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State of the State: One Man Tries to Do it All for Power Agency

Jamey Dunn
WUIS/Illinois Issues

Auditor general findings that a state agency has no official budget, financial reports, formal planning process or even basic office supplies are a bit shocking. According to a recent state audit, the Illinois Power Agency has paid its bills late, collected fees late and turned in travel vouchers late since its creation two years ago. 

One might look over such results and shake his or her head at more inept bureaucracy in Illinois — government wasting money on a bloated agency that cannot even submit paperwork on time. However, the Illinois Power Agency is not your typical agency (see Illinois Issues, July/August 2009, page 25). The most obvious distinction is staffing levels. The Power Agency consists of one person, director Mark Pruitt. 

The General Assembly created the Illinois Power Agency after a 10-year rate freeze on electricity expired in 2007. Consumers started to put pressure on lawmakers when they saw their electric bills soar. “My friends on the [electricity] generation side don’t like me saying this, but it was a price shock that caused the Illinois Power Agency to come into existence,” Pruitt says. 

The primary objective of the agency is to procure power for Illinois utility companies. Commonwealth Edison, the company that serves northern Illinois, and Ameren Illinois, which serves central and southern Illinois, do not own power plants or generate electricity. Since both companies have power generating entities — Exelon Generation and Ameren Generation, respectively — in their corporate families, accusations of conflicts of interest were tainting the power buying process. 

According to a complaint filed by the attorney general’s office, Exelon won more than 97 percent of ComEd’s contracts through a 2006 power auction.

So the Power Agency provides a buffer to avoid collusion and sets a benchmark for rates to ensure that they are in line with market values. Any bids over the benchmark price are tossed out. Then bids are chosen based entirely on cost — the cheapest accepted first. “People can trust that when the bill shows up, that they know that price came from somewhere. It came from a process that hasn’t been finagled by … some collusionary group of manufacturers of electricity,” Pruitt says. 

Pruitt characterizes himself as a broker. “We set up the transactions so that all several million Illinois consumers don’t have to do their own individual transactions.” The agency’s first procurement last year resulted in about an 8 percent reduction in Ameren customers’ bills and a 9 percent reduction in ComEd customers’ bills. 

“We think that the Illinois Power Agency is keeping rates low. The process has worked the way we had hoped it would work,” says David Kolata, executive director of the Citizens Utility Board. 

The Power Agency creation coincided with the economic and budget crisis in Illinois. Pruitt says that when he took the job, members of then-Gov. Rod Blagojevich’s administration told him many organizational duties would be covered by sharing staff with other agencies. “I pointed out I don’t have an administrative background. So I am going to need someone to do things from travel vouchers to filing contracts. I need those functions handled for me.”

That help never materialized, and Pruitt says that he now wishes he had been more skeptical of the offer that was never fleshed out into a specific plan.

Pruitt says he has not hired any permanent staff — he contracts consultants to advise on power procurement — because of the way the agency is funded. It started out with seed money appropriated by the General Assembly in fiscal years 2008 and 2009. The agency has to pay back the money by fiscal year 2011 and then survive off a fund maintained by the state treasurer. That fund has taken a hit in the economic downturn. Fees collected from bidders go toward paying expert consultants. 

Pruitt estimates the seed money will be repaid in May. “Then I will be in a position to hire someone and know that I can pay them.”

The audit charges Pruitt with being too prudent with the original appropriations. From the audit: “Due to budget constraints, an additional employee was not hired. However, it should be noted the agency had unexpended balances of $273,728 and $1,250,000 for fiscal years 2009 and 2008, respectively.” Almost every one of the 22 findings recommends hiring more staff as part of the solution. 

Pruitt says finding an operating officer is his first hiring priority. He is looking for someone who can handle financial responsibilities, monitor legislation and communicate with other agencies. Pruitt says he is talking with other agencies about sharing some staff members that he would not need as full-time workers. “I know from the audit I need a fiscal person. We will find one.”

He also wants to hire a statistician and researcher in the near future. 

