From The Colorado Springs Gazette (Billie Stanton Anleu):
When you pay that bill to Colorado Springs Utilities each month, you might not realize that Colorado Springs owns the four-utility organization, and it’s run by the City Council, which also functions as the Utilities Board.
Mayor John Suthers, Council President Merv Bennett and Colorado Springs Forward, a powerful nonprofit, want to see an appointed board take over governance of the $1 billion-a-year public entity.
Most City Council members don’t. They want either an elected board or no change at all. So Suthers and Colorado Springs Forward are pushing for a compromise – a hybrid board, with a majority of appointed members plus a few elected ones.
What’s the best model to govern Utilities? Through the City Council, as is done now, a different elected board, an appointed board or a combination of both? And if members will be appointed, who should appoint them?
Current Utilities Board members could recommend a switch to any of those new models, but they don’t decide whether a change actually gets made. That will be up to voters, the ratepayers themselves, who are expected to see a ballot proposal in April.
The hybrid board
This model is widely regarded as dysfunctional, and the Utilities Board voted unanimously May 25 to reject it as an option.
“The hybrid governance model is rare, for good reason,” said Jeff Tarbert, consulting facilitator for the Utilities Board’s governance review. “Any model that has the consequence of creating unintended factions or creates confusion concerning where a board’s ultimate fiduciary duty lies makes effective governance more difficult.”
Bennett said, “All the research we’ve done, in every instance, it (the hybrid model) created dysfunction. I could accept either (appointed or elected); I much prefer an appointed board.”
Board member Keith King said he sat on the Colorado League of Charter Schools’ hybrid board for 14 years and watched as fighting factions formed.
“In the end, it was a non-functioning board. A hybrid does not work well because people who are elected then are appointing people to the board. It makes for conflicts,” King said.
The league structure was changed four years ago. Now all its members are elected, King said.
Colorado Springs Forward leaders said in a statement to The Gazette they prefer the elected model: “While we see many advantages to the all-appointed option . we believe the hybrid of appointed and elected is the better alternative .”
The status quo
Some Utilities Board members believe they’re doing a fine job in that role even while serving on the City Council.
“If it ain’t broke, don’t fix it,” said City Council President Pro Tem Jill Gaebler.
“They say they want people who would focus exclusively on Utilities. Tell me who that is. Give me a name. Those who are qualified are probably CEOs of other companies, and I don’t think they’re going to have any more time than I do.”
That’s a reversal from Gaebler’s position six months ago, when she said serving Utilities and its committees took too much time. “I don’t think it’s fair to ask that much of a council that has a whole other role at $6,250 a year,” she said then.
Gaebler’s previous viewpoint resonates with some of her colleagues. As council members, they have their hands full working on marijuana regulatory reforms, a new strategic plan, a review of the City Code and myriad landslide, land swap, planning, rezoning and other issues.
The time crunch has become intense for a council facing contentious issues in a city of nearly a half million people while also supervising Utilities in the increasingly complex energy and water arena.
But Gaebler and others say they can oversee Utilities if they’re given better resources.
“The longer I look at it, the more I’m inclined to leave it with the City Council,” King said. “I’m not sure we’d be getting higher-qualified people running Utilities than what we’re already doing. If the council could have staff, the ability to do research, the ability to really govern . I think we would be able to govern it well.”
Board member Bill Murray pointed to a J.D. Powers study that ranked Utilities No. 2 in the West among mid-size utilities for customer satisfaction as proof that ratepayers have no issue with Utilities’ governance.
“In this particular case, the name of the game is control of the Utilities,” Murray said. “The mayor needs to control Utilities because he needs the money.”
But while some board members say they provide good accountability for Utilities, critics say City Council members lack scientific knowledge to run the enterprise effectively.
“This board – being elected and being politicians – they’re so easily swayed,” said Jacquie Ostrom, who served on Utilities’ Customer Advisory Group last year to help develop its Electric Integrated Resource Plan. “CSU works so hard to schmooze them and be their friend. We need to gain information and knowledge outside of CSU. . There’s just no way these politicians can bring the kind of expertise we need.”
“In the past,” said board member Don Knight, “we’ve had board members who won’t believe a single word the staff tells them, and we’ve had board members who will never question the board. Whether appointed or elected, we need a board that will know when you have to dig deep and question, when something doesn’t seem right on the surface or is an incomplete solution.”
