An independent forensic audit of the failed Tenaska Brownsville Generating Station deal between Nebraska-based Tenaska Inc. and the Brownsville Public Utilities Board concludes that BPUB management contrived an electrical capacity shortage and intentionally used “outdated and overstated” load forecast data to justify its pursuit of the project.
The 69-page report by auditing firm Carr, Riggs & Ingram (CRI), made public on Wednesday, notes that Tenaska proposed the project to BPUB in late 2011 and, in December 2012, the city of Brownsville approved a series of electric rate increases to cover BPUB’s share of the cost of building the project plus operations and maintenance costs. The generating station was to have had a capacity of up to 800 megawatts (MW), 25 percent of which would have been owned by BPUB.
Per the Tenaska agreement, BPUB was responsible for development expenses, requiring the hiring of outside engineering firms, attorneys and consultants, while Tenaska was responsible for finding “subscribers” for the remaining 75 percent of the plant’s capacity. Tenaska’s inability to achieve that is the reason the project failed, according to the auditors. On Nov. 1, 2021, the city of Brownsville hired CRI to conduct the forensic analysis of events before and after formulation of the project.
Among the report’s conclusions are BPUB management’s presentations to BPUB’s board and the city of Brownsville “did not accurately reflect studies and were biased toward the Project or omitted pertinent facts. Given that the Board and City Commissioners are not energy experts, they were reliant on Management to aid their decision-making with regard to the Project.”
“Further, given the interference and manipulation of the narrative, it is our opinion that Management, with the participation of (former Brownsville mayor Tony Martinez) intentionally misrepresented or omitted key information in order to ensure that the Project (and its related rate hikes) would be approved by the Board and the (city),” reads the report.
The auditors found that after initiation of project was initiated, BPUB agreed to multiple extensions even though Tenaska was unable to find a single subscriber for the station’s generating capacity besides BPUB.
“Presentations made by Management to (the city) did not accurately reflect the reality of the Project status,” according to the report. “Because of this, Management was able to defend rate increases that were no longer necessary for a Project that would not be built.”
Brownsville Mayor Trey Mendez, who serves as the ex-officio member of the seven-member BPUB board, told the Brownsville Herald Wednesday that he’d read the entire report and that “there’s a lot there,” adding that the city commission is “certainly concerned about the findings from the auditor.”
“It was a totally independent, neutral auditor,” he said. “It took 11 months, which is a lot longer than we expected. But the reason for that was because the auditors were very thorough. They reviewed over 10,000 documents overall, emails, correspondence, presentations, all sort of documents related to the project.”
Mendez said that based on the audit report the project’s lack of feasibility had become obvious within the first couple of years, and that he “expects that PUB will respond and that the PUB board will also ensure some sort of accountability for this.”
BPUB General Manager and CEO John Bruciak told the Brownsville Herald on Wednesday that he’d received the auditors report earlier in the day but was in meetings and hadn’t yet had a chance to read it. Bruciak said he probably wouldn’t be able to comment until after meeting with the BPUB board early next week.