Another function of the agency is to encourage procurement of renewable energy, with a goal of 25 percent of the power it buys coming from renewable sources by 2025. Pruitt says a researcher could help plan for the future, as well as help the agency reach that goal. “What’s the next thing that we need to be looking for out there? Is it smart grid? Is it long-range transmission of wind energy from the upper plains? Is it renewable [energy]? Is it retirement of coal plants? Is it Futuregen? What are the next things that are coming that the agency needs to gear up for?”

But Pruitt does not believe the agency should ever have a large workforce. “I’ve always taken it that [the legislature] envisioned it being small, that it used outside expertise and it wasn’t going to build its own little empire. That it was to be as tied into the most current thinking as was available.” 

He says the audit finding that he does not have basic office supplies has made him the butt of a few jokes: “I got an anonymous pad of paper delivered to me.” Pruitt adds that he has access to everything he needs now but will need more supplies and even offices as staff grows. “I really want us to be frugal because it’s easier to loosen up on restrictions over time if necessary. It’s almost impossible to tighten down.”

As for filling positions that require more expertise, Pruitt is not sure that will happen soon. Two bureau chief positions described in the law that created the Power Agency require applicants to have 10 years’ experience and not work for a utility for two years before or after the job. 

“A bureau is an area of expertise or activity that is distinctive within an agency. So right now, the Bureau of Procurement is me when I sit at my desk, and I’ve got my procurement files open on the computer and my procurement file cabinet open. When that bureau closes, the Bureau of Asset Development opens up, and I open up a separate set of files,” he says.

Pruitt takes responsibility for the reporting problems that the audit uncovered. “That was entirely my fault. I was hired as a subject matter expert and not so much as an experienced agency administrator, and it took me admittedly quite a while to learn how to create accounts within the comptroller’s office.” But, he says after some patient instruction from the comptroller’s staff, things are getting better. “I’ll get things filed within a day. It’s easy — once you know what to do — it’s easy.”

One of the functions of the agency is to bring more transparency to the process of buying electricity. So the fact that there is no formal accounting process and no Web site on which to post the yearly procurement plans is a major shortfall. 

Pruitt says he is not trying to hide anything but was putting his time into the main purpose of the agency — buying the cheapest power possible. “Did I err on the side of ensuring that we got the core mission done over administrative functions? Yes I did.”

And he says the agency has been successful in fulfilling that mission. “This was a theoretical system that was put forward that had never been tried before, and we made it work. It’s like designing a car and having the first one come off the assembly line. Oh, it starts, it rolls and it stops — brilliant.”

Pruitt adds: “The audit findings were not of the nature where I was carrying sacks of money out of the agency. … I am as transparent as I can be, given what I have.”

But in Illinois, sacks of money have been carried out the door in other agencies in the past, and citizens have had to listen to reports of rampant corruption, most recently associated with the man who gave Pruitt his job. 

“Having audit findings and your name in the paper and things like that is embarrassing for me. But I don’t view any of it as being undue criticism at all. And I wish that there weren’t any and that I had known what I should have been doing a little bit better. But given the circumstances of the timing and the restrictions, I think that we can be successful in our next audit. We’re not going to have a repeat of any of those findings,” Pruitt says. “I guess in my first year, I’m begging a little bit of forgiveness.”

Kolata agrees: “I think first and foremost, what consumers care about is the results, that the procurement go well and that their rates go in the right direction. … Overall, I think consumers have reason to be pleased with the performance of the [Illinois Power Agency] so far.”

And people probably do care more about their bills going down than whether the Power Agency put its plan on a Web site, and maybe even more than they care about the agency’s accounting practices. But that does not give the Illinois Power Agency a free pass. Pruitt has faced serious budget and staffing constraints, and he has taken responsibility for the problems in his agency. But once he can hire some help, fixing those shortfalls should be top priority.

 

The Power Agency creation coincided with the economic and budget crisis in Illinois.

Illinois Issues, April 2010

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