The answer is...the Lower Colorado River Authority.
The story of the LCRA began with a man named Alvin Jacob Wirtz. He was a Columbus boy. He was born in 1888, got his law degree at the University of Texas in 1910, married and moved to Seguin where he served eight years in the Texas Senate. He became involved with the development of the Guadalupe River by a subsidiary of Samuel Insull’s industrial holdings. In 1929, at the collapse of the stock market, Insull’s empire toppled and Wirtz was appointed receiver of its assets by Texas creditors. These assets included a half finished dam on the Colorado River, then called Hamilton Dam.
Wirtz then championed the creation of the Lower Colorado River Authority. In 1934 legislation that he had written was passed into law.
Working closely with then junior U. S. Representative Lyndon Baines Johnson, Wirtz secured federal grants and loans to begin building the hydroelectric power plants and dams that now provide service to 800,000 people in a predominantly rural service area.
From the beginning, private utility companies have fought to undermine and abolish the agency. At various points in its history, the organization failed to change with the times and suffered for it. In the early 1980’s, improprieties were discovered. Most of it was the kind of good ol’ boy mutual back-patting that had been S.O.P. in Texas for a hundred years but in the post-Nixon era is considered unethical. Heads rolled.
Not long after, a ex-city councilman from Austin named Mark Rose was given the helm by the bipartisan board. He’s held the reins ever since. Since then, things have improved steadily. Now, the LCRA, always a proud organization, boasts one of the best records of any public or private utility in the nation and charges the lowest electric rates in the state. It strong-armed the City of Austin, which was dumping raw sewage into the river, into cleaning up its act and the river is cleaner than it has been in 40 years. The agency is on a roll.
He is quick to say that the whole team at LCRA was responsible for the turnaround but the guy who ran the show was Mark Rose.
We sat on wicker chairs on the front porch of a log cabin at the Riverside Conference Center. Pretty spot. He’s a pretty laid back guy and made me feel comfortable in spite of the fact that I had misremembered an appointment with him the week before and stood him up. I figure any politician who gives a second chance to a senile reporter from a town of 81 must be okay.
LCRA is getting a lot of good press and from what I’ve read, deservedly so.
Standard and Poor named it as the nation’s "best wholesale electric provider." You supply the
lowest cost electricity in the state. You’ve cleaned up the Colorado River, you’re developing a great reputation as an
environmentally progressive organization and you’re gearing up to add telecommunications to your
power and water businesses. Looking ahead into the twenty-first century...what do you see?
A lot of work. The utility industry is going to go through a significant restructuring and we have to find our niche in all of that. The water business is a reflection of the area that we’re serving. As those areas grow, we intend to grow with that and telecommunications is the 1930’s all over again and we have the opportunity to put in the infrastructure and make sure that our communities are not left out...to see that the superhighway, the information highway, goes to the farm to market road if you will.
We’ve taken fiber optics from Austin to Buchanan Dam and we’re about to start a project down to the Fayette Power Plant. Now once we’ve done that, if someone wants to come up from Houston to connect, and if our cities along the way can connect...then great. Add all that up and it’s a pretty exciting portfolio of things to work on.
Everyone I have met who works for LCRA is sharp. You hire a lot of good people. The conventional wisdom is that as a government organization you shouldn’t be able to compete with private business. You aren’t supposed to get the best people. How do you do it.
Two things: One, we do have a wonderful history here and we haven’t had a lot of turnover so a lot of the folks that are at the LCRA have been here for a number of years...so my task has been not so much hiring people but motivating folks to head in a new direction...so it’s taking a wonderfully talented team of folks and saying ‘Why don’t we head in this direction over here.’ Most folks made that turn quite well. A few haven’t liked it and have left, but that happens to any organization. When we have recruited, we are able to pay a little bit better than state government. We don’t get any tax dollars. We don’t get any state dollars and our board has allowed us to...I wouldn’t say compete on salaries with the private utilities...because we don’t...as the head of this organization, I’d make two or three hundred thousand dollars more than I make now at a private utility...but I make a good salary and the rank and file LCRA employee makes a good salary and has a good set of benefits and we recognize that and that’s helped.