Environmental activist John Crandall said competency is an issue, citing a previous City Council’s decision in 2011 to sign a $111.8 million contract for unproven coal-plant scrubber technology without putting the project out to bid.
“My emphasis is on competency,” said Crandall. “That’s what I want to see on the board, and we’ve never had that. It’s a hell of a job.”
Monument attorney Leslie Weise, a clean-air advocate, said City Council candidates aren’t asked about their qualifications to serve on the Utilities Board.
“It’s almost an afterthought that you have this extra duty to run a $1 billion business that’s highly technical, regulated and complex,” Weise said. “From what I’ve observed, it’s not functioning.”
Some ratepayers favor a governing board of experts in air quality, water quality, medical effects of air pollution and other specialties. That’s not the plan, though. Current members want a board of management experts, such as CEOs with business backgrounds.
The appointed board
A random check of municipal utilities about the size of the local department shows all have unpaid, appointed boards.
“I come from a nonprofit environment, where all our boards are appointed,” Bennett said. “Personally, I think we can get better talent through an appointed board.”
Said Suthers: “Utilities is getting more and more complex – the role of renewables, when to terminate coal-fired power. I would like to bring more expertise to the table. I would love to feel more comfortable with the Neumann Systems (scrubbers). You don’t get that kind of expertise in an elected board.”
Lincoln Electric System in Nebraska has nine board members representing the utility’s service area. The City Council can recommend nominees, who are chosen by the mayor and confirmed by the council.
The Knoxville (Tenn.) Utilities Board of seven commissioners nominates its own replacements, who then are appointed by the mayor and confirmed by the City Council. The board also appoints a president and CEO.
The public utility in Tacoma, Wash., has a five-member board appointed by the City Council.
The five-member board for the Orlando, Fla., utility consists of the mayor, three Orlando residents and one from unincorporated Orange County.
Orlando has a nominating board that vets candidates for appointments. When a seat opens, a few nominees are selected, and the sitting utilities board interviews them and chooses one.
And the five-member utility board for Chattanooga, Tenn., is appointed by the mayor and confirmed by the City Council.
But even if the Colorado Springs City Council appointed the Utilities Board, most current members don’t favor that model.
“I have not seen any appointments, whether by the mayor or fellow council members, that have not been approved for confirmation,” Knight said. “I don’t think we do a really good job of a complete vetting and getting the people’s input on it. The other concern I have, I’ve also seen nobody (appointed) ever get dismissed.
“If I buy stock in any company, and I don’t like what the board of directors is doing, I can sell my stock. I can’t do that as a CSU ratepayer. The ultimate accountability is to the ratepayers, and those are the voters. When you’re appointed, you’re also beholden to the person who appointed you.”
A new elected board
Like Knight, most other current Utilities Board members say if any change is made, it should be to a separate elected board.
Murray said he’d be willing to turn Utilities governance over to an elected board. “But that would be the only way I’d do it. . We’re very concerned about the appointment process because, historically, the mayor appoints, and you’ve never even seen who applied.”
Utilities Board Chairman Andres Pico, who initially balked at the idea of shedding board responsibilities, now says he’s willing to consider that change, but only to an elected board, which ratepayers overwhelmingly preferred in a recent survey by Utilities.
“With a company, the stockholders pick the board the majority of the time, and the board answers to the stockholders,” Pico said. “And that’s the same here: The citizens are the stockholders. I adamantly think an elected board is the way to go.”
Colorado Springs Forward, whose PAC endorses and donates money to candidates, said it can’t support an all-elected board because that would set up “a situation where election politics and special-interest agendas will dominate the election process, creating a highly politicized board.”
The Utilities Board expects to decide in July whether to recommend a change and, if so, what change or changes.
Whether appointed or elected, Bennett said, a change is needed. “We need a City Council who gives 100 percent attention to the city and a Utilities board who gives 100 percent attention to Utilities.”
“We’ve got a lot of capable people here in the city, and I think we can find the folks who can do the job,” said Councilman Larry Bagley, who is leaning in favor of an appointed board. “I don’t have any qualms about it being a separate board or different people doing it. I think it’ll work.”