Right step

Bernero finally acknowledges that BWL is a valuable and vulnerable asset. If the city were to face bankruptcy — implausible, but hardly impossible — a court could order it sold to pay off Lansing´s creditors. Shedding BWL could be a sound defensive strategy, but there is a more pressing and by now obvious reason to sell.

Lansing isn´t able to manage a business as complex as an electric utility. It doesn´t have the oversight expertise, and the mixing of politics and electric power — which is the real reason the utility´s commissioners fired BWL General Manager J. Peter Lark — is bad for ratepayers and the city.

It´s tempting to cast BWL´s commissioners as inept. In January, a majority of them voted to fire Lark “for cause,” which entailed a modest severance package of six months’ salary — $129,251.

Instead they agreed to a $650,000 out-of-court settlement announced last week, just $250,000 shy of the $900,000 maximum contract obligation. Clearly, the “for cause” artifice crumbled during severance negotiations.

Had the dispute gone to court, BWL would have had to provide Lark with a detailed list of grievances. BWL Chairman David Price said that settling the matter privately eliminated the need to prepare this bill of particulars for Lark or offer the rationale for the decision to the board members — Sandra Zerkle, Tracy Thomas and Vice Chairwoman Margaret Bossenbery — who refused to support the firing.

The decision to dismiss Lark was a rushed affair lacking foundation. But firing a chief executive for cause — or anyone, for that matter — is a taxing and often exhausting process. For most big businesses there are guidelines, steps that managers follow to make their case and avoid costly payouts. There are meetings, written warnings, personal improvements plans, maybe even suspensions.

It´s unlikely that big power company like CMS Energy, supported by board members like William D. Harvey, retired chairman and CEO of Alliant Energy Corp.; Deborah H. Butler, executive vice president of planning and chief information officer of Norfolk Southern Corp.; or Stephen E. Ewing, former vice chairman of DTE Energy, would act so precipitously. They are seasoned business leaders and are very well compensated with stipends and stock for their board service.

To oversee BWL, the city seeks out volunteers who willingly invest their time and energy to serve their community. They should be commended for their service. But they are amateurs in a game that requires professionals.

Announcing the Lark settlement, BWL rather breezily asserted that insurance would cover most of the payout and its attorney fees. But that doesn´t mean the BWL won´t pay. Price said there was no discussion in board meetings about how this latest claim could affect insurance premiums. Having fired the last three general managers, a carrier would be negligent not to raise BWL´s rates.

More to the point, shouldn´t the issue be raised by at least one of the board members? Drivers with multiple accidents will sometimes pay repairs out-of-pocket to avoid years of higher premiums. This settlement isn´t free.

Here is the question for Lansing ratepayers. It has cost your utility $650,000 to pay off Lark. How are you better off?

Price said that BWL´s interim general manager, Dick Peffley, brings stability to the organization and is respected by the utility´s employees. “We have a person in charge who spent 38 years in the company. He knows how to turn on the lights and water.”

But while Peffley bring to his leadership role a new openness, style alone doesn´t change the utility. Except for the top two jobs, the BWL is staffed by the same people in the same jobs as they had during the ice storm crisis. It too easy to blame the failed response entirely on Lark.

BWL faces significant and costly power generation and transmission line issues. The downtown Eckert facility is near the end of its useful life. BWL spent $186 million on its new REO Town natural gas-fired plant, which produces about a third of the power that utility coaxes from the Eckert plant. It must either build big or buy. Either is expensive. BWL is in the process of upgrading its transmission system, which it told the Lansing State Journal would cost about $101 million to implement over the next six years. More money.

Does it make sense for ratepayers — that is, the people of Lansing — to undertake all of these expenses? The difference in electric bills for BWL and commercial utilities like Consumers is shrinking.

And finally, does Lansing really want its power provider closely aligned with city government? Bernero wants more accountability — an inspector general to inform him about utility operations — and more share responsibility from BWL for costly city services.

Despite appointing all of the voting board members and orchestrating the purge of Lark, Bernero still isn´t satisfied that the city has a handle on BWL´s activities. But should it? Providing power to its residents isn´t a core function of city government, especially as finances tighten and challenges grow.

It´s time to move on. Sell BWL, invest the proceeds to cover unfunded pension liabilities and invest in assets that make Lansing a better city.