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Independence officials look for direction amid reports critical of utility

'How do we build from a foundation that’s cracked or broken or shaky at best,' council member asks

By Mike Genet mike.genet@examiner.net

On the heels of two critical reviews of Independence Power & Light this summer – one from the city’s former management analyst, one from the outside management firm hired for the short term – city staff have been working to address some issues raised. But the City Council’s next moves regarding the utility, including whether to spend up to $240,000 for the proposed next consulting phase, are not yet clear.

Among the more immediate issues raised by DKMT Consulting’s report, and discussed in recent meetings:

• Lack of strategic planning for IPL, whether on its own or as part of a city plan.

• Not enough transparency with capital improvement budgeting.

• Relying too much on embedded institutional knowledge, with some standard operating procedures lacking.

• Lack of data-driven management.

• Communication breakdowns among IPL, the council and Public Utilizes Advisory Board.

• Not enough resources for specialized accounting. 

The consultants noted the last issue led to IPL missing out on $2.5 million in revenue from the Southwest Power Pool, the city’s energy broker, because the utility couldn’t appropriately support its costs.

The City Council last week discussed short-term priorities such as crime, vagrancy, trash and delivering customer service and eyeballing finances amid the pandemic, Mayor Eileen Weir said. But the council did not have much discussion about the next consulting phase and whether to spend that money.

“We haven’t gotten back to making a determination on that, and we need to, to determine where the council wants to go,” Weir said. “Do we want to take some of that upon ourselves?”

“Longer term, the utilities is a huge opportunity for us, and a huge challenge. We’ve put a lot of effort into figuring out how to make it work for us. (The reports) certainly exposed some weaknesses – some easily fixed, and some require more thoughtful and even tough decisions – but the end goal is we want the best utility we can have. We want the safest, most affordable and most reliable utility.”

Any strategic plan involving Power & Light must include some form of civic and community engagement, Weir said. 

“The council will change, the management will change, but the community isn’t going anywhere,” she said. “That doesn’t mean preferences won’t change, but when they set the tone our job is to carry it out.

“Strategic planning works, and I’m hoping the council takes that approach for utilities. We don’t want to fall into every two years you’re changing course, but we need to be flexible enough to changing times.”

After hearing the DKMT presentations, Council Member Mike Huff, a former superintendent in IPL, expressed his dismay over the subpar Federal Energy Regulatory Commission accounting (FERC, which led to less revenue) and that the consultants couldn’t find more standard operating procedures – both downturns from his time working there, he said. 

Jim Nail, an IPL veteran recently promoted to assistant general manager, said the department is good with accounting for the North American Electric Reliability Corporation but acknowledged that the necessary FERC improvement.

“We still have a top-notch NERC team,” he said. “We’re trying to build up the FERC.” 

In his report, former management analyst Mark Thoma-Perry had noted several issues with timekeeping and overtime practices and policies. City management said they were tightening up some timekeeping practices, but some changing several of the practices and policies would require further negotiation with the electrical workers union.

DKMT cautioned that when budgeting for overtime, the city must account for 24/7 operations. 

“Structural overtime can’t be managed away,” consultant Don Harker said. “It’s something you have to deal with.”

Harker noted the turmoil in IPL with leadership changes the past few years, and he said not being data driven leads to conflicting information that he says has frustrated the council and PUAB at times. But even with the issues, the utility still maintains great potential to help the city moving forward.

“We look at it as an undervalued, under-utilized asset, with unique capabilities,” he said.

Council Member Mike Steinmeyer questioned how much the city needs or could benefit from DKMT moving forward. The consultants noted that city officials have had varied interpretations about the City Charter with how IPL can be used when making decisions about the city as a whole, he said, and that complicates DKMT’s job.

“If we have conflicting views regarding the charter, you’ve got a lot of work ahead of you,” he said. “How do we build from a foundation that’s cracked or broken or shaky at best.”

“I think we’re smart people, and I don’t know that we need to spend $250,000 to figure out where we’re broken.”

Council Member Dan Hobart said he agrees the foundation needs to be fixed, but that IPL, which essentially is a $140 million company, is not a normal problem for just about any council member, and at times the council could use some help.

“We have constant conflict, and this is not an easy task to run a big company like this,” he said. “Frankly, I think it’s beyond our general expertise, no disrespect to anybody here. We need help getting it prepared to what we want it to be.”