We have a good mission. That’s what I think motivates most folks here...tremendous work ethic at the LCRA....really is just outstanding.
It is so neat to go to one of our facilities and see the unbelievable pride that the employees take in our facilities. That’s what I think makes us such a unique organization...and I didn’t start that. I inherited that.
In that same vein, I know that LCRA operates as a quasi-private entity, somewhat similar to the way the Post Office was privatized by the federal government. You have five “lines of business.” Can you describe how this works?
I think in terms of a funding source and the way we operate, the postal system is a pretty good analogy. We don’t get any tax dollars. We are given the right to sell electricity and water and some basic services which we provide to our customers and that’s the basic framework. We’re public in that our board is chosen by the governor and the legislature has created us and so therefore they provide some level of oversight in terms of our mission and how we operate. That’s where the ‘quasi’ part comes in.
In terms of our five lines of business. We’re in a different organizational structure. We have a generating company, a transmission and energy company, a water, waste water and hydroelectric company and we have community services. Those are our four corporate structures ...our four businesses if you will.
Community services doesn’t make a profit. Matter of fact, it gets a little of our profit and through community services we do economic development, land and recreation programs, environmental programs and take care of the river.
Our basic mission has five parts to it...electricity, water management, conservation, economic development and recreation. A lot of people think that’s new and it’s really not. If you look at the 1935 seal that the original board of directors created, you’ll see it on that seal.
People are skeptical of political organizations. It’s almost assumed that government is wasteful, prone to serving special interests, slow and ineffective. An efficient, effective public organization that actually beats the corporate world at its own game is almost impossible to believe...yet that appears to be the case. To what do you attribute your success?
Our mission. The fact that we don’t have a third party source of revenues. We can go broke. We may be public...and we are. We may be a "governmental entity"...which we are. We can also go broke. We have to operate on business principles. We don’t have a monopoly. We have contracts with our customers. If they get mad enough, they can go to the courthouse and sue. So we recognize that every day when we get up we have to operate a business. It’s a public business but it has to operate on basic business principles. “Number two, we don’t have the same motivations as private companies. They have stock holders and they have customers that they serve. We have only customers that we serve. We have stakeholders. Our job is to take care of eight or nine hundred thousand people in Central Texas and when we do make a profit to reinvest that into capital or invest it into community development programs.
...Just like a ‘real’ business.
That’s what’s so unique about the LCRA. It all goes back to our mission.
It’s interesting that the LCRA is not used more often as a model. Clearly it’s pretty successful. Do you see people and other institutions looking at what you are doing and thinking "What could we do?"
No. Frankly, it’s more of just the stereotype of ‘you’re the government, or you’re quasi-governmental, therefore you must be inefficient’ and we tend to have to prove to people that we’re not...but if you look at us very hard, you realize that we’re a pretty efficient organization.
We’re not without our beauracracy. We’re not without our problems. We’re not as good as we think we are or as we oughta be but we compete very favorably with all levels of providers out there...water and waste water, energy...We compete very favorably against all of them...a very competitive spirit at the LCRA.
Every day of my watch we will have a very competitive spirit. Yet people still say ‘You ought to privatize the LCRA. Well as you point out, we have been privatized.
It’s a property rights issue to me. The folks in Central Texas have paid for us. They get the benefit from it. That’s the way it ought to be. We’re not getting state dollars. We’re not getting tax dollars. People in another part of the state are not subsidizing the LCRA.
As a model...it’s real simple to me. It’s the revenue source. If I have my mission over here and every two years I go to Congress and I get my money. Then I’ve got my money. My money came through a third party. If you could find a way for all of government to not have that third party relationship on money but to have to operate on some basis or private enterprise or self-sufficiency...
If you don’t do this and you don’t do it well, then people could fire you and you could go broke...then we would see different levels of government service and different attitudes.
