Board Members Present: Chair Merv Bennett, Vice Chair Andy Pico, Board Members Don Knight, Jan Martin, Helen Collins, and Larry Bagley

Transcription

1 Minutes Colorado Springs Utilities Board Special Meeting Governance Structure & Governance Process Review March 25, 2015, 1:00 p.m. - 3:00 p.m. Blue River Room 121 S. Tejon Street, 5 th Floor Board Members Present: Chair Merv Bennett, Vice Chair Andy Pico, Board Members Don Knight, Jan Martin, Helen Collins, and Larry Bagley Board Members Excused: Jill Gaebler, Val Snider, and Keith King Staff Members Present: Jerry Forte, Sherri Newell Wilkinson, Gary Bostrom, Eric Tharp, Bill Cherrier, Carl Cruz, Christian Nelson, Ken Burgess, and Eileen Verosko Facilitator: Dr. Jeff Tarbert, Principal and CEO of The TARBERT Group, LLC and Executive Consultant for the American Public Power Association (APPA) 1. Call to Order The meeting convened at 1:02 p.m. Chair Bennett invited the audience to participate in the discussions throughout the meeting. Ms. Sherri Newell Wilkinson, Chief Strategy and External Affairs Officer introduced Dr. Jeff Tarbert, and gave a brief bio on his background and experience. She stated that Dr. Tarbert brings a lot of varied and diverse perspective to the process. Dr. Tarbert expanded on his background, his career with APPA, and how he came to acquire his expertise in the utility industry. Dr. Tarbert reviewed the agenda. Dr. Tarbert stated that the governance of Colorado Springs Utilities is one of the most complex he has come across. He also noted the reputation Colorado Springs Utilities has of being the best regarding utilities operations in public power. He stated he is from the electric side of the industry, and much of what he will be saying will be in the context of electric, but that the governance principles apply to each service. 2. Review Governance Structure and Process Review Plan Dr. Tarbert clarified that the plan to review the governance structure and governance process is to learn if there is a better way to do things, and to include public input. 1

2 Dr. Tarbert discussed the definitions for governance process and governance structure, and the assumptions regarding the process. He explained how electric utilities are at a tipping point in the industry, and how the electric utility business model is evolving. Board Members responded to Customer Phil Lane s question of whether one of the assumptions from this process will be implementing recommendations from the final outcome, stating that if a change in the governance structure was recommended, it would require voter approval. Changes to governance processes could be made by the Utilities Board and City Council. Dr. Tarbert reviewed the objectives and drivers for the review. Chair Bennett explained that although the Utilities Board does not believe anything is broken now, they want to be pro-active should problems occur in the future. Vice Chair Pico commented on how processes in the last two years have changed substantially. Dr. Tarbert commented on the importance of keeping public input centric to the process. He stated that the process does not work well if the citizens don t realize that they are the owners and understand the value of ownership. Dr. Tarbert reviewed the current plan that is in place for the governance review. Chair Bennett explained that the plan has off ramps built into it to determine at each step whether to stop or go on. We are currently in the benchmarking phase. Dr. Tarbert s recommendation was to use this plan as a guideline, because as you progress through the plan, there will be some flexing and tweaking that will occur. 3. Public Power Governance A. Governance Definition and Evolution Dr. Tarbert discussed the types of energy providers in the United States, including Publicly Owned Utilities, Investor Owned, Power Marketers, Cooperatives, and Federal Power Agencies. He commented that Colorado Springs is among the largest publicly owned utilities, but also very complex in having four utility services as well as generation and transmission. Dr. Tarbert recommended discussing governance process first, stating it works best to learn best governance practices before looking at the structure. He presented the definition of governance, and discussed board responsibilities. He stated that if board members do not know their role, the body is not functioning as it should. A board must be accountable to its customers/owners. Their role is to oversee the operations of the organization, and to sustain and enhance its value. Dr. Tarbert explained the origins of governance and how it has evolved from the 1930 s through current day. He gave some examples of companies that had failures in 2

