ATTORNEY GENERAL OF TEXAS 

GREG ABBOTT 

December 17, 2013 

The Honorable John J. Carona 

Chair, Committee on Business and 

Opinion No. GA-1031 

Commerce 

Texas State Senate 

Post Office Box 12068 

Austin, Texas 78711 

Re: Whether the Austin City Council may 

transfer governance of Austin Energy to a 

board of directors (RQ-1132-GA) 

Dear Senator Carona: 

You ask three questions about the Austin City Council's authority to adopt an ordinance 

regarding the governance of its municipally owned electric utility. 1 You tell us that the City of 

Austin's ("City") electric utility, Austin Energy ("Utility"), is governed by the Austin City 

Council. See Request Letter at 1. You indicate that questions exist regarding the City's 

authority to transition the Utility's governance to an independent board of directors, the 

fundamental question being whether the City has authority to change the governance structure of 

the Utility absent a city charter amendment election. See id. at 2--4. You express concern that a 

charter amendment election would exclude those Utility customers who are not City residents 

from having input in the matter. See id. at 3 (stating that "approximately 15 percent of Austin 

Energy's customers ... are located outside of the municipal boundaries and, therefore, cannot 

vote in city elections" and noting the Utility's provision of utility service to the numerous State 

of Texas facilities located within the City). In these circumstances, you ask: 

1) Does Local Government Code, Section 552.122 allow the 

Austin City Council, by ordinance, to transition to a board of 

director governance, distinct from the Austin City Council, and to 

allow out-of-city customer representation on the board? 

2) Do any provisions of the Austin City Charter, including but not 

limited to those related to purchasing, personnel matters, or 

finance, pose a limitation on the powers or responsibilities that 

1

See Letter from Honorable John J. Carona, Chair, Comm. on Bus. & Commerce, to Honorable Greg 

Abbott, Tex. Att'y Gen. at 4 (June 24, 2013), http://www.texasattomeygeneral.gov/opin ("Request Letter"). 
TheHonorableJohnJ.Carona- Page 2 (GA-1031) 

ld at 4. 

may be delegated to a board of directors that includes out-of-city 

customer representation established by an ordinance adopted by 

the Austin City Council? 

3) If the city charter does present limitations to the powers that 

might be delegated to a board of directors, does state law provide 

an option for amending the city charter with respect to the 

oversight or operation of Austin Energy that would allow all 

customers to have a voice in the election? 

In connection with your first question, you raise section 552.122 of the Local 

Government Code. See id at 3. Section 552.122 is contained in subchapter G of chapter 552, 

which applies to municipal electric utility systems that have certain outstanding debt obligations. 

See TEX. Loc. Gov'T CoDE ANN. §§ 552.121 (West Supp. 2012) (setting forth requirements for 

applicability of subchapter G), 552.121-.124 (subchapter G). Section 552.122 provides that "[a] 

municipality by ordinance may transfer management and control of the municipality's electric 

utility system to a board of trustees appointed by the municipality's governing body." ld 

§ 552.122(a) (emphasis added). By its plain language, section 552.122 authorizes a municipality 

to transfer management and control of its electric utility to a board oftrustees. See Tex. W Oaks 

Hasp., L.P. v. Williams, 371 S.W.3d 171, 177 (Tex. 2012) (stating that the aim of statutory 

construction is to determine legislative intent, which is best ascertained by the "plain and 

common meaning of the statute's words"). Section 552.122 does not require a charter 

amendment for a city to change its utility's governance structure and instead expressly permits 

the municipality to do so by ordinance. TEX. Loc. Gov'T CODE ANN.§ 552.122(a) (West Supp. 

2012); cf id § 552.121 (recognizing governance change can be made by ordinance or charter 

election). The only express requirement section 552.122 imposes is that the ordinance shall 

prescribe "(1) the number of members; and (2) the qualifications for appointment to the board." 

Id § 552.122(b); cf id § 552.142(b)-(c) (imposing numerous other requirements regarding the 

transfer of management and control of a municipally owned water utility). Section 552.122 

contains no additional requirements regarding the composition of the board. Further, it contains 

no language prohibiting a municipality from establishing board member qualifications that allow 

for representation by out-of-city utility customers. Thus, assuming the City satisfies the 

applicability provisions in section 552,121, section 552.122 authorizes the City to adopt an 

ordinance providing for a board of trustees to manage and control the Utility and to establish the 

board member qualifications, which could include out-of-city representation. 