To me, that’s the big story of LCRA. The possibility it represents for how people are governed not
only as a state but as a nation.
Few private corporations can claim the kind of productivity and profitability that LCRA boasts...The
difference is that LCRA returns much of its money to the river...and the communities along it. What
projects of this sort are you especially proud of?
One, just that the river is clean because that didn’t involve money. It involved political leadership and I’m very proud of the organization for having hustled out there and made all that happen. As far as where we put our money, we’ve done a couple of things different. I’m very proud of our community development grant program that we’ve just started where we’re putting a $1 million a year back into communities in small grants of anywhere from $5,000 to $25,000 which is a profit sharing program.
The telecommunications effort is one where we have taken certain profits and built the fiber optic loop to Buchanan and we’re gonna build it to Fayette and I think in the long run that’s going to be monumental in terms of the good that it brings to rural Texas.
You don’t hear about this much, but our employees, through their own charity give out about $200,000 a year. That’s employees dippin’ into their pockets.
In 1987, when I came to LCRA, one thing that slapped me in the face was that LCRA didn’t own an acre of land from Austin to the Gulf Coast...no access...no boat docks...no parks...nothing. We looked at that and we acknowledged that it wasn’t right and that downstream counted and we didn’t have a revenue source for it so we asked the board for permission to sell some land on Lake Travis.
We had 18,000 acres and we figured we’d sell some of that land so we went from 18,000 acres to 13,000 acres. We generated $9 million and we matched that with Parks and Wildlife money. We now have parks in Bastrop, Smithville, La Grange, Columbus, Wharton...helped San Saba build a park, helped Burnet build a park plus we’ve acquired 2,000 acres here that we’re holding in trust as a conservation area and we’re holding some land up on the Llano River. I’m incredibly proud of that...and we own more land than we owned two years ago.
Your public statements show a person who has a big vision of the future and a lot of political savvy.
You talk about your mission... about "serving" the people and the river. Political people use those
phrases a lot.
To "Joe Public," it goes in one ear and comes out the other. We want to believe that a politician
wants to serve but we don’t see much evidence of it. I suspect however that some politicians take the
concept of service seriously. Are you one?
Yes.
Good answer. You’ve been called "one of the most progressive utility executives in the country." I know you look
ahead but I hear you look backwards, too. I’ve been told you have a degree in history from the
University of Texas. What period of the LCRA’s >
The early years. As a matter of fact, I’m working with a fellow over here in Bastrop whom I’ve hired
because I don’t have time to do the research. I’m working with him on a biography of Alvin Wirtz, the
fellow who started the LCRA. It’s an incredible period in our history.
Wirtz had to fight it out with all the private power interests to get the LCRA created. People don’t
realize that the LCRA has its roots in a private utility company that went broke. We didn’t start the
Buchanan Dam...we finished it. The Insull Corporation that owned Texas Power and Light at that time and
started that project, went bankrupt nationwide and left half a dam in the middle of the river. There was no
private capital. It was the middle of the Depression. It didn’t get grants as much as it got loans and we paid
back those loans.
I like that history but as an amateur historian, I only use the history...as a gauge to go forward. I like
history but I don’t enjoy living in the past. I look to it for relevancy to the future and I’ve found that we’ve
always had to struggle. We’ve always had to defend ourselves. I take some comfort that that’s not a new
challenge and there are a lot of other people who have already met it.
You just ruined my next question...Alvin Jacob Wirtz was instrumental in the formation of LCRA back in 1934. He was a lawyer from down our way...grew up in Columbus. He was reputed to be a brilliant political strategist and an
effective behind the scenes player. He was a potent force behind the career of LBJ. What can you tell
our readers about him?
You’ve described him quite well. He certainly was the father of the LCRA. He actually helped create
the Guadeloupe/Blanco River Authority...very, very influencial. Died at 63 of a heart attack at the
Texas-Rice football game. Just a remarkable fellow.
