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Changes prompt Council to postpone discussion of utility governance

Friday, May 10, 2013 by Michael Kanin

A new version of a draft ordinance that would create a separate governing body for Austin Energy met Thursday with questions and concern from the Council members who originally kicked off an attempt to establish an independent board to oversee the utility.


Council members eventually postponed further discussion – and any more voting about the idea – until their May 23 meeting. Though one version of an Austin Energy independent governing board was approved on first reading in mid-April, Mayor Lee Leffingwell, Mayor Pro Tem Sheryl Cole, and Council Member Bill Spelman all felt that changes in the ordinance made this week were significant enough to warrant a delay for further study.


“Council Member Spelman, Mayor Pro Tem Cole, and myself were sponsors of the original ordinance and it has been, I can just say, rewritten,” said Leffingwell. “We would like to have that opportunity (to postpone).”


Council Members Laura Morrison and Kathie Tovo urged their colleagues to at least have some level of discussion about the matter. “We certainly would have the opportunity to not take action after we discuss it this evening,” said Morrison. “I know that there are folks that are planning to come down and be part of it, so I would prefer that we not postpone it, and that we at least have the opportunity to discuss the draft.”


On Tuesday, it appeared that all Council members aside from Leffingwell were circling around a set of basic ideas offered by Riley and Spelman. However, a key operational difference between the proposals – a Riley provision that would amount to Council review of every board decision – seemed to gain more traction than Spelman’s attempt to allow the new board independent purview over a limited set of decisions.


Spelman told In Fact Daily Tuesday that he did not believe that he had enough votes for the type of board he pitched originally.


Between Tuesday and the Thursday meeting, city legal staff worked up a new draft of the governing ordinance. It was intended to capture changes discussed by Council members. It also appears to significantly weaken the board, reserving the final word on all decisions for the Council. As such, the new ordinance may simply recreate the city’s current Electric Utility Commission – something that six of the current seven commissioners would advise Council members against.


Shudde Fath, who has served on the commission for the past 34 years, told In Fact Daily Thursday evening that she was extremely frustrated by the turn Council has taken toward a weaker board.


She pointed to one of the arguments opponents use that the new board would be “corporate.”


“The Council’s going to appoint the board members and if you don’t appoint corporate COs to sit on the board, there’s not going to be a corporate takeover,” she said. “The way to get board members who share the values of the Council is to appoint board members who share the values of the Council.” She suggested members such as utility activist Paul Robbins, former General Manager Juan Garza and former Austin Energy executive Karl Rábago would be good members.


Fath showed In Fact Daily a letter she had sent to Council voicing her concerns earlier this week. It says, in part, “Off and on over many years the issue of governance by an elected Council has been mentioned as a negative by bond rating houses.” The November 2012 Moody’s report on Austin Energy’s bond rating, listed the following as a “challenge” for Austin Energy: “Political involvement in power resource decisions and rate setting.”


Spelman told In Fact Daily via email, “The current version does not take any steps toward improving oversight of the utility. It gives the board no authority at all. There was room for compromise, but this is not a compromise. This is the status quo.”


For his part, Riley thinks the new draft provides Council, staff, and the utility with a measured way forward.


“Under the proposal on the table now, the City Council would retain principal responsibility for major decisions like strategic plans, rates, budgets, and large capital purchases,” Riley said. “A new Electric Utility Board would provide input on those matters, and would make decisions on all other utility matters, but those decisions would be subject to Council review. A new Council subcommittee would keep an eye on both the utility and the Board, and would make recommendations to the full Council about any further changes needed to make sure the new structure works efficiently and effectively.


“This proposal is designed to ensure better oversight of the utility, while still preserving the Council’s accountability and authority.  It also allows for periodic adjustments to the Board’s authority as needed once the Board is up and running.”


Meanwhile, legislative machinations may complicate matters even further. Thanks to a very strict reading of the city charter by legal staff, Council members have been told that they may not have the authority to move management oversight of the utility out from under the City Manager’s office. That power would, theoretically, be reassigned to the board – a move that would shift day-to-day control over the utility away from the City Manager.


A majority of Council members appears to believe that this is a necessary step. Bills introduced at the state capitol by Sen. Kirk Watson, D-Austin, and Rep. Paul Workman, R-Austin, are designed to clarify city power to move Austin Energy reporting. However, their effort appears to be stalled. With only a handful of days left in this year’s legislative session, each day the legislation remains in committee lessens the likelihood of its passage.


Without the clarification, city legal staff – who report to City Manager Marc Ott, himself an opponent of the reporting change – are unlikely to assist Council members in reconfiguring the board. If that remains the case, any governance change would come minus a key chunk of utility reconfiguration.

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