I’m still not a fan of the CSU governance model. It allows CSU executives to run the company unfettered by the strings of legitimate supervision. I remain critical of unsupervised policies and processes which allow CSU management to venture into ill-planned capital spending and inappropriate speculative investment. For example, (as you may recall) without legitimate board supervision CSU’s executives managed to drive their gas price hedging scheme into the ditch. A recent City Auditor’s inspection reported “the price of natural gas dropped dramatically and utilities, (locked-in on its 3 year rates), spent $208 million more (than they should have) for natural gas.” And nobody was held accountable. In the real world, when a business loses nearly a QUARTER BILLION dollars, its stock price plummets and somebody is fired. Did you know the city’s General Fund receives a payment from CSU every year? In the old days, the payment was called PILT (Payment In Lieu of Taxes). Eventually, the Tax Adverse killed PILT. But because the voracious General Fund needs to be fed every year, PILT was simply renamed “excess revenue” and the burgers never stopped coming off the grill. The PILT (excess revenue) flows into the general fund for general spending and is available (ironically) for street lights or water in our parks, etc. $208 million is most of an entire year’s general fund budget! The Auditor says CSU lost $208,000,000 in gas price hedging (most of an entire year’s budget!) That’s $208,000,000 in potential “excess revenue”, and as “excess revenue”, this should have been rightly claimed by Council for the general fund. Other large CSU capital over-spending could be classified as excess revenue. For example, consider the prediction that NSG’s scrubber cost will exceed other readily available emissions control options by over $100,000,000. That over-spend (excess revenue) could have been directed to other critical municipal needs like public safety, pension reform and infrastructure improvements. The questions: 1) Because it wears 2 hats (Utilities Board and City Council) does City Council possess an inherent conflict of interest preventing it from making a claim for excess revenue from CSU on behalf of the citizen’s? 2) Because the Mayor possesses a duty to negotiate “best deals” in all contracts on behalf of the citizens, does he have a duty to demand a review of new contracts and demand an investigation of previous large capital-spend contracts to prevent further over spending at CSU; 3) should the Mayor submit a claim for all excess revenue on behalf of the citizens? Best practice public policy demands we install a new utilities board with a structure that holds CSU executives legitimately accountable. This could be accomplished if President King and his members relinquish some power by simple board governance policy modification; altering who sits-in-the-seats. I suggest Council appoint 5 of its members; the Mayor’s office receives a legitimate seat (not ex-officio); and then, Council hires 3 bona-fide industry experts with high-level, national industry expertise who can lead an informed and intelligent utility company conversation. As it is, we have a conundrum; a utility board providing no legitimate executive management supervision; and concomitantly, no legitimate utilities company representation at City Council. And if their blind oversight of CSU is an example of Council’s meddlesome leadership, count on being led by the King/Miller coalition to the City for Chumps. I’d rather be led by forward-leaning leaders to a prosperous future including jobs, an expanding economy, exceptional health care, recreation and low cost utilities.
Posted on: Mon, 03 Feb 2014 12:56:42 +0000
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