Times change. Ten years ago, the city and the LCRA were in a blood feud over
water quality in the Colorado River. The city was dumping raw sewage into the
river and the river authority was threatening to give the city a good spanking
at the Texas Water Commission. Now the two are in the midst of an odd
courtship. Don’t call it dating, yet. But the two are talking about dating.
Marriage might come later.
The dowry, of course, includes the City of Austin’s electric utility. And with
a potential selling price of up to $3.4 billion, it’s quite a catch for any
suitor. Last August, LCRA general manager Mark Rose gave the city a pitch that
caught most people by surprise. While Mayor Bruce Todd was pushing for an
outright sale of the utility to one of the big investor-owned utilities, Rose
and lobbyist David Armbrust visited several councilmembers in their offices and
offered to simply partner up with the city.
At first blush, it’s a reasonable idea. The city keeps its most valuable
asset. City electric customers could continue to enjoy the benefits of having a
utility that is tax-exempt. And both agencies could reap the benefits of
eliminating redundant positions while consolidating the ownership of generation
facilities like the Fayette Power Plant. The city owns 40% of the facility,
which burns Wyoming coal.
Of course, Rose didn’t make the pitch just in order to curry favor with the
city. He makes it clear in his interviews that he wants to distance himself
from Austin city politics as much as possible. “I’m not mad at Austin,” Rose
says, “But we don’t serve Austin.”
A former city councilmember, Rose says Austin’s city council “has one and only
one question that they are going to have to answer: `Who are we going to
represent? The ratepayers or the city as an institution?’ That’s the only
question.”
By selling the utility, Rose says, the city will get a few billion dollars
which could then fund the portion of the budget that was formerly made up by
transfers from the utility to the general fund. If the city does that, he says,
city ratepayers will pay the price over the long term in the form of higher
electric rates.
Suitors abound, at the right price of course. Texas Utilities and several
others have expressed interest in the utility. But Rose’s suggestion has
started people thinking about what kind of partner might make sense for the
city. The City of San Antonio – which has already partnered with the city on the lawsuit against Houston
Lighting & Power over the South Texas Project – has been one suggestion.
So, the LCRA is just one of many possible partners for the city. And several
potential buyers are queuing up for a possible purchase. But Robert Floyd, the
former chair of the city’s Electric Utility Commission, is one of many who
believe an outright sale of the utility will be bad for the city over the long
run. “I don’t care what the price is,” he said. “There couldn’t be a stupider
move on the planet.” – R.B.
This article appears in November 24 • 1995 and November 24 • 1995 (Cover).