Lee's electric company
CPS Energy chair fights for his job, and his $600,000 paycheck
Critics contend Milton Lee, chief executive of City-owned CPS Energy, has been talking about retiring for years — nearly as long as he’s been CEO.
As the city has waded more deeply into one of the most important decisions of the coming decades — whether or not to buy into a multi-billion-dollar expansion of the South Texas Project nuclear complex outside Bay City — Lee has become more disengaged.
So there was nothing really remarkable about the March press release announcing Lee’s departure date of September 30. Nothing, that is, but Lee’s own grudging statement.
“It’s very difficult for me to leave at this critical juncture when our community is on the verge of making crucial decisions about our long-term electrical supply,” Lee is quoted as saying in the March 19 release, “but I’m compelled to honor the length-of-service agreement I worked out with members of the Board of Trustees several years ago.”
However, Lee, one of the highest-paid CEOs of any city-owned utility in the country, refused to sign his resignation, according to multiple sources. And on June 16, the Express-News reported that the “business community” — including Castro and Hardberger campaign treasurer Mike Beldon and NuStar Chairman Bill Greehey — favored keeping Lee around, and that newly elected Mayor Julián Castro was disinclined to let him go.
CPS Board Chair Aurora Geis declined to
discuss the specifics of Lee’s contract or his resignation.
For more than two years, the 38-year veteran engineer, who has led CPS since 2002, has enjoyed a personal second on his elbow, a “deputy” general manager who has taken over most of his duties. Some council members have grown used to seeking out Lee and being served Steve Bartley instead.
But as speculation that Lee was being forced into retirement started making the circuit, a handful of supporters, former Councilwoman and failed mayoral candidate Sheila McNeil chief among them, began to call for keeping Lee in place.
Perhaps more bizarre than Lee’s last-minute reluctance to leave has been the variety of conspiracy theories and speculation Lee’s dithering has inspired.
One camp holds that former Mayor Phil Hardberger wanted Lee gone to move the utility more quickly away from fossil fuels and into renewable energy sources; another suggests Lee is fighting to seal the nuclear-expansion deal and ensure himself a posh retirement with NRG Energy, CPS’s partner at the South Texas Project; others speculate that one or another board member covets Lee’s job.
Former Express-News columnist Jaime Castillo, now running PR for Castro, wrote a column back in March suggesting that Hardberger — and, more specifically, Hardberger aide Larry Zinn — was behind the pressure to push Lee out. Zinn contests Castillo’s hypothesis; Castillo says it would be “inappropriate” to comment about his work at the paper from his current position.
Still, Hardberger was not an anti-nuke mayor. Though he launched an ambitious plan to make San Antonio a leader in clean-energy development and green jobs, he also voted in favor of spending $216 million to pursue the STP expansion.
And how do you force out someone who, by all accounts, has been halfway out the door for years?
It’s hard to evaluate the second theory — Lee as nuclear lobbyist in training — without access to the details of his CPS contract. Does it have a non-compete clause that would prohibit him from leaping from CPS to NRG? CPS has not responded to a request for that information, and a follow-up call seeking clarification from Geis was not returned by press deadline. (CPS Board member Steve Hennigan failed to return repeated calls seeking comment.)
But Lee’s motivations aren’t that hard to divine.
Surely Lee was struck, like most of the invested world, by the international economic recession that started collapsing stock values last year. Another round on the City’s dime would bring a happy infusion of cash to the Lee household and give those stocks time to recover.
And the Alamo City gives Lee crazy amounts of money for co-leading our utility. Since 2000, his earnings have nearly tripled — from $222,358 in fiscal 2001 to $613,325 in fiscal 2008. And he made more in incentive pay last year — $245,825 — than in all of 2001. Lee’s total take home last year was roughly three times the earnings of leading executives at comparably sized municipally owned utilities in Austin and Seattle. City-owned Austin Energy’s General Manager Roger Duncan earned $216,757 last year. Because Duncan is a city employee, he is not allowed to receive exclusive benefits, incentives, or bonuses, other than those allotted to all city employees, said Austin Energy spokesman Carlos Cordova.
And, if you need another reason for Lee’s sudden about-face, it appears a long-simmering conflict with the electrical union has finally been diffused. You may recall that the utility, in addition to facing an assortment of individual discrimination claims in federal court last year, was being sued by the International Brotherhood of Electrical Workers. Allegations included dozens of cases of worker intimidation and discrimination and one charge of wire-tapping. [See “Hot Wired,” August 6, 2008.]
After repeatedly bragging that the utility eliminated hundreds of jobs in the past five years during last year’s rate-hike fight at City Hall — a sign of fiscal conservatism and trustworthiness, he argued — Lee started singing a different tune. Late last year, he reached out to the union, agreeing not only to include the IBEW any time significant employment issues arise, but to do his utmost to limit layoffs during the current financial recession.
While Lee refused to participate in this story, the IBEW praised Lee for stepping in at a critical time to address the union’s concerns.
“Milton Lee had the foresight to reach out to the leadership of the IBEW and say we need to stop this if we can and try to salvage a long-term relationship,” said George Crawford, regional international representative for the IBEW. “We probably were not communicating real well between labor and management … I will say IBEW will take our share of the blame.”
Attorneys for the IBEW in January asked District Judge Xavier Rodriguez to dismiss the union’s case against CPS, which Rodriguez did on February 25.
Lee’s recommendation that San Antonio expand the STP nuclear plant with partner NRG Energy plays well to the IBEW membership.
“We support the generation of nuclear power,” Crawford said, “not just because it provides hundreds of well-paying jobs. We do view nuclear power as the safest way to generate power in America, and one of the cleanest.”
Another former council member and mayoral hopeful, Diane Cibrian, said she was taken off guard when Lee became a campaign issue. Put on the spot by citizens at public campaign forums, all four front-running mayoral candidates, including Cibrian and Castro, pledged to work to keep Lee on staff until the nuclear decision had been made.
“I understood why folks in the community would express concern,” Cibrian said. “Attaining energy for the future of San Antonio is one of the most critical issues we have as a community.”
While reasons behind Lee’s new-found affection for his job are easy to project, it’s less clear what Lee, in turn, offers the city. Past and present council members have expressed frustration with Lee privately over the years, not least of them Cibrian, but sparks could fly in public when the CPS board meets next Wednesday to discuss Lee’s incentive pay and the board’s expectations for his continued service.
“The public should be at ease that we’re going to do what’s in the best interest of this utility and this community and Milton Lee, in that order,” Geis told the Current.
“The contract we have with Milton states we are going to utilize Milton’s expertise when it’s in the best interest of this utility, this community, and Milton. The question the board will continue to have is, where is that value?”
A national search to shake out Lee’s replacement, however, has yet to be launched, suggesting Lee will be with us well past September. That would only be fair — to Milton, to San Antonio, and to whatever candidate the Board ultimately brings in to replace him, said Mayor Castro, who inherited a seat at the CPS Board table along with his mayoralship.
“It makes more business sense to wait until this very big decision is made and give it some time,” Castro said. “I don’t think that it’s the best time to make this search, either from the perspective of the utility or the candidate who is applying.
“I do agree, and I think Milton Lee agrees, that in fairly short order, in the relatively near future, there will be a leadership change. I just don’t think it needs to happen right away.”
San Antonio Current intern Amie Ninh contributed to this report.