Business as Usual

Despite a deregulated energy market, Houston is sticking with the home team

Dadoush and Johnson defend the ratings. The city gave Reliant extra points because of its experience handling the current contract, they say. Also, the city asked the companies to prepare sample bills using existing account information. It's no surprise that Reliant -- which has been preparing such bills for three years -- scored higher than TXU and Constellation.

Those two categories alone were enough to boost Reliant's score seven points above its competitors. And that made the difference: In the city's final analysis, which compares all factors except price, Reliant beat Constellation by just four points and TXU by six. (Curiously, the city says it has no record of who participated in that final evaluation meeting.)

A Constellation spokesman says he has no problem with the process. But Carlos Santos, a spokesman for Dallas-based TXU, says Reliant had "more time to design the system and tailor it to the city's requirements." He adds, "We have handled larger accounts than the one from the city of Houston. We were just very, very disappointed."

Reliant, of course, is the hometown favorite. Its name is on Reliant Stadium; its political action committee has cut two generous $5,000 checks to Mayor White in the last year. When former building services director Baker faced City Council to explain his last-day memo, he said he'd decided to recommend Constellation in part because the mayor had instructed them not to "do business as usual."

"We think it's important that the city did business with the local provider," says Reliant Vice President David Roylance. "We've got to support our local companies. The mayor's been very outspoken about that."

Roylance's argument ignores the stated goals of deregulation: finding better deals, opening the playing field to new companies and breaking up old monopolies. But even White seemed to engage in hometown boosterism in his remarks to council April 13. He said he was supporting Reliant's proposal for three reasons: value and its commitments to diversity and to the community.

But Reliant's record on diversity is less than clear. AmPro's attorney, Brownell, asked the city for copies of the monthly WMBE reports that Reliant had been required to file under the old contract.

When the city finally released them, close inspection revealed that each document was part of a 27-page fax Reliant sent the city on May 27 -- weeks after Brownell's request and months after Reliant supposedly submitted the reports.

The report allegedly filed in September 2003 made reference to something that didn't happen until late October. Also, while the fax was dated February 11, 2004, it detailed the company's report for April.

Velma Laws, the city's affirmative action director, insists there's an innocent explanation: Her department started to "revamp" its processes in March or April, and realized it had somehow lost its entire Reliant file. So when Brownell made his request, the city contacted Reliant and asked it to resend whatever records it had, she says.

The episode caused Brownell to ask Attorney General Abbott to investigate both the entire bid process and Reliant for fraud over the fax misdating. Abbott's spokesman declined to comment on the request.

But Abbott did move on another matter. Last month, he told the city it must release the memos written by its consultants.

In the memos, released last week, CDM painstakingly detailed the pluses and minuses of the proposals from Constellation, TXU and Reliant. But the city blacked out the entire section about Reliant, even while releasing nonpricing information about the other companies.

The memos still seem to indicate that the consultants preferred Constellation. The company demonstrated "the most sensitivity to the city's needs and provided the city with most of the major contract terms sought," a CDM staffer wrote. He also rejected Reliant's supposed price advantage: "The cost difference for these two offers…is less than one percent of the estimated annual expenditure of electricity, so other factors are important."

City officials, alternately bemused and annoyed by Brownell's bomb-tossing, say they stand by their choice. But they still seem more interested in blocking information than clarifying matters.

For example: Last month, Reliant provided the Houston Press with fax cover sheets indicating it sent the city monthly WMBE reports on three occasions before Brownell's request in May.

The city might have records that concur with this. Then again, it might not. On August 6, affirmative action director Laws called to say she'd found a file containing additional documents about her department's dealings with Reliant. Because it seemed to be covered by the Press's original public records request, Laws offered to fax it over.

Six hours later, she called to apologize. The city had decided to appeal the records' release to the attorney general. She wasn't allowed to fax anything.

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