Tulare’s Board of Public Utilities is getting a forced overhaul from the top down.
At a special meeting of the City Council tonight, April 6, Mayor Carlton Jones will present his choices to fill four of the five seats on the currently unmanned Board of Public Utilities Commission. His picks will require approval by the Council.
Last month, all five of the former commissioners lost or resigned from their jobs, beginning with the dismissal of Ed Henry and Lee Brehm, who were removed by 3-1 votes of the Council at a meeting on March 21. The votes to remove the pair were followed immediately by the resignation of BPU President Philip Smith. Jim Pennington and Dick Johnson, the two remaining commissioners, also quit in protest.
Councilman David Macedo voted no both times. Vice Mayor Maritsa Castellanoz was absent.
Prior Knowledge
The agenda item that ultimately led to the removal of Henry and Brehm was listed as a discussion between staff and the Council about the removal and appointment process for members on the city’s committees. However, BPU commissioners and their supporters
apparently knew the votes to remove Henry and Brehm were coming. Their protests began during public comments before Council began its discussion, giving the impression members of the BPU and the Council had talked about the coming dismissal of Henry and Brehm.
“I’m at a bit of a loss to understand why the City Council is putting our friends and neighbors through the embarrassment of being fired for ambiguous and unspecified reasons before their terms are up,” Tulare resident Jason Bender told the Council. “Any effort to have a majority of any board or commission talk to a majority of another board or commission, or assign council members, especially a majority of council members, to talk to other boards and commissioners simply does not pass the smell test. All bodies are to be independent and for the most part non-political.”
Breakfast Meeting
When Commissioner Henry addressed the Council, he revealed that he and Jones had discussed the BPU’s business over breakfast at IHOP the previous day. During that talk, which included a discussion of Colony Energy’s plan to construct a bio-gas extraction plant with the city’s aid, a plan which is currently on hold, Henry said Jones told him he intended to remove the entire BPU because of its failure to support Colony Energy.
“I said it’s a done issue. You said, ‘No, it’s not a done issue,’ that if you had to you were going to remove all the board members on the BPU and get this overturned by getting new board members on there,” Henry said. “I was a little flabbergasted at that statement right there, because we (the BPU) acted within our purview.”
Jones denied the allegation, saying Henry had either misheard or misunderstood him.
“That’s just not the case,” the mayor said. “Even if you thought you heard it was my intentions to remove the entire BPU, then you couldn’t have been further from reality. You come up with your own option of what you thought I meant and what you thought I said, and you run with it.”
‘Standing Beside a Lie’
When Henry later repeated the accusation that Jones said he would remove the BPU membership if necessary to revive the Colony Energy deal, Jones said Henry was “standing beside a lie.” An argument ensued, with Councilman Macedo playing peacemaker.
“It is not a lie,” Henry said. “It’s maybe we heard different things, you heard different things.”
Jones eventually apologized for calling Henry’s statement a lie, but the argument continued.
“You said the Colony Energy deal is dead,” Jones responded. “I said no it’s not. Then you said, ‘What am I going to do, remove every Board of Public Utilities member?’ And, I said–”
“And you said something to the effect that if you have to you will,” Henry said, interrupting the mayor.
“No, I don’t have to,” Jones replied.
Ethics Violation
Commissioner Brehm also took issue with what he believes is Jones asserting undue influence over the BPU. Jones, he said, attended the March meeting of the BPU, asking the Commission to revisit the city’s arrangement with Colony.
“I think there’s a huge ethics violation that happened at that meeting,” Brehm said. “When he (Jones) shows up to our meeting representing… himself as mayor and for the City Council to discuss… an agenda item, he’s overstepped his bounds.”
The city attorney advised the Council not to discuss Brehm’s accusation during the open session. While it is not illegal for members of the Council to attend meetings of the city’s boards, it can create the appearance of impropriety, he said.
“That’s why I say there’s a possible ethics violation, because if he’s standing there he can be forcing our board to see it his way or you’re done,” Brehm said. “Very interesting. Now, there’s public members on the chopping block.”