From the beginning, LCRA has lived with charges of cronyism...accused of catering to special
interests, big land owners, rice farmers, Brown and Root... The private utilities have tried many
times to use these charges to gain an advantage in the legislature. I understand that right before you
got this job, they almost succeeded. Improprieties were discovered and the Sunset Commission came
down of LCRA hard. What can you tell me about that part of the organization’s past?
Well we certainly did have a scandal in the early 1980’s and we had some relationships with our
vendors that by today's standards were not appropriate and by 1980 standards were probably not
appropriate. They were things that people did customarily in the 40’s and 50’s and 60’s. Hunting trips paid
for by vendors...accepting rather large gifts. That sort of thing. The world’s changed and the LCRA didn’t
recognize that as quickly as we needed to. I think the organization has learned from that. We try to live by
a higher standard today.
Politics...I think they’re as real today as they’ve ever been. When I go down to see the rice farmers, I
get accused of being a kid who grew up around the highland lakes and who only cares about the highland
lakes and when I go up around the highland lakes I get accused of being somebody who’s a patsy for the
rice farmers and sends all the water down to the rice farmers.
Because I have held public office before, people tend to view me as a politician. I characterize myself
as a ‘recovering politician’. The fact of the matter is, I don’t run the power plants and I don’t run the dams.
I’ve hired an incredibly talented team of engineers and folks who do that. and I have the good sense to let
them manage the system. As a manager, probably my greatest strength is that I have not made some
political decisions. The system is set up a certain way because of hydrology and I let it run that way.
You’re an Austin boy. When I told our Postmaster in Round Top about my missed appointment and
how embarrassed I was she told me not to worry about it. She said you were no big deal and that if
you gave me any trouble, she’d give you a call. She says she remembers when you used to chase
cheerleaders at Austin High. Dave Nagel our Mayor told me you were a nice guy...said you always
remembered his name.
Seems to me if I ran into two people in Round Top that know you...you must know a lot of people.
I’m intrigued by the Postmistress of Round Top...I spend a lot of time in the community. I travel a lot.
I visit Round Top. Sometimes I’m just chillin’ out and don’t seek any recognition. I just sneak through a
couple of the stores there. That’s one thing I do that’s a little different I guess from other General
Managers.
The LCRA is a political animal. It has to pass muster with the legislature. It must cooperate with a
variety of public and private organizations to get its job done. Part of getting your job done involves
playing politics. You’re pretty good at that. In fact, it has been suggested more than once that you
have long term political aspirations. Is that so?
I will do some other things in my life other than be General Manager of the LCRA. I became General
Manager at 37, pretty damn young and I’m proud that the board gave me the opportunity to do that and I
enjoy what I’m doing. The board can terminate my services at any moment but I’m starting my seventh
year as General Manager and my tenth year here. That’s longer than I’ve done anything else. I can do this
job for several more years and still be young. Right now I’m runnin’ for General manager of the LCRA and
I’m pretty focused on that.
Except for one short period, we have had one family in the Mayor’s office for almost 35 years. I don’t
think you have a shot at the mayoral position in Round Top as your last name is not Nagel. If you did
have another job, what office would be your second choice?
I guess I have always thought pretty seriously about runnin’ for congress and that’s not a surprise to
people that know me. I ran for the Austin city council because things were so messed up. They were
dumping raw sewage into the river and people were really unhappy. It’s a big job. In Austin, you run at
large. It cost me $135,000 to get elected to the Austin City Council. It’s a congressional race. I said to
myself ‘If I can do that job and do it well and get credit for doing a good job as a council member then I
probably have laid a pretty good foundation to do some other things.
I somewhat view congress in that way right now. People are so down on it. I hear people say, I hear
Jake Pickle say ‘It’s not the best time to be in congress or ‘it’s a pretty rough place’ or ‘its partisan.’ Others
will say ‘it’s pretty screwed up right now.’ That actually makes me look at it and say... ‘I’m interested in
it.’ Maybe it’s just that I like to crawl into beds that are on fire but I’m interested in that.
I love this state. I truly, truly love Texas and our history so it wouldn’t be hard to get in a position of
workin’ full time around here and stayin’ home you know...but my current thinking is I’d be the most
interested in a congressional race.
