Embattled utilities director retiring Embattled utilities director retiring (October 07, 2005)

Some speculate move is tied to department scandal

by Bill D'Agostino

Palo Alto Utilities Director John Ulrich, whose recently embroiled department underwent an extensive internal investigation leading to the termination or discipline of 19 of his employees, announced Wednesday he would retire Jan. 3.

Although City Manager Frank Benest said the announcement was not tied to the scandal, others were not as certain.

"I think it's a case, probably, if you're the head of the department and the department has problems you have to take responsibility for it," Mayor Jim Burch said. "I think it's a way to say, 'Maybe it's better if somebody else runs the department.'"

Benest said the decision to retire was Ulrich's alone and for personal reasons.

"He felt it was a good time to retire," Benest said. "He felt he has achieved the major goals I set out for him and the council set out for him."

Despite being listed as a contact on the press release announcing his retirement, Ulrich, 62, did not return calls for comment. The release noted that Ulrich said his decision came "after much thought."

The investigation into the Utilities Department, which the Weekly brought to light in January, began last fall when city employees were accused of using city equipment and charging the city overtime for non-city work. Later, the probe expanded to include additional allegations, including sexual harassment, physical intimidation and lack of managerial oversight.

Six of the 19 disciplined employees were fired or left instead of being terminated. City officials refused to reveal the names or positions of any of the 19 employees.

Documents summarizing the investigation have not been released to the public, despite requests from the Weekly. The city argued that the documents are private because they deal with personnel matters.

On Sept. 21, the Weekly sued the city to obtain copies of the relevant reports.

Palo Alto runs its own water, electricity and gas services. Ulrich has been leading the Utilities Department, which has a budget that exceeds all other city departments combined, for the past six and a half years. He has typically been the second highest paid city employee after Benest. His salary this year exceeded $180,000.

Prior to coming to Palo Alto in 1999, Ulrich worked for Pacific Gas and Electric for more than 25 years.

Ulrich was the center of another controversy earlier this year when it came to light he owned more than $6,000 worth of PG&E stock and failed to report it on state-mandated forms that disclose public officials' financial interests.

The city contracts with PG&E to use the company's pipelines to transport natural gas.

On Monday, the Santa Clara County District Attorney's office sent a letter to the city stating it will not file criminal charges against Ulrich.

Special Assistant District Attorney Bill Larsen wrote he couldn't prove beyond a reasonable doubt that Ulrich knew the city's contracts with PG&E might benefit him financially. Ulrich had voluntarily disclosed he owned 176 shares of PG&E stock and sold them in April, according to Larsen's letter. Two years before joining Palo Alto, Ulrich sold more than $80,000 worth of PG&E stock, Larsen also noted.

Despite the recent controversies, City Councilman Bern Beecham -- who is generally regarded as the council's expert on utilities issues -- praised Ulrich's handling of the department, especially since the city had to adjust to the dramatically changing world of the electrical industry.

"I am sorry to see John retire," Beecham said. "I've learned a lot watching him. I've got a lot of admiration for the things he's been able to accomplish here."

Last year, a 40-year-old energy contract that provided Palo Alto with cheap electricity expired. Instead of purchasing another large contract, the city decided to buy a series of smaller contracts.

"It's been a, so far, very successful strategy for us," Benest said.

Also under Ulrich's leadership, the Utilities Department recently began a popular renewable energy program, called PaloAltoGreen, where customers agree to pay more per month in exchange for receiving all their electricity from renewable sources.

"When you look at those accomplishments, he has been very accomplished," Benest said.

Councilwoman Yoriko Kishimoto also offered kind words about Ulrich's management. But she noted the scandal had made her more concerned about the day-to-day operations of the entire city.

"I would say it's raised questions in my mind about whether we're keeping close enough tabs on quality control within City Hall," Kishimoto said. "Certainly the investigation has shown problems in the Utilities Department. I'm anxious to confirm that this situation doesn't exist in other departments."

Staff Writer Bill D'Agostino can be e-mailed at bdagostino@paweekly.com.

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