Austin Energy board would have little power under new plan

Consensus appears to be building around an Austin Energy governance proposal that would create a governing board for the utility that would be subject to wide City Council oversight, at least initially. Indeed, six Council members seemed to signal some level of satisfaction with what is emerging as the kernel of a proposal.

 

The exception is Mayor Lee Leffingwell. At Council’s regular Tuesday work session, Leffingwell continued to express concerns that this version of the board would be nothing more than a reincarnation of the city’s relatively weak Electric Utility Commission.

 

Electric Utility commissioner Philip Schmandt told In Fact Daily via email that Council’s discussion appeared to be “moving away from an independent board and towards a dependent board.” However, Schmandt also suggested that the move toward an independent board might come in stages.

 

“In the EUC’s recommendation to the City Council, we did recognize that it would take probably six or so years to ‘wean’ the City Council from the approximately $50 million in hidden transfers from Austin Energy to the City’s general fund (in addition to the General Fund Transfer).  And if this is a first step in that direction, I think we would be supportive,” Schmandt wrote. “Ultimately though, in order for AE to run more efficiently and to move those ‘hidden’ costs from rate payers to tax payers, the board will need to be independent.”

 

Still, Leffingwell told In Fact Daily after the meeting that what his colleagues appear to be moving toward is “worse than what we have now. What they do is add to the mix this subcommittee, take away all the authority of the board. The board has no sovereign authority with this proposal.”

 

EUC member Steve Smaha told In Fact Daily in an email, “This is exactly the opposite of what I wanted to see. Over my six years on the EUC, the City Council has avoided dealing with the many proposals and recommendations it has received, and I doubt this will change.”

 

The issue of an independent governing body for Austin Energy is a lingering one. With roots that go back as far as the mid-90s, the idea was resurrected in the wake of last year’s painful ratemaking process.

 

Council members could approve an ordinance that would create the board at their Thursday meeting. However, with the latest developments, all parties – including Leffingwell – appear ready to entertain only a second-reading vote at that time. If that happens, a final vote on the governing ordinance would not happen until May 23 or later.

 

Council members are also awaiting authority from the legislature to move utility supervision from under the purview of Austin’s City Manager’s Office to the new board. Current City Manager Marc Ott is opposed to the idea, and until the passage of a bill carried by Sen. Kirk Watson (D-Austin) and Rep. Paul Workman (R-Austin), city legal staff has urged Council members to take no action in that direction.

 

So, the change in governance becomes at least a two-stage process. Any creation of an independent body and decision-making about its purview will come before Council tackles a debate over who should supervise utility management – and thus hold the keys to the city’s largest enterprise.

 

Council Member Chris Riley, who has pitched a version of the independent board that would be subject to wide Council review, brought his colleagues together with a series of clarifications and suggestions Tuesday.

 

Riley started with a general statement. “I am hopeful that there is room for agreement,” he began. “In particular, I think the fundamental problem we are dealing with is that we need to ensure that we have strong oversight of the utility and the main body that the Council relies on to provide oversight – at least from the standpoint of community interface with the utility – is the Electric Utility Commission, and we’ve been hearing over and over again, with increasing emphasis, that the EUC feels it is unable to effectively carry out that responsibility.”

 

He then moved to, again, reinforce the idea that under no version of the new governing board would Council give up final authority over rates, purchases over a certain dollar figure (the magic number appears to be somewhere between $50 and $100 million), eminent domain proceedings, or generation planning. Riley then suggested that, in place of a separate advisory board – the role currently filled by the EUC – Council rely on a subcommittee of itself to watch over the board, and to be certain that it is fulfilling its mission.

 

Riley also called for all items brought before the board to also be put on Council’s agenda. This act would remove any notion that the board could make any decision on its own, without Council stepping in to correct any wayward action.

 

This seemed to address concerns brought by Council Members Laura Morrison and Kathie Tovo. “In terms of what you are discussing here today, with the opportunity of Council review, I think that’s a much more palatable model going forward,” said Tovo.

 

So did Morrison. “I guess I want to say I think I agree with pretty much everything that has been said here today,” she said. “I am very encouraged.”

 

It also seemed to displease Leffingwell. “I think we started off with a reasonable approach to creating independent governance and it’s been diluted in stages to where now it’s, in my opinion, basically meaningless.”

 

Spelman told In Fact Daily that his first preference for a board would have been one that he pitched two weeks ago – an independent governing body with some sovereign power set next to a Council that retained power over the major set of utility decisions. Everything else would fall in an area where the board would make decisions that were reviewable by Council.

 

However, given Tuesday’s discussion, Spelman said he did not believe he had the votes to pass that version of the board. He said that the Riley proposition was his second choice.

 

Schmandt told In Fact Daily that there is some irony in the tone of some of the opposition to the independent board.

 

“Ironically, many who oppose the independent board do so in the name of low income residents, while the current status quo is shifting significant costs onto those residents by means of assessing $50 million in annual costs through utility bills, which is far more regressive than paying them through property taxes.” He added via email, “As one half of AE customers are renters, those customers are paying for costs that they would not pay directly at all if there were a truly independent board. That’s a lot of money.”

 

Also Tuesday, Leffingwell noted that he would call for a 7 pm time certain for Thursday’s Austin Energy governance discussion. With Council members all attending the speech by President Barack Obama, Leffingwell suggested that this may be the earliest that they could get to the item.