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Austin Energy governance bill moving toward passage in Texas House

Friday, May 3, 2013 by Elizabeth Pagano

Members of the Texas House State Affairs Committee got a bit of insight into the fight around ongoing Austin Energy governance issues on Wednesday night.  And, although the bill was left pending by the committee, it is likely to be voted out and go to the full House at the committee’s next meeting.


Last month, City Council endorsed Senate Bill 410, drafted by Senator Kirk Watson (D-Austin) that would allow them to move Austin Energy’s reporting from city management’s watch to a yet-to-be-created board. Council voted 5-1 to support the legislation, with Council Member Laura Morrison casting the lone vote of opposition. (Council Member Kathie Tovo was absent.)


Representative Paul Workman (R-Austin) took on the bill in the House after Rep. Eddie Rodriguez (D-Austin) changed his mind about carrying the bill.


Workman said the bill not only had the support of local officials, but was only codifying something the City Attorney believes Council could do without a charter revision.


“I don’t find anything in the bill about establishing the separate governance. There’s nothing in here about how many members the new governance will be made up of, or where they are going to come from. This is about local control. These folks will have the opportunity to work through the City Council to do what they need to do. The bill is not about the merits of governance,” said Workman. “That is for the local folks to decide.”


The last time it was before City Council, both Mayor Lee Leffingwell and Council Member Bill Spelman favored the idea of separating city management from the utility. But that move, if it happens, is expected to come after state legislation – namely SB 410 – is passed. SB 410, which was discussed on Wednesday night, makes clear what some claim is already legal, and gives City Council the explicit authority to create an independent energy board that would have management control over the utility.


Leffingwell was on hand to explain his endorsement of the bill, as was Trey Salinas, who was representing CCARE, a group of Austin Energy’s large commercial customers.


Leffingwell gave some history, explaining that the recent rate case was appealed to the PUC by customers outside the city, and as a result those customers now have lower rates than those inside the city of Austin. The ordinance that City Council passed on first reading last month requires that one member of the independent board live outside the city.


“Austin Energy is a $1 billion enterprise that is owned and operated by the city. It needs to be governed by an independent board of directors and operated as a competitive business,” said Leffingwell. “This bill will enable us to do that.”


Those on the committee who spoke seemed to favor the bill, speaking to concerns that those outside of the city who were served by the utility weren’t properly represented by its governance, and noting that the city’s elected officials were in support of the legislation.


“As a policymaker, to have that kind of expertise just seems kind of daunting to me,” said Representative Jessica Farrar (D-Houston). “The council people are elected from the citizenry and expected to have the expertise you might need to run a utility company.”


Noting that the bill had the support of two mayors and City Council, Representative Charlie Geren (R-Fort Worth) said he was having trouble understanding why people opposed it.


Local activist Paul Robbins spoke in opposition of the bill, calling it a matter of sovereignty that would determine whether voters in Austin would govern themselves.


Robbins was critical of Council’s decision not to include the issue of governance on last November’s ballot, saying it was a charter issue that would best be left to voters.


“Perhaps if City Council had taken up the issue in a timely matter, they would have been able to place the proposal on the ballot and persuade the majority of Austin voters that it was to their benefit. Instead, the Austin City Council is asking you to remove the voters from the process because the Council didn’t have the foresight and, frankly, the courage to do their job,” said Robbins.


Tom “Smitty” Smith with Public Citizen told the committee that, in his opinion, there was a rush to change the utility’s governance before the larger-scale users reduced rates expire in May 2015, under a single-member district City Council and prior to the next charter election.


“They are, frankly, worried that their deals will not be extended,” said Smith. “That’s really what’s going on here. It’s about whether the citizenry controls the utility or the business community (does.)”


With the bill still in play at the legislature, and the committee yet to weigh in officially, City Council will take up the matter of Austin Energy’s governance again next week.


“You can tell that something is a knock-down drag-out fight at City Hall when we’re hearing about it at the State Affairs Committee,” said Andrew Dobbs with Texas Campaign for the Environment. “If you come out to City Hall next week, you are going to see some fireworks. And that’s where they belong. It’s unnecessary at this time to get the state involved in this.”

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