3 corporate governance, and explained the evolution of board members becoming personally liable in their positions. Dr. Tarbert discussed legislative response to board failures, and discussed acts and rules that have been passed that are becoming the standards by which all boards are being held to. B. Follow-Up: Public Power Business Model Dr. Tarbert discussed challenges the utilities industry is facing. He stated that the first one hundred years have been pretty straight forward, but issues moving forward involve major environmental regulations that will be very high cost, aging infrastructure, flat sales/revenue across the industry, keeping up with technology, changing customer needs and involvement, and business model risks. Dr. Tarbert presented examples of the business model for investor owned utilities and publicly owned utilities. He stated that local control is a tremendous advantage with the credit rating agencies, and an invaluable asset of public power. Customer awareness of local control is also extremely important. C. Best Practices: Duties and Responsibilities Dr. Tarbert reviewed primary duties and responsibilities of a governing body. He also reviewed the duties between the Utilities Board and City Council according to Colorado Springs City Charter and City Code, and Utilities Board Policy. He listed the five top board duties: 1 Comply with statutory and fiduciary duties 2 Assure an effective chief executive 3 Approve strategic direction and policy guidance 4 Monitor and improve organization performance 5 Evaluate and improve board effectiveness The Utilities Board needs to do everything they can so the CEO is as effective as he/she can be in their job by giving clear direction, consensus, resources, and assuring that authority given to the CEO is not undercut. D. Performance Monitoring Dr. Tarbert stated that monitoring organizational performance is a key role of the Utilities Board. E. Effective Governance Processes Dr. Tarbert asked if the Utilities Board has an evaluation for its own work. He stated the most effective board gives direction for outcomes and provides oversight. The best boards identify what they need to know to make sure that the operations are running well, and what they can do to help improve the organization. 3

4 Board Member Collins arrived at 2:13 p.m. Break 2:15 p.m. 2:28 p.m. Dr. Tarbert reviewed the information in the presentation binder. 4. Excellence in Utility Governance Dr. Tarbert discussed work he has done with other utilities, and explained how politics can sometimes get in the way of good judgment. He explained the guiding principles for excellence in board obligations, board member actions, and board enablers. He also provided a few examples of other utilities. Dr. Tarbert s recommendation is to focus on governance process review first to gain the level of excellence the Utilities Board is looking for. He stated that as time is spent on the process, the correct structure will evolve. He discussed a model for excellence in governance that was developed for Energy Northwest based on process. Dr. Tarbert responded to Board Member Martin s question on what type of topics he would suggest they use for governance process, stating he would recommend they refer back to the top five board responsibilities he reviewed earlier in the presentation. Dr. Tarbert responded to Board Member Martin s question of how the Carver Model fits into the review process, stating there are some very sound practices in the Carver Model, but it may be time to look at a change for something more concise that everyone can get behind. A. Procedures and Processes for High Performance Dr. Tarbert stated that any type of governance structure can work; it s the process that is used that makes it effective. Per Ms. Newell Wilkinson s request, Dr. Tarbert discussed the work he did with Energy Northwest in creating their excellence in governance model. Ms. Newell Wilkinson stated that Mr. Mark Reddemann, CEO for Energy Northwest will be one of the guest speakers at the April meeting where he will describe their work in more detail. In addition, Mr. John D. Stasio, CEO of the Sacramento Municipal Utility District will also provide his perspective on the governance process. 5. Questions and Decision Points A. Additional Information Needed Dr. Tarbert stated that if at the end of this process there is only a decision on governance structure and the process has not been reviewed; the outcome set at the beginning of the review will not be reached. Process should be reviewed to attain the 4

5 highest level of achievement for the organization and the CEO. He suggested some possible directions in which to move forward. Chair Bennett polled the Utilities Board members on their ideas for moving forward, and the consensus was to move forward with a review of the governance process first. Dr. Tarbert will continue to assist throughout the governance process review. Per the request of Board Member Knight, Dr. Tarbert explained the American Public Power Association Governance Workshop he is holding in Colorado Springs in May. Customer Comment Ms. Debra Stout-Meiniger, community activist spoke on how she felt the strong mayor governance has gone badly. She stated that people feel threatened when one person has more control than a whole board. She requested that the Utilities Board stay the way it is with people voting them into office. Mr. John Cassiani, Executive Director for Colorado Springs Forward commented that reviewing the governance process first makes more sense than looking at the governance structure. He also requested that the Carver Model be reviewed in the process. Mr. Walter Lawson, customer stated that when we get to the end of this process he would not like a separate board that is in conflict with the Mayor and the City Council. B. Plan for April 29 Meeting Ms. Newell Wilkinson stated that she would work with Dr. Tarbert in modifying the current plan to focus on the governance process first, and bring it to the Utilities Board at their April meeting for approval. The April Governance meeting will reflect changes in the plan. Board Member Knight requested that Dr. Tarbert s APPA Governance Workshop be added to the schedule. Ms. Newell Wilkinson responded to Board Member Collins request to inform new Utilities Board members about the review, stating that Dr. Tarbert will be available to meet with each of them in a one-on-one session. 6. Adjournment The meeting adjourned at 3:35 p.m. 5