DAY OF RECKONING FOR PUB BOARD, CEO BRUCIAK, MARTINEZ

 

Special to El Rrun-Rrun

Has push come to shove in the public furor created with the release of a forensic audit of the failed City of Brownsville-Tenaska energy company joint project to build an 800 MW gas-fired, electric plant which raised some $125 million through a 42 percent hike in utility rates since 2013, and which was never built?

Today, during a special meeting to be held at the PUB's main offices at 1425 Robinhood Drive, they will – among other things – consider the employment, evaluation, reassignment, duties, and potential discipline of John Bruciak, CEO and General Manager, in executive session. The board will then decide after the closed meeting what action to take against Bruciak, who commands a $335,000-plus salary plus retirement and benefits: suspend him, place him on administrative leave without pay, or simply fire him.

The Omaha-Neb.-based Tenaska and the city entered into an agreement to build the plant in late 2012 and the city commission approved the rate hikes to pay for the construction bonds despite the fact that an engineering consulting firm (R. W. Beck, Inc.) warned the PUB administration that the energy shortage projections were "vintage" numbers and that they should be periodically reviewed to correct them with real numbers.

Beck warned PUB about the tentative projections in a report to PUB where they stated that:

“Importantly, as discussed in Section 3, a significant portion of the historical period upon which the forecast is based is not known with certainty but is in fact only estimated...Accordingly, a forecast must be viewed as a guide only, and plans for large capital expenditures, which are based on such forecasts, made with care and with an allowance for flexibility (emphasis added).”

“This forecast should be updated periodically, particularly when events occur that are expected to impact growth or when projections of driving variables change significantly. In addition, it may become useful to create projections that directly estimate the range of uncertainty that can be expected in future electric demand on the BPUB system. Several techniques are available to address the sources of
potential error in the forecast...However, the forecasting equations and the infrastructure developed for this forecast are capable of addressing a range of potential risk analysis methods.”

PUB, instead, chose to keep the projections that predicted a shortage, and subsequently ordered that the flawed projections be used to show that the city would face an energy shortage if the plant was not built.

They also claimed that several potential industries – including a steel plant – had  cited a shortage of energy for them not to bring their businesses here, but were unable to have the Brownsville Economic Development Corporation (BEDC) provide the auditors with any documentation to prove it.

Additionally, they added 13.5 percent to increase the contrived shortage and justified the additional amount by saying that the number was required as a Reserve Capacity Margin by the Electric Reliability Council of Texas (ERCOT), which it was not. In an interview as late as 2021, Bruciak and Energy Risk Manager Marylin Gilbert mentioned this "requirement" to justify the additional "reserve capacity margin" that justified continuing to build the plant.

The Project was to be an 800 MW natural gas-fired power plant. The COB would be entitled to 200 MW of power, and Tenaska would be required to sell or find subscribers for the remainder of the capacity. BPUB negotiated an agreement to provide the natural gas transportation to the plant via a BPUB owned pipeline (the “Pipeline”) spanning approximately 50 miles, thus requiring the acquisition of land Right of Ways (“ROW”). 

Construction of the Project would not commence until Tenaska found subscribers for the remaining capacity. BPUB and Tenaska agreed at least six times to extend the agreement deadlines to give Tenaska more time to find subscribers. Eventually the lack of subscribers led to the final termination of the project.

Formal notice of the Project’s termination was not provided to the COB until August 2020. Of the approximately $118 million in revenue attributable to Project-related rate increases, approximately $35 million had been spent on the Project, while $29 Million was set aside in a Tenaska Equity Fund, and $54 Million was allegedly allocated to fund rate reductions beginning in April 2016.

The forensic audit revealed that Bruciak, and former mayor Tony Martinez (an ex oficio member of the BPUB as mayor), knew as early as 2015 that Tenaska could not find subscribers to purchase its 600 MW share of the plant's production and that both kept the city commission and members of the utility's board in the dark while speaking in support of keeping the artificially-high rates.

Even after Tenaska's 2017 unilateral termination of its partnership in the plant project, it's legal counsel and both men advocated for the retention of the high rates in order to allow a law firm to continue purchasing right-of-ways from Hidalgo County to Brownsville for water and gas lines for the plant they knew would never be built. They also withheld the fact that Tenaska had pulled out of the project from the city and the PUB board until August 2020. 

A part of the audit states that "Management and Mayor Martinez knew by early April 2017 that the Project was dead in the water. Yet, they still...pushed for the Project to continue, and misled the Board and COB on the status of the Project, all done with the knowledge, support, and in some cases participation of Mayor Martinez."

The revelations contained in the audit, combined with monthly utility bills that have doubled and at times tripled the normal rates, has led to protests at the PUB and with protesters to demand that PUB suspend or fire Bruciak and investigate PUB and its current and past boards to determine whether criminal charges can be brought against them. They also demand that PUB refund the money to its ratepayers.

The board's ability to deal with Bruciak and Martinez has also come into question because of the apparent conflicts of interest of its members with both men and with some of the vendors paid with funds raised through the rate increases. The top vendors were:

 

For example, the chair of the PUB is Sandra Saenz, Martinez's longtime personal secretary in his law

firm and in his city office when he was mayor. She and husband Ronnie have been longtime tenants of Martinez and run Spanky's Hamburgers restaurant next to a Martinez "bistro," called Lola's. They were ardent supporters of Martinez's failed political reelection campaign for mayor.

Another, Sandra Langley, is a local banker with First Community Bank who traveled in jaunts to Colombia with Martinez on the public dime ostensibly to attract investment in Brownsville. Martinez and Langley – among others – traveled at the expense of the BEDC, which was under contract with the Greater Brownsville Incentives Corporation (GBIC) to attract outside industry and create jobs for Brownsville residents.

And commenters to this blog wrote the "PUB Board Member Dr. Jude Benavidez's wife Anne is an Ambiotec manager and Jude has been employed by them as a consultant in the past." 

The audit names Ambiotec as one of the handsomely paid ($3,689,660) engineering firms hired to work on the Tenaska plant project.

Other members of the PUB board include Mayor Trey Mendez (ex oficio member as mayor), Patricio Sampayo, Joseph L. Hollmann, Ph.D., and Arthur "Art" Rendon. Mendez's vote may well salvage his legacy despite the fact that he has engaged in downtown property speculation  himself.

Will they cast their vote to terminate Bruciak on Monday and launch an investigation into potential criminal acts and wrongdoing by those named in the audit and possibly past board members? 

Will they reorganize the PUB board to remove all traces of conflicts of interest with the former mayor between its chair Saenz and some of its members, like Langley? 

Will they seek to replace the legal advisors (Davidson & Troilo, Ream and Garza), who made a mint ($4,656,131) on the Tenaska plant by going along with the deceptions Bruciak and Martinez propagated to the point where they advised management to continue buying ROW even after they knew the plant would not be built?

Or will Bruciak simply make it easy for them and submit his resignation to keep all his retirement benefits compliments of the ratepayers he defrauded? Should they accept it at this juncture?

Will board members roll over and allow their personal and business interests to come between them and their obligation to protect the PUB ratepayer who has shouldered the burden of the Tenaska debacle? 

We'll see today.