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Council members grill Austin Energy over plans for new building

Wednesday, June 11, 2014 by Michael Kanin

City Council members expressed concern at Tuesday’s work session over the transparency of the route taken by Austin Energy officials in search of roughly $9 million to design a new headquarters building in East Austin and an additional $5.2 million for what was described as upgrades to a system that may, when it’s all done, cost tax payers more than $60 million.


Council Member Bill Spelman summed his concerns. “It sounds to me that this is a very reasonable set of decisions that you guys are making, both on the building (and the billing system),” he said. “But the way you are portraying these decisions is not putting your best foot forward. If this is actually saving us money to build a new building, if this is actually saving us money to have gone to this extremely expensive system…that seems to me to be something that you should highlight.”


Earlier, Spelman was a bit more pointed. He began speaking specifically about the city’s relationship with IBM, the billing system provider, and questions about the city’s inability to get 2009 pricing figures that might illustrate potential savings. “It’s what happens when you deal with a corporate structure which remains secretive and proprietary and doesn’t let very much out about what it is up to,” he said.


The building has received press attention questioning the need for what Mayor Lee Leffingwell described as rumors of a “gold plated” facility. To that, Council Member Laura Morrison added questions over whether there was an actual need, based on staff size for a new structure.


Council Member Kathie Tovo questioned whether any Council had actually approved the construction of the facility. When staff suggested that Council had approved a master plan for construction. Council Member Mike Martinez fired back that approving a master plan is not the same thing as signing off on a construction deal.


“We approve facility master plans quiet frequently in different departments and apparently we did 30 months ago at Austin Energy,” Martinez began. “To me that doesn’t create an assumption that we’re going to build whatever that facilities master plan says.”


Martinez then turned to the 2012 Austin Energy Rate Adjustment. “I think it’s very troublesome that we went through a very difficult rate case, knowing that the facilities master plan was coming, and here we are a little over a year after the rate case and we see that our finances to, I believe, the tune of a $60 million-plus reserve this year and now we’re already going out and planning to build a building for $7 million.


In the end, City Manager Marc Ott assured Council members that there would be “no gold-plated building.” Ott also signed on to the notion that staff would provide more data about the reasoning and needs behind constructing the facility, and an accompanying delay in approval of the building.


Later in the morning, Spelman brought up the Customer Care & Billing System contract with IBM. The city’s utilities share a single billing system, one that has experienced major flaws as the city has tangled with dramatic rate changes.


Addressing Austin Energy Chief Administrative Officer Kerry Overton, Spelman wondered if Austin Energy could have foreseen the need brought forward Tuesday – ultimately, a call for more space and a testing environment for future changes – when the project began five years ago.


Overton replied, “In one way, I would say, not much. But what we do know is, all of this equipment is proprietary equipment and so their pricing is really their systems operation,” Overton said. “We don’t have a way of looking at a quote on this back in 2009 and compare it to what they would give to us today.”

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