PUB, TENASKA, CITY COMMISSION PLAYING US FOR SUCKERS

Special to El Rrun-Rrun

First they promised us a low-cost, dependable source of electricity from a $500 million gas-powered plant if the City of Brownsville Commission would increase utility rates to pay for the bonds to build it.

The Public Utility Board and the Tenaska executives promised that if the commission raised the rates, they would build the plant, purchase water and gas line right-of-way, and that Brownsville would get 200 of the 800 MWs that would be produced. 

Despite the fact that the city was paying $325 of the $500 million, Tenaska would keep 600 MWs to sell and the city the other 200. That is, the city would pay 65 percent of the cost and keep 25 percent of the electricity. Tenaska would pay 35 percent of the cost and keep 75 percent of the electricity. Sweet.

Then-Mayor Tony Martinez described the proposed power plant as “a terrific deal for Brownsville.”

“We looked at a lot of things,” said John Bruciak, BPUB general manager and CEO. “We did an integrated resource plan on the power supply that looked at everything in the state that was available. This is hands down was the most economical and efficient for our residents.”

BPUB electric consumers saw their electric payments increased by 41.5 percent over four years to fund the failed power plant deal, which has been heavily scrutinized following the release of a forensic audit by the city on Oct. 5. That audit was ordered by the Audit and Oversight committee headed by chairman commissioner John Cowen. But will those efforts result in a rebate or in meaningful consequences?

And is the city charter review committee recommendations to change the rules pertaining to the utility akin to putting the cart before the horse, or closing the barn door after the critter is gone?

The plans to raise rates to build the Tenaska Brownsville Generating Plant were set in 2011, with some increases in electricity beginning in late 2012, then continuing through 2016.  

BPUB negotiated an agreement to provide the natural gas and water transportation to the plant via a BPUB owned pipeline (the “Pipeline”) spanning approximately 50 miles, thus requiring the acquisition of millions in 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.

The forensic audit revealed that Bruciak, and former mayor 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.

Fitch Ratings came in on May 2015 and stated its analysis "reflects diminished interest in the remaining capacity of the project, which is likely the result of very favorable energy prices available in the ERCOT market. Low natural gas prices and the addition of substantial wind generation capacity have contributed to low energy prices and the lack of new non-renewable capacity construction in the region."

Formal notice of the Project’s termination was not provided to the COB until August 2020. Of the approximately $125 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.

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."

Now the new PUB Director of Finance, Mike Perez, says it won't be that easy. Due to bond debt requirements, Perez said that the board and the city commission must take four steps requiring 14 separate actions before a rebate of the remaining $29 million can be returned to the ratepayers through their utility bills.

The rebate, said  Perez, must include written certification that implementing the rebate plan "would not impair the relieability, efficiency or availability of utility service required to be delivered to customers of the (BPUB) system." The PUB honchos estimated that no rebate funds would be distributed until after April 18.