You spent some time on the city council in Austin. What was that like?
It was an incredible experience and I’m really glad that I had the opportunity. I’m also really glad that
I had the courage to move to Bastrop because I’ve learned another world that I’m probably better connected
to culturally and spiritually.
My parents grew up in a small town in North Texas. My parents were always small town folks livin’
in a big city. They were horse people and that’s what I grew up around. I really feel blessed that I grew up
in a big city. I went to a downtown high school. I had an opportunity at the age of twenty-nine to get elected
to the city council of one of the better cities in this nation and I learned a lot.
You have to be bipartisan. You’ve worked for both Republican and Democratic governors. Is that a
difficult balancing act?
Not at all. That’s the one great pleasant surprise of the LCRA. I’ve had a board with a majority of
Democrats and a board with a majority of Republicans and what I’ve found is that because they come from
specific counties, what they really cared about was the river...what they really cared about was the county
they came from and what they really cared about was having a good reputation as an agency. Were that to
change, I probably would not want to be General Manager.
That is probably our great, quiet strength...that we’ve gone about our business in a non-partisan fashion.
Let’s talk about the information superhighway...Down in our area, we are panting to partake of the
telecommunications revolution that is changing the face of commerce and information exchange in
the cities. We’re connected on the Internet but like most rural areas , we are at risk of being left
behind as a new telcom infrastructure is established. We can’t compete unless we can get the
additional bandwidth that will bring the new interactive technologies into our homes. This takes
some big players with big money. LCRA is doing something about that. Tell us about that.
Well we’re trying to do something about it. As you said, it takes big bucks and we don’t have all the
bucks that it takes to make it happen, plus we have some legal prohibitions that I respect in that we legally
are not permitted to provide retail services for telecommunications.
We recognize, like I said before, it’s 1935 all over again in telecommunications and there isn’t the
density (in rural areas) and people are looking in Dallas and Austin and San Antonio and those
markets.We’re gonna do the big ticket item. We’re probably going to invest ten or eleven million dollars
on that fiber optic loop. We’ll provide the spoke.
I am interested in your leadership style. When LCRA people talk about you...they speak with
respect. They seem to think you have done a good job. I don’t know if you’re exactly popular but one
thing is for sure...your people know who’s in charge...and they seem satisfied with that. Some have
accused you of treating LCRA like your own private fiefdom. How do you balance the need to
aggressively get things done with the need to be politically sensitive?
I focus most on what needs to be done and hope that the politics work out. Actually, I’m pretty hands
off. There some real bright people workin’ for me...a hell of a lot smarter than I am.
What frustrates you the most about your job?
After sixty years, still having to defend our right to exist to some folks. There’s a certain part of me
that says ‘What’s the problem here? Why am I even having to hear that? We’re not taxing people
involuntarily. We’re pretty public-minded...what?’ I just have to remind myself from time to time that we
don’t have an inherent right to exist.
Sometimes its not honest in its source because I know there are investor-owned utilities that just
because they would like to have our market will talk the privatization rhetoric. For those guys, I’m gonna
fight ‘em every day I’m here.
You travel a lot. Like many progressive executives, you seem to believe in "managing by wandering
around." Have you paddled down the Colorado River lately?
As a matter of fact, I had that conversation with my neighbor. That was buggin’ me just last night. Last
year I did an upper stretch. I’m gonna get one of the ranger’s boats and do kind of a long trip down the
river for a couple of days.
Now for the last question and as is traditional at the Round Top Register, the most important
question of the interview. I know that one of LCRA’s missions is community development. The
agency funds grants and provides other types of support to towns in its service area. Now I happen
to be an alderman in Round Top and what I want to know is how could we get our greedy little hands
on some of that money?
Frank Morgan. He runs that program.
Well is there any money that I can take home today?
Not today.
So there’s not any money that I could take back right now. Oh man! The mayor is gonna kill me. Transfer interrupted!
/STRONG>
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