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Utility commissioners approve

Tuesday, February 6, 2001 by

Resolution on deregulation

Austin Energy advisors not eager for competition

Mayor Kirk Watson and Council Member Daryl Slusher are scheduled to hold a press conference this morning to discuss deregulation issues and the status of the city’s utility, Austin Energy. The Electric Utility Commission (EUC) spent last night tweaking a resolution that outlines the minimum requirements for Austin to enter the electric deregulation game. That resolution is scheduled to go to City Council on Thursday.

Municipal utilities are entitled to opt out of electric deregulation next year, and the few comments from commissioners last night appeared to indicate they wanted to steer clear of deregulation. The brief discussion showed that commissioners are well aware of the city’s dependence on the utility for revenues. For example, EUC Chair Teresa Reel said, “If (ratepayers’) taxes are going to go up 30 percent, it is not in their interest.”Austin Energy recommended that “at least these five conditions be met before the City Council makes a decision to opt into deregulation.”

• a decision to opt into deregulation will be in the best interest of all classes of customers and the citizen-owners of Austin Energy;

• utility customers will continue to pay for electricity at a competitive price;

• electricity will continue to be delivered in a reliable manner;

• energy efficiency programs will continue to be available to all customers;

• deregulation efforts in Texas that began on January 1, 2002, are successfully implemented.

Earlier Monday, the Senate Business and Commerce Committee and the House State Affairs Committee met in joint session to hear testimony on electric rate restructuring. Mario Espinosa, who follows legislation for Austin Energy, told In Fact Daily there were few surprises in that testimony. At last night’s EUC meeting, Vice Chair Barry Sarma wanted to see the city’s guidelines better articulated. “Is there any way to quantify this stuff in some manner?” Sarma asked Austin Energy General Manager Chuck Manning. “How are you going to quