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January 03, 2006

Jill Chambers (R - Enron)

MARTA, like many other entities that have a lot of fuel to purchase, enters into contracts with energy firms from time to time to guarantee both quantities and prices of gas and natural gas. In a volatile energy environment (like the one we're currently in) it is often ideal to get a fixed cost on a commodity to match the fixed costs of fares. If we were talking about an airline, those fares would be plane tickets, with MARTA it is the expected number of tokens and monthly and weekly passes that will be purchased.

One such energy trader that MARTA purchased a contract from was Enron. In retrospect that seems like a bad idea, but at the time MARTA was just contracting with a company whose CEO had earned a personal nickname from the President of the country. MARTA agreed to pay a certain amount of money to purchase natural gas, and Enron agreed to supply that natural gas for that price when MARTA needed it.

When Enron filed for bankruptcy, they had to unwind most if not all of their contracts. At the time, MARTA's contract was in the money -- it would have been cheaper for MARTA to buy the gas at the current market price than from Enron. But since then natural gas prices have skyrocketed, and the agreed upon price would have saved the transit authority a significant sum of money over the past few years.

According to Enron, MARTA owes them big bucks because at the time of their bankruptcy exiting the contract was favorable to MARTA. But MARTA disagrees, it doesn't see why it should pay a penalty to Enron because they happened to file for bankruptcy at a convenient time for natural gas prices -- even though backing out favored MARTA at that moment they'd have happily stayed in the contract if given the chance.

For some reason, state Rep. Jill Chambers, one of just four Republican legislators representing DeKalb County, which along with Fulton funds MARTA's operations, takes Enron's side. What??? She says she doesn't understand why MARTA enters into such contracts (I guess she's never locked a rate on her natural gas price).

What Jill clearly doesn't understand is that getting a hold on the prices your business pays is essential to its continued operation going forward. Especially so for an organization like MARTA that doesn't have much breathing room year to year. People frequently buy items like cars, airplane tickets and even new homes from sellers who go belly up before the full product can be delivered (whether it is an extended warrantly, scheduled flight or 4 bedroom house), but I don't think Jill's advice to those people would be to reconsider future cars, flights and homes.

All throughout the '90's residents of DeKalb and Fulton were promised real action on MARTA if Republicans ever took over. The holy grail GOP obsession used to be state takeover (please!). Instead, all we've gotten is partisan nitpicking from an endangered legislator desperate to score some cheap points -- even if it means taking Enron's side. Can we please put the Democrats back in charge of this committee?

Posted by Chris at January 3, 2006 02:11 PM

Comments

Does MARTA even have any breathing room at all? I thought they operated at a loss.

Posted by: MEM [TypeKey Profile Page] at January 7, 2006 07:06 PM

Yes, MARTA operates at a loss. 55% of MARTA's one-percent sales tax goes toward operations. Jill Chambers has done everything in her power to find any excuse in the book to let that split go to 50%.

The rest of the sales tax is strictly dedicated to capital funding. If you ever wonder why MARTA spends so much money on physical improvements that seem a little superfluous, there's your answer.

If the split didn't exist at all, MARTA's FY 06 budget would be completely in the black.

MARTOC doesn't need to be handed back to the Democrats. That level of oversight should go to an independent auditor who can make assessments that are not so politically-driven. A savvy Democrat would acknowledge, "Yeah, Democrats screwed up oversight in the past. Today, Republicans are politicizing oversight at the expense of improving transit. Therefore, I intend the de-politicize this process: give MARTA, GRTA, and GDOT the same level of oversight so they can work better together for Georgia's mobility needs."

Posted by: Joe [TypeKey Profile Page] at January 7, 2006 07:43 PM

Chris, you're too funny. Wish we could start referring to JC this way in press releases (R-Enron).

Posted by: cascada [TypeKey Profile Page] at April 11, 2006 01:05 PM

Regarding the concept of attempting to de-politicize the oversight process: the boards of all three organizations are completely and utterly political creatures, before you even get to the legislature committee level. What I think needs to be done is to change the board structure of each agency to require a transportation background. This would result in all three being run more competently, but it would not resolve the issue of the oversight process being political. Or else make them elected positions - at least this way we'd be getting real politicians, not backdoor patronage people.

You know, of the three (MARTA GRTA GDOT), isn't it true that only MARTA has a state-level oversight committee? And GDOT is spending waaaay more money. Wouldn't it be interesting if MARTOC were given oversight responsibilities for MARTA, GRTA, AND GDOT?

MARTOC being a committee of the legislature means that whoever chairs it and invests the time and effort to understand what's going on will do so expecting a political gain. And whether it's going to be one that helps transit will just depend on who they perceive their base to be. Maybe the whole concept is flawed.

Posted by: cascada [TypeKey Profile Page] at April 11, 2006 01:17 PM

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