chambers emptied late Thursday much of the opposition seemed cheered by what had transpired. “It’s a whole lot better than it was,” Smith told In Fact Daily.

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