The Austin Chronicle

Austin @ Large: Analyzing the Analyst

Prop. 7 and the City's Double-Edged Utility

By Mike Clark-Madison, April 19, 2002, News

When you vote on the very long May 4 ballot, resist the temptation to go home after voicing your choice on the first four charter amendments (public financing, repealing campaign cash limits, single-member districts, and repealing term limits). The rest sound boring, but one in particular -- Proposition 7 -- deserves a considered response.

This would create a new position, appointed by the City Council, of "electric utility consumer analyst." Those four words are about the only job description that person would have; unlike public financing or single-member districts, or the police-monitor proposal that didn't make the ballot, the details have not even begun to be worked out. But it's not for lack of consideration.

Prop. 7 is the latest, and probably last, council attempt to answer a question that's been hovering since 1996: How can Austin Energy be competitive and still meet a public utility's commitment to the public good? Back in 1996, the opinion of many city leaders was that the electric utility couldn't be both competitive and public, and thus should be privatized.

This was before electric deregulation was much more than a twinkle in the Legislature's eye, but at the inauguration ceremony for the returning Goodman and new Council Members Daryl Slusher and Beverly Griffith, then-Mayor Bruce Todd devoted his speaking time to a clarion call to privatize the utility, which is yet another reason why people have such negative memories of Todd. As it happened, the city strategic plan for turning the utility into a proper competitive business, yet keeping it city-owned, passed on a 4-3 vote, against City Manager Jesus Garza's recommendation. (It was as part of this plan that the former Electric Utility Department got "rebranded" as Austin Energy.)

Who Speaks for Us? --

Having made that narrow commitment, though, the actual role of Austin Energy within City Hall has remained a work in progress. It's not just another city department, if only because it makes up half the city's annual budget and more than half of its annual debt service. Transfers from AE's profits -- in effect, the dividend paid to citizens as stockholders of the utility -- make up nearly 20% of the city's General Fund, which pays for a lot of cops and library books, and helps keep our property tax rate artificially low.

So, as the board of directors of this $1 billion enterprise, the City Council has been pressured to pay more attention to AE's business issues and less to the needs of the citizens/ratepayers/stockholders/voters, all of whom are the same people. They have not, in our view, actually succumbed to this pressure, precisely because the citizens, customers, stockholders, and voters are all the same people, even if they don't always know it. But complaints have been ongoing -- particularly from whoever is, at the time, the left wing of the council -- about AE not giving council members and citizens (and from here on, you can read "citizens" as "average residential ratepayers") adequate information or otherwise being accountable.

It's been a long time since AE has raised rates, but old-timers will remember that, under Texas law, the electric and water utilities are allowed to contract with a designated "consumer advocate" to represent the interests of small customers. The city's longtime advocate, Scott McCullough, himself had a contentious relationship with AE and objected to what he thought was a too-strong commitment to secrecy. Big customers -- people like, say, Motorola or AMD -- have their own lobbyists who heavily make their presence felt at City Hall when rates are on the table. Prop. 7 would make McCullough's position permanent and appointed by the council, rather than by AE itself.

On previous occasions, Goodman and others have tried during budget deliberations to have such a position created in the City Auditor's office. These efforts failed, either because people like Garza blew hard about the affront to council-manager government, or because people like Gus Garcia -- himself an auditor by trade -- raised concerns about the auditor's need for independence from anything that smacks of "advocacy." (As mayor, he once again put the kibosh on such discussions last month by throwing around a five-letter-word beginning with "E" -- i.e., that little bankrupt company down the road in Houston.

Hence this year's charter amendment.

-- In Theory, the Council

The last important fact bringing you to the ballot box is the City Council's grudging consent last year to allow Austin Energy to keep proprietary information confidential and away from potential competitors for Austin's electric market. (Right now, the city is allowed to opt out of retail competition, but that's not likely to last forever.) This has moved much of AE's business into executive session. "There are some things we need to do now that we never needed to do before," Goodman told her colleagues last month when Prop. 7 was being debated, "and part of that is have some sort of reassurance and protection for the consumer component of a public utility that can no longer be so public."

So, since the public at large can no longer watch all of AE's business, and since the City Council is not made up of electric-utility specialists, we need, Goodman says, an analyst (steering away from that word "advocate") to represent citizens at the table. Noble idea, but sort of a sad commentary on how (in)effectively City Hall works. Implicit in this proposal is that a council-appointed analyst will tell the council something different from what they'd hear from AE management, who likewise work for the council at one remove -- new AE general manager Juan Garza currently reports directly to his old friend, colleague, and former underling Jesus Garza (no relation), and after next week will report to new City Manager Toby Futrell.

More to the point, implicit in Prop. 7 is a mistrust of AE and the city manager, which in the case of Jesus Garza may not have been entirely misplaced. But considering the current lovefest between Futrell and the council, it's hard to believe that Toby would not, her own self, go to Austin Energy and crunch whatever numbers Jackie Goodman asked for. Would those numbers tell the council -- or at least those members who'd rather be citizen advocates than utility directors -- what they want to hear?

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