You next ask whether any provision of the City's charter limits the powers and 

responsibilities that may be delegated by ordinance to a board that includes out-of-city customer 

representatives. See Request Letter at 4. You do not suggest a particular charter provision or 

specific limitation for us to examine in relation to your question. We decline the invitation to 

exhaustively examine every provision of the city charter, but we find no immediately apparent 

provision that prohibits the City from delegating management and control of its Utility to an 

appointed board that includes out-of-city representatives. Whether any particular charter 

provision impacts the City's authority to "transfer management and control of the municipality's 
TheHonorableJohnJ.Carona- Page 3 (GA-1031) 

electric utility system to a board of trustees" that is independent will ultimately depend on an 

analysis of the charter provisions at issue. TEX. Loc. Gov'T CoDE ANN.§ 552.122 (West Supp. 

2012). Questions regarding construction of a city charter are outside the purview of an attorney 

general opinion. See Tex. Att'y Gen. Op. No. GA-0356 (2005) at 2 (stating that this office does 

not construe city charters). 

Of course, a home-rule city may not adopt an ordinance or charter provision that is 

"inconsistent with the Constitution of this State, or [with] the general laws enacted by the 

Legislature of this State." TEX. CONST. art. XI, § 5. A charter provision that conflicts with a 

state statute is unenforceable. See In re Sanchez, 81 S.W.3d 794, 796 (Tex. 2002). A court will 

not hold a general law and a municipal ordinance or charter provision "repugnant to each other if 

any other reasonable construction leaving both in effect can be reached." Dallas Merch 's & 

Concessionaire's Ass 'n v. City of Dallas, 852 S.W.2d 489, 491 (Tex. 1993). Section 552.122 

authorizes a transfer to a board of trustees of the "management and control" of the utility. TEX. 

Loc. Gov'T CODE ANN. § 552.122(a) (West Supp. 2012). In considering a predecessor statute, 

this office defined "management and control" to mean "governing, supervising, directing and 

conducting the affairs of the utility system." Tex. Att'y Gen. Op. No. DM-444 (1997) at 3. To 

the extent a charter provision is construed by the City to serve as a limitation on a board of 

trustees' ability to govern, supervise, direct and conduct the affairs of the Utility, a court could 

conclude that the charter provision is unenforceable as inconsistent with section 552.122. 

Whether any particular provision in the City's charter impermissibly conflicts with section 

552.122 is not a question we address here. 

Finally, you ask whether state law provides an option for amending the City charter to 

allow all Utility customers to vote in the charter-amendment election. See Request Letter at 4. 

Article XI, section 5 of the Texas Constitution provides that home-rule cities "may, by a majority 

vote of the qualified voters of said city, at an election held for that purpose, adopt or amend their 

charters." TEX. CONST. art. XI,§ 5 (emphasis added). Section 9.005 ofthe Local Government 

Code provides that "a proposed amendment to a municipality's charter is adopted if it is 

approved by a majority of the qualified voters of the municipality who vote at an election held 

for that purpose." TEX. Loc. Gov'T CoDE ANN. § 9.005(a) (West 2008) (emphasis added); City 

of Socorro v. US. Fireworks of Am., Inc., 842 S.W.2d 779, 781 (Tex. App.-El Paso 1992, writ 

denied) (recognizing Legislature's adoption of chapter 9 of the Local Government Code in 

implementing article XI, section 5). Under this authority, only qualified voters of the City may 

vote in an election to amend the City's charter. 
The Honorable John J. Carona - Page 4 (GA-1031) 

SUMMARY 

A city to which chapter 552 ofthe Local Government Code 

applies has express authority under section 552.122 to adopt an 

ordinance providing for a board of trustees to manage and control 

its municipally owned electric utility and to establish the b ard 

member qualifications which can include out-of-city 

representation. 

Whether any particular city charter provision limits such a 

board's independent exercise of its delegated powers and 

responsibilities is not a question that can be resolved in an attorney 

general opinion. 

Under article XI, section 5 of the Texas Constitution, only 

qualified voters of the City of Austin may vote in an election to 

amend the Austin city charter. 

DANIEL T. HODGE 

First Assistant Attorney General 

JAMES D. BLACKLOCK 

Deputy Attorney General for Legal Counsel 

VIRGINIA K. HOELSCHER 

Chair, Opinion Committee 

Charlotte M. Harper 

Very truly yours, 

Attorney General of Texas 

Assistant Attorney General, Opinion Committee