Comments to Seattle City Light Superintendent Selection Panel

Municipal League’s Comments to Seattle City Light Superintendent Selection Panel

June 24, 2003

The Municipal League appreciates the invitation to make a presentation to the Seattle City Light Superintendent Selection Committee. By our appearance here tonight, we are hoping to build on our review of Seattle City Light. Our goal is to help the City move forward to resolve the problems we and others have identified with the management of the Utility. In preparing our remarks tonight, we have relied on the work of the Mayor’s City Light Review Committee, the Vantage consulting report, and on our own review.

Your Committee faces a difficult task. It must make a selection which best ensures that Seattle City Light is able to recover its once enviable position of providing a reliable supply of electricity to ratepayers at fair and reasonable prices in a manner reflecting community values.

In addition to the items listed in your draft Job Description, we have identified three major challenges which we think will be confronting the new Superintendent in her/his first term and the priority areas of expertise and skill we believe these challenges will require.

In our view, the top three challenges are:

A) Restoring the utility to fiscal health by reducing costs, reducing debt as a major factor in cost and increasing efficiency with the ultimate goal of reducing and stabilizing rates.

B) Developing and utilizing appropriate long term planning, solid analysis and strong risk management as necessary foundations for navigating in a volatile and uncertain environment.

C) Restoring public confidence that the utility is operating for the benefit of its ratepayer/owners rather than meeting short-term political objectives.

What priority areas of expertise and skill will these challenges require?

Challenge #1—restoring fiscal health of the utility—requires at a minimum the following:

Demonstrated capability to implement strong corrective actions when needed to address and fix serious problems.
The ability and willingness and leadership skills to advocate for the health of the utility in the face of sometimes conflicting political considerations and interest group pressures.
An understanding of how to determine cost-effectiveness, its importance in decision making, and the willingness to promote this consideration when recommending a broad array of actions and decisions.
Broad-based public finance background, either on the Superintendent’s part or as a strong component of the management team’s expertise. Whether the Superintendent personally has such background or not, he/she must respect it and utilize it in his/her work.

Challenge # 2—Develop and utilize appropriate long term planning, solid analysis, and strong risk management as necessary foundations for navigating in a volatile and uncertain environment.

The vision we have is that, under the new Superintendent, each major issue presented to the Mayor or Council for decision (or decided internally for lesser issues) will be supported by a publicly-available cost-benefit analysis identifying the various realistic options and assessing the relative policy burdens or benefits to the ratepayers, differential effect on various classes of customers, the effect on different classes of debt and total debt load, the benefits to environmental policies and any impact on the revenues of the city. In order for this to happen, the Superintendent must have:

A respect for integrated resource planning; no decision relating to major resource acquisition or sale should be made on an ad hoc basis.
Respect for planning and analysis functions and expertise. This capability will need to be restored to the utility, and the Superintendent must understand its importance and be willing to fully and effectively utilize it.
A strong understanding of the power issues unique to the Pacific Northwest region, and of the issues specific to public utilities.
The new Superintendent must have a strong grasp of the full range and importance of risk management issues, and be willing to fully and promptly develop and implement all needed policies and procedures.

Challenge # 3--Restoring public confidence that the utility is operating for the benefit of its ratepayer/owners rather than meeting short term political objectives.

The fundamental requirement for meeting this challenge lies in managing well, and thus restoring the Utility’s fiscal health.
Public confidence will come with public understanding of the strategic directions, key operational policies, and resource management decisions of the utility. That means good information, clear communications, straightforward rationale, and supportable recommendations to the Mayor, Council and the public. The draft job description speaks of “a style that engenders trust and support from the Mayor, City Council, the general pubic, customers and community interests.” We agree with this statement, but would add that the style must be based on substantive actions and clear communication of those actions. But more on communication issues later.
Experience in working in the public arena, including successful interaction with public officials, the environmental, business, and labor communities, and the public in general. A clear understanding of how to navigate among the various responsible parties and communities of interest is essential to effective leadership of a large public utility.
Understanding that splitting the baby isn’t good enough. The temptation when faced with many competing interests is to give a little to each. But the top priority, by far, of the new Superintendent in his/her first term has got to be getting City Light healthy again, and that may require a disproportionate (as least as compared to historic practice) focus on that goal.

What qualifications and expertise do we think Seattle should be seeking in a new Superintendent?

This question is largely answered by our comments above. In addition, we suggest searching for a new Superintendent who:

Other advice for the Selection Committee:

A new Superintendent can’t be expert in all the functions of a complex organization like Seattle City Light. This is too much to ask, and would require more money than the City could afford to pay. However, it is important that the Superintendent be cognizant of personal knowledge gaps and weaknesses. He or she must respect the need for this knowledge, though personally lacking it, and work to identify and utilize such expertise within the ranks of the utility, or failing that, seek out and employ the needed expertise. However, a too-steep learning curve could be a problem for a new Superintendent, given the pace of change and the uniqueness of regional and public utility issues. The Superintendent must have enough experience and basic knowledge to be able to judge the soundness of expert advice given by others.

We promised more on communications. We have long been concerned that the communications function of a public utility, as for any governmental entity, needs to be used primarily to assist the public to understand key information about service delivery and pending changes. We hope that a new Superintendent would focus on using communications tools (both internal staff and outside consultants) sparingly and appropriately to convey necessary information and to engage various parties in important substantive discourse. In an era of scarce resources, a governmental organization’s positive image should come largely from doing good work and achieving positive results, rather than from telling people it is doing good work.

The Vantage report also raised concerns about a defensive culture. Allowing good work to speak for itself and mistakes to be directly and openly confronted, and then corrected, will do much to diminish this cultural problem.

As all observers pointed out, including the media, the Municipal League, the Vantage report and the Mayor’s City Light Review Committee, all parties have played at least some role in getting us to the present state of difficulty at Seattle City Light. The Municipal League believes that the Mayor and Council, particularly, and various interest groups as well, need to commit to doing their part in ensuring that City Light is able to solve its serious fiscal and institutional problems. And that means, on the part of the elected officials, that they should work together to achieve consensus on what their appropriate roles are vis a vis the utility, so that it does not continue to be a pawn in a political tug of war between the Mayor and Council. The Superintendent must be allowed to do his/her critically important job of restoring the utility’s health, without being distracted or derailed by the confusion of roles and the political food fight currently being waged at City Hall. The various interest groups, too, must do their part by allowing the Utility to take corrective actions to become healthy again, being understanding if their particular needs and wants do not receive top priority in the near future. We didn’t allow the previous Superintendent that luxury; we must not make the same mistake with the incoming Superintendent, or we will be unable to resolve our current serious problems.

Finally, we note that the situation for the utility is constantly shifting; it must operate in a dynamic and uncertain environment where the only constant seems to be change. Hence it might be useful to ask Vantage to revisit the utility shortly before the new Superintendent comes on board, to provide a baseline snapshot of conditions at that time and some guidance for best addressing them.

We stand ready to assist in any way we can. Thank you for this opportunity to comment.

Putnam Barber
Chair
Municipal League of King County

Lucy Steers
Vice-Chair
Municipal League of King County

Bruce D. Carter
Chair
Municipal League City Light Review Committee