Communication Breakdown
While the idea of removing Brehm and Henry had still not been formally introduced as Council business, Jones began describing why he wished to do so. Members of the BPU, he said, were unwilling to discuss their decisions and were not doing a thorough job.
“It’s about being responsive, listening, doing your homework,” Jones said. “If you’re making a decision on a fuel cell and you’ve never seen a fuel cell, I have an issue with that. If you’re making a decision on a contract and you never read the contract, I have an issue with that.”
Jones described action bordering on insubordination on the part of some BPU members.
“Whenever council members come to any board or commission and say there’s a miscommunications here, let’s kind of hold off and have those discussions, and a couple of members say, ‘Nope, I don’t want to have those discussions,’ I have a problem with that,” he said. “It’s not about the decision you make or how you make them, but when we come and try to talk to you and you feel like you don’t have to, that’s where we have a problem. That was not all of the Board of Public Utilities members, and I’m not going to act like it was.”
Jones did not say which members had refused to talk to him or what issues they declined to discuss.
Lack of Diversity
Councilman Jose Sigala, who joined the Council just three months ago as the representative for District 1, was uninterested in the BPU’s past, but concerned about its lack of diversity, both on the BPU and the city’s other boards.
“When I looked at the list of commissioners and saw 46 possible commissioners, and only one out of 46 was from District 1, that for me was an issue,” he said.
He denied any other motivation for his vote to remove Brehm and Henry.
“For me, it’s about fairness, it’s about representation, it’s about looking out for the folks in District 1,” Sigala said. “No one is taking me out to breakfast.”
Puppet Masters
Commissioner Smith was not convinced by Jones rhetoric, though he said he empathized with Sigala’s call for a more diverse group.
“It is my opinion that the decision to relieve a peer of his office was based not on what was most beneficial to our community, but on the personal political interests of a few council members,” Smith said. “And, I do understand this. I’m not saying you’re incorrect in wanting more diversity.”
Smith, however, felt he and the other members of the BPU were being manipulated to make decisions not in the interest of the entire community.
“I refuse to be a marionette in this puppet show, therefore I resign my office as commissioner and president of the City of Tulare Board of Public Utilities effective immediately,” he said.
Colony Energy Revisited
In January of 2015, Colony Energy Partners Tulare received a $5 million grant from the state to aid construction of a bio-diesel plant near Paige Avenue and Enterprise Street, on land leased from the city and adjacent to the its waste treatment plants. Currently, Colony is paying $800 a month for the lease, an amount that will increase to $5,000 a month beginning in May, and construction has not begun on the facility.
Colony’s representatives, who met with the City Council on January 17, said the state grants, now totaling more than $8 million, will begin expiring in this summer. The original arrangement between the city and Colony would have have seen about $1 million a year over 20 years going into the city’s coffers, as Colony converted methane produced at the city’s waste treatment facilities into usable fuel. However, Colony opted not to move ahead with the partnership in August of last year.
Now, they’d like to reconsider.
“The opportunity to work with us and complete this project is still here,” said Matt Schmitt, Colony’s vice president for development, partner and investor. “The process of negotiating the contract bogged down about five months ago, and we are standing behind our proposal and ready to move forward, if the city wishes to do so.”
If the city reconsiders, which would require approval by the BPU, Colony could begin the project within 90 days. All state approvals are already in place, its representatives said.
The former BPU membership, however, declined to reconsider working with Colony, which brought its proposal to the Commission at its February 16 meeting.
Burning Off Profits
Currently, the city is contracted with Fuel Cell Energy (FCE), a company that converts waste methane at the city’s waste facility into power. A 20-year agreement signed last year will see around $900,000 a year paid to Tulare from FCE’s energy production at the 2.8-megawatt facility.
FCE’s process does not consume all available raw methane out-gassing from Tulare’s waste stream. Some 600,000 cubic feet of bio-gas are burned by the city each day. That fuel could be refined or used to produce additional energy, and the city, via the BPU, was negotiating up until August with Colony on a plan to refine the gas and resell it. Then, negotiations faltered.
According to BPU Commissioner Henry, Joe Carlini–the Tulare’s former public works director, who now serves as its interim city manager–sent an email to Colony requesting information about its finances, including assurances its state grants and private funding were in place, and that a buyer for the gas it would refine had been secured. The email was sent August 2.
“Immediately, the following day, Colony Energy sent back and says, ‘Hey, we’re withdrawing. We’re withdrawing,’” Henry said. “They said that they might jeopardize losing their funding.”
Colony Needs Tulare’s Gas
Colony representatives told the BPU at its February 16 meeting that it was staff at City Hall who ended negotiations. Saying they need the city’s methane, Colony offered a sweetened version of its plan, with an estimated $20 million payoff for the city over 20 years.
“It’s imperative that we work with you to get your gas to make our project go forward, having reviewed our project further,” said Kent Hawkins, Colony’s managing director. “We do need the stability of using your bio-gas and tying into your plant.”
Colony would also pay the city $1.2 million in rent over 20 years and hire 15 full-time employees.
“We’re just coming in to say, listen, we want to kind of pick up where we left off and move forward and start negotiations again,” Hawkins said. “That’s all we’re asking.”
‘That’s Not True’
It was the city, not Colony, who ended the negotiation, the company representatives told the BPU. Hawkins said his company received a termination letter from Carlini before sending the August 3 email withdrawing from the project.
“That’s not true,” Carlini said. “It was never a termination letter.”
Carlini said Colony wanted the city to pay up to 70 percent of the cost of an upgrade of the gas conditioning skid at the city’s waste facility. At that point, the city decided to postpone negotiating for three to four weeks while it assessed the skid Colony wished to have installed, Carlini said, and a letter was sent reflecting the pause.
“They put (in) their letter to rescind prior to getting that document,” Carlini said. “That’s not my fault. That letter was never a termination letter. It was letter to postpone the negotiations awaiting the assessment of that skid. We got the skid the day after they gave us the letter, and that was way before the five weeks we told them it was going to take to get the assessment.”
Another Breakdown
The BPU voted unanimously to begin negotiating with FCE, declining to consider Colony’s new proposal. It was at this point Mayor Jones–who attended the meeting with councilmen Sigala and Nunley–addressed the Commission.
“We did ask staff to go back and review this contract and work with Colony,” Jones said. “They (those doing business with the city) should be able to go to any of them (city staff, commissioners and council members), and some point we have to communicate better. That’s what this is.”
It was that lack of communication Jones sited when calling the vote to dismiss Henry and Brehm from the BPU.
Water Studies Altered?
Jones has also questioned the validity of studies used by the BPU to formulate recent increases in the city’s water rates. The issue was brought before the Council by Henry at the same meeting where he was eventually dismissed.
“You thought the study was maybe invalid, that there was inaccurate data, to the point of even six wells may have been taken offline intentionally to alter the hydrologic data and rate study to justify the increase,” Henry told Jones. “In other words, to have a narrative that would fit an increase in the rates.”
Six of the city’s wells were offline at one point, but Henry said they were brought back online when the water system was extended to include homes in the Matheny Tract.
“If you (Jones) have some information regarding those wells, that the data might have been manipulated, I think those people ought to come forward,” Henry said. “That’s a seriously claim right there. I don’t know how valid that is or how true it is, if there’s documentation or if there’s a paper trail.”
Slippery Slope
Still addressing the mayor before his removal, Henry gave his opinion on why he was about to be removed from office.
“It sounds like, because you don’t agree with the Board of Public Utilities, you’re going to start dismissing or removing people,” he said.
And, he feels this precedent could lead to future manipulation of a highly-technical board.
“Let’s say tonight you completely wipe out the membership on the Board of Public Utilities and put in five new people, what if in six months to a year, year and a half, that board starts making decision you don’t agree with, are you going to remove them again until you get a board that thinks exactly like you do?” Henry asked.
The Tulare City Council will meet to review nominees for the BPU seats at 6 p.m. in the Council Chambers, 491 N. M St.