July 24, 2012

By Marty Toohey
Austin American-Statesman

Austin voters could decide in November whether an independent board, rather than the city government, should run the city-owned electric utility.

The city’s Electric Utility Commission, an advisory group, agreed Monday night that the ballot should include a proposal to put Austin Energy under the direction of an independent panel, similar to the governing board of San Antonio’s CPS Energy. Currently, Austin Energy is run by the city manager and City Council.

The proposal to change Austin Energy’s oversight is not new; a city commission recommended an independent board in the 1990s. But the idea resurfaced as part of the debate over a controversial rate increase set to take effect in October.

Mayor Lee Leffingwell said last month that he supports a switch, partly to ease the difficulties Austin Energy will probably face when the Legislature convenes in January and powerful detractors are expected to push for the utility to be placed under new management or opened up to competition from the private sector. State Sen. Kirk Watson, D-Austin, endorsed the independent board proposal this month.

But some Austin City Council members and activist groups say it’s best to keep Austin Energy under the direct supervision of the city’s elected officials. They say that setup makes the utility more responsive to the public’s wishes. It’s also unclear whether the city can cobble together a proposal by mid-August, the deadline for putting propositions on the November ballot.

"Time is short … but if it can be done, we should do it," Leffingwell said Tuesday.

Those in favor of an independent board say it would bring expertise the council lacks, be more likely to resist the pressures of politics and have less incentive to tuck general city spending into the utility’s budget — as the city has done over the years by spending as much as $80 million annually on city programs unrelated to electricity, in addition to the $100 million or so the utility transfers to the city’s "general fund."

Proponents of the current setup say that Austin Energy has kept its rates among the lowest in Texas for years and that even the debate over the rate increase was improved by council oversight.

Tom "Smitty" Smith, the head of the Texas chapter ofthe watchdog group Public Citizen, said that before a controversial nuclear-investment deal fell apart a few years ago and caused a public outcry over accountability, San Antonio’s board was far less responsive to the public than Austin’s council.

City staffers are researching forms of governance allowed by Texas law. But that report will not be ready until the fall.

Because so many questions will be unanswered, the council would probably have to decide in August whether to put a generally worded proposal to the public, said Phillip Schmandt, the chairman of the Electric Utility Commission.

That would leave the details to be hammered out by the council later.

The council would decide whether a new board must seek council permission to raise rates and put bond proposals on the ballot as well as how much board representation to give to the 50,000 or so Austin Energy customers living outside the city limits. Those customers cannot vote in Austin elections, and their complaints are a major reason the discussions have resumed about changing Austin Energy’s governing structure.

Contact Marty Toohey at 445-3673 445-3673

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