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Spelman, Riley plans for new Austin Energy board gain traction

Wednesday, April 24, 2013 by Michael Kanin

Consensus appeared to build Tuesday around a pair of Council members’ proposals that would create an independent governing body for Austin Energy. The proposals, brought forward by Council Members Bill Spelman and Chris Riley, would more or less divide management and oversight of the utility between the Council and the new board.


As part of each plan, Council would retain some form of check on board decisions via a still-to-be-determined review process. Both Spelman and Riley’s pitches are similar to a version of independent utility governance called for by the city’s Electric Utility Commission. Though there are currently key differences in the way that each approach would achieve review, many of the conceptual elements of the Riley and Spelman plans appear to line up.


Mayor Lee Leffingwell and Mayor Pro Tem Sheryl Cole have each signaled their support of something like the Spelman and Riley plans. “That’s the whole point: We can’t keep up with the change in the industry (in a) sufficient enough (manner) to run the (utility) in a daily, sound manner, and we’re appointing a board to do that,” Cole said.


And though Leffingwell continued to indicate his strong preference for a powerful independent board – and argument that came in to play as Riley suggested that Council members review every utility board decision – Riley noted that the Mayor’s concerns were of form rather than substance.


Meanwhile, Council Members Laura Morrison and Kathie Tovo remained deeply critical of their colleagues’ attempt to separate some amount of utility oversight from the Council dais. Both Morrison and Tovo pelted Spelman and Riley with questions about what, exactly, their proposals were aiming to fix.


“As I’ve been giving this some thought, one of the things that I think we started to hear loud and clear – and I realize that, in our discussions, we may have missed a step – and that is trying to answer the question: What are we trying to fix?” said Morrison.


She turned to Spelman. “If I look and listen to your presentation, I would assume from the beginning that the top level (of) what we’re trying to fix is the Council doesn’t know enough about the utility and that we’re looking for some expertise and professional oversight of our utility.”


Spelman confirmed that Morrison’s summation was accurate in regard to “why we are having this discussion in the first place.”


Morrison then plunged in to a lengthy and detailed examination of past Electric Utility Commission actions, utility purchases, and management issues. Her overriding implication was that, if the utility is poorly watched, slow to act, or poorly managed (by either AE staff or city management) than perhaps there were other, systemic issues at fault.


Tovo pointed to data in a study performed by city staff that examines how Austin Energy relates to other utilities. She told her colleagues that the information “shows that it’s clearly not, in terms of setting energy efficiency goals, in terms of our financial performance” an advantage to turn decision-making over to an independent body. “What are the areas where we really feel that Austin Energy would perform better with an independent board?” she asked.


Spelman offered a simple response to Tovo. “Why are we losing $40 million a year?” he asked.


Tovo responded that the issue appeared to be a rather narrow one, and that it might be best for a Council subcommittee to address it. She noted that it was staff’s job to run the utility, implying that the argument that Council doesn’t have enough time to delve in to utility operations is moot. “None of us were elected to get in there and make sure service is restored when a storm hits,” Tovo continued.


Spelman fired back with what sounded an awful lot like the confirmation of what may be the utility’s biggest fear. “We are not competing with big corporations for business in the animal shelter, or even in the Water Utility or Austin Resource Recovery,” Spelman said. “The only place where city government is competing with big corporations even tacitly is in the electric utility – which is an extremely big business. The only place where we are threatened with deregulation and every two years the issue comes up like clockwork is with energy.”


He continued. “At some point some legislator is going to say ‘it’s about time we deregulate these municipally-owned utilities, including CPS, including Bryan and Lubbock and…including Austin.’ At which point I would like to believe that we have a governance procedure in place which is quick enough to be able to compete in the open market with the TXUs and the Houston Power and Lights,” Spelman said. “We’re not at that place yet. We have the seven of us who do not, I believe, understand the electric business well enough to compete on a head-to-head basis with (private corporations).”


Leffingwell echoed that statement. “I think we have to start preparing ourselves in the near to intermediate term for deregulation in this state,” he said. “We have to do the best we can to be able to compete. I don’t think we are now.”


Council members are posted for action on Austin Energy governance this Thursday. However, Leffingwell indicated Tuesday that, with Council Member Mike Martinez set to be out of town on city business this week, votes on both second and third readings of the ordinance would be postponed.


That appears to put Council members on course for further public discussion at a May 7 work session, and perhaps a final vote on May 9.

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