Gardner Energy’s electric utility board (EUB) will become an advisory board, rather than an autonomous board with budget authority.
City council members made the decision after learning their liability insurance provider will not cover individual EUB members, individual city council members or the board itself in the event they are sued.
The president of Midwest Public Risk(MPR), the city’s liability insurance provider, explained that his company could not cover a board’s decisions if the board doesn’t have the legal authority to make those decisions.
“The EUB does not have the authority to bind the city to something,” Terry Norwood, MPR President, told the city council during a special meeting Feb. 24. “It’s kind of scary.”
Since December, council members have debated how to deal with the EUB after the city’s attorney told the governing body that the ordinance that created the EUB does not line up with state statute. According to Ryan Denk, legal counsel, state statute requires that elected officials, or the city council, have budget authority to set rates and staff pay scales. The EUB, legally, can not make those decisions, Denk told the council last year. Denk provided council with a list of several things he believed state statute prohibited the EUB from doing.
At the time, council considered making the EUB an advisory board, or one that makes recommendations about rates and other Gardner Energy decisions. However, a majority of the council, including members Heath Freeman, Tory Roberts, and Steve Shute; was unwilling to strip the EUB of most of its authority.
Instead, a majority of the council opted to leave the EUB ordinance and make piecemeal changes to more closely align the EUB with state statute. Council members made changes to its city purchasing policy to more closely align the city’s policies with those created by the EUB for Gardner Energy. Additionally, council members began approving EUB expenditures during council meetings.
The governing body also decided to disclose to potential bond investors that the city had a board exercising outside of state statutory authority. And then, council members learned that their insurance provider would not cover them individually if someone sued them for decisions the EUB made. The city’s insurance provider also will not provide liability coverage for individual EUB members or the board itself.
“It it was me, there’s no way you’re getting me on that EUB,” Norwood told the council. “I’m not going to risk my own assets, my house, my college fund.”
Only one EUB member attended the Feb. 24 council meeting. Randy Gregorcyk said supported turning the utility board into an advisory board and did not agree with the board’s official statement.
At previous council meetings, other EUB members have strongly opposed changes to the ordinance, 2296, that created the board.
According to a statement released by EUB President Eric Schultz, EUB members were aware that the city’s legal counsel had concerns about the board in its present form.
“The EUB has not, either before or since the concerns of Attorney Denk were raised in a public forum, been formally notified of any actions that should be halted by the EUB,” Schultz’ statement reads. “The EUB continues to function as prescribed by currently adopted Gardner city statutes and ordinances and is committed to our mission to represent the best interests of the citizens and rate payers of the city of Gardner.”
Mayor Chris Morrow said in light of new information, the city council had a few options to consider during the Feb. 24 meeting. He said council could adopt an ordinance making the EUB an advisory board or eliminate the board completely making Gardner Energy a department of the city.
However, council member Freeman said he was disappointed that council wasn’t considering another option. He suggested going through the existing ordinance line-by-line making small amendments to resolve legal concerns.
Roberts, who initially voted against making the EUB an advisory board during a Nov. 18 meeting, voted differently during the Feb. 24 special meeting.
“I am in favor of making an advisory board until we can get on a fast track for a board of public utilities (BPU),” Roberts said.
In previous meetings, council members have appeared to reach a consensus to create a BPU that would oversee all city utilities, including the electric utility and water and wastewater.
The slow-moving process was an area of contention for Shute, who wondered why creating a BPU wasn’t fast tracked in the first place.
“I thought we’d be there by now,” Roberts said. “But I don’t want to open us up to even one more day with the risks.”
Council member Kristina Harrison said if the council is going to consider creating a BPU, they should also consider selling the electric utility. Council member Larry Fotovich said he would also like council to look at bringing the electric utility back into the city as a department, with council oversight and control, however, there did not seem to be much support for that.
The ordinance council adopted last night will make the EUB an advisory board. However, discussions about the fate of the EUB and the city’s electric utility will continue.