WHAT IS GOING ON WITH THE DENTON MUNICIPAL ELECTRIC INVESTIGATION?

ERIC PRUETT

renewable denton.jpeg

How Did We Get Here?

Modern society has normalized demonizing institutions we are skeptical of, and hoisting sacrificial heads upon double-sharpened sticks has become commonplace. Calls to “drain the swamp” and revolutions to end the reign of tyranny are a cyclical occurrence which stems from the conflict between our innate desires of power and autonomy. When malfeasance is found we are ever thankful for this protection from it, but sometimes in our haste to root out evil we punish the innocent, and all too often it is uncertain in which of these scenarios we partook. This two-ended spear has now made its way to our city of Denton.

In the past several weeks, the presence of a city investigation into the contracting practices of Denton Municipal Electric (DME), specifically as related to the Renewable Denton Plan (RDP) has surfaced. Reactions from the community have varied widely from glee to disdain, yet it has begged more questions than it has answered. Let’s take a look at the events which have transpired and the city’s statement about the outcome of these investigations.

The Timeline Towards Investigation

  • June 21, 2016: City council votes to approve the RDP.
  • July 1, 2016: City manager George Campbell resigns after council votes to not renew his contract.
  • Jan 24, 2017: Todd Hileman starts as a newly hired city manager by council. Either before or after his start date (the city’s press release does not say), Hileman and the interim city attorney receive a request for information about the Denton Energy Center (DEC, a component of the RDP).
  • February, 2017: Hileman and Denton’s interim city attorney launch an investigation into DME contracting practices, which later broadens to employee conduct.
  • Spring 2017: The following retire or resign their positions: Director of solid waste, director of libraries, purchasing director, and three of the five assistant city managers. Mario Canizares is hired to backfill one of the ACM positions.
  • May 6, 2017: City council election – Gerard Hudspeth replaces Kevin Roden and John Ryan replaces Joey Hawkins. Don Duff later replaces Kathleen Wazny in a runoff.
  • June 30, 2017: City council is briefed on the investigations into DME.
  • July 7, 2017: Phil Williams, general manager of DME resigns, “in order to assist with moving the organization forward” as stated by the city.
  • July 10, 2017: A lawsuit is filed against the city by DME employees Mike Grim and Jim Maynard.
  • July 11, 2017: DME employees Mike Grim and Jim Maynard are fired. The reasoning given in their dismissal letters is loss of trust, but no findings of the investigation are cited for the cause of termination.
  • July 26, 2017: After briefing the Public Utilities Board and the City Council on the outcome of the investigation, Todd Hileman gives an interview to Denton Record Chronicle reporter Peggy Heinkel-Wolfe and a DRC editor.
  • July 27, 2017: The city of Denton publishes its findings in the investigation.

From the city’s press release, we know that an initial review by the city attorney’s office in February was prompted by a request for information about the DEC. This initial review resulted in two formal investigations by external law firms: one into the contracting process to implement the RDP, and another into employee conduct. Briefly, their findings were:

  • A preference for Wärtsilä engines (for the DEC) over competitor’s engines existed within DME, and a non-disclosure agreement (NDA) was signed with Wärtsilä prior to the RFP being issued for companies to bid on providing engines for the DEC.

  • While it would have been preferable to restart the procurement process to avoid appearances of impropriety, no legal concerns were found which warranted changing course at this time.

  • DME Employees were found to have met with two of the four vendors who bid on contracts prior to the RFP, but no evidence of fraud or criminal activity was found of either DME or the vendors.

So What?

Hileman is coming out swinging. When he was selected in November, he stated his “overarching focus coming in is going to be fiscal management and building trust in the government to where people know we’re running a transparent organization.” Later in March, he followed this promise up with an open house, and stated that “we're talking about ways of being more aggressive in getting out into the neighborhoods. Why do we need to wait for an item or concern to blow up? Why not host a community meeting beforehand to make sure residents have information ahead of time?”

As members of the public, it is challenging to ascertain the gravity of certain findings of this investigation. For instance, it seems likely that NDAs were signed with additional suppliers beyond Wärtsilä prior to the RFP being issued. When DME tries to reduce emissions while increasing renewables as tasked by city council, it is highly likely that several suppliers had technical solutions whose details could only be shared with DME after an NDA was signed. We certainly need to guard our public institutions against ethical misconduct and fraud. But insisting that our city departments should not be able to know about the latest solutions from suppliers before designing solutions for our city could cause our city departments to design less effective solutions. Would it have been better for Denton if DME did not know the specifics of the Wärtsilä engines and therefore designed the RDP with a minimum of 50% renewables instead of 70%?

So far, this investigation has arguably inspired more questions than it has answered. Was the resignation of Williams and the termination of two other employees related to the investigation or not? Who was behind the requests that induced Hileman to launch these investigations? If Hileman is so focussed on public transparency, why did he choose to share the results with the local paper ahead of announcing the results directly to the public? Was this a master political stroke by Hileman to placate those opposed to the RDP for environmental or fiscal uncertainty reasons so that the city may move on to future projects less embroiled in controversy? So far it seems to be having the opposite effect, as some opposed to the RDP see newfound hope for contractually blocking the DEC construction to delay or halt RDP implementation.

Hileman has made a statement through his actions that following procurement regulations is not enough: employees who are interpreted as having an appearance of impropriety are on notice. He has created a chief procurement and contract compliance officer position to be filled this coming fiscal year. A high price has been paid by three families already, so let's hope that the benefits of increased scrutiny over our city’s expenditures and the possibility of putting the controversies of the last few years behind us outweigh any fear our city employees may now have of sticking out leading to less out-of-the-box thinking which could have improved our city.

Will Hileman grow into the character of the naval officer greeting Ralph and saving the boys from self-annihilation in Lord of the Flies? Who set the figurative forest fire in Denton which called him to the island? And will Hileman recognize the situation on the island of Denton in time to save and unify our residents toward a brighter future? We should get another opportunity to find out, as a third investigation into the Energy Management Organization arm of DME, which trades energy on the ERCOT market to save Denton ratepayers money, is ongoing.