The high price of a deal gone bad: Rebuilding CPS leadership
November 22, 2009
San Antonio Express-News
It's come to this: The simple truth withheld from the community by CPS Energy was revealed last week by NRG Energy executives to a Houston gathering of financial analysts: San Antonio can't afford the high price of expanding the South Texas Project nuclear facility.
Not that we need another example, but once again Wall Street enjoys the advantage over Main Street. Ratepayers don't have a need to know, but let's not deny institutional investors a little inside information.
The project will cost billions more than CPS estimated, even after interim General Manager Steve Bartley went to Japan to seek concessions. Utility executives want until January to bring a new number to Mayor Julián Castro and the City Council. Why wait?
What CPS once promised was a good deal for the city is now, clearly, a bad deal. It's a bad deal made worse by utility executives who deliberately withheld critical financial data, thus misleading elected city leaders, the Express-News and the public. Even as we were told the project would cost CPS and NRG a total of $13 billion, utility executives knew Toshiba Inc. was estimating $4 billion more.
After investing several hundred million dollars in the planned expansion, it's now time for the city to cut its losses and cash out by asking NRG to help find a private-sector buyer that doesn't answer to ratepayers.
But more than a sale is in order as we consider anew other energy options.
It's also time for a change in utility leadership. The energy this city needs right now that CPS can't deliver is a big jolt of renewed public confidence. That will come only if Castro and the council can start with a clean slate.
CPS CEO Milton Lee already is on the way out, albeit in a way most of us can only dream of, earning hundreds of thousands of dollars to stand on the sidelines until his September retirement. Bartley and the various executives around him are, in my view, all good people who have enjoyed successful careers. The utility has been well-managed over the years, but it's also conducted itself like a private entity not answerable to City Hall or ratepayers.
CPS board Chair Aurora Geis has worked diligently for years and is well-intentioned. She also is turf-conscious and defensive, as if the five-person board that appoints its own members answers to no one. The fact that she and fellow board member Stephen Hennigan work at the same San Antonio credit union is a conflict of interest that should have been dealt with long ago.
Castro, the council and the ratepayers would be best served if Geis stepped aside voluntarily and gave the mayor, still in his first year in office, the opportunity to survey the community for a credible, proven leader - former Mayor Phil Hardberger comes to mind - to oversee an expedited national search for a new CEO.
Sadly, a robust community conversation about the city's energy future has been squandered. Instead of building new nuclear towers, it's time to rebuild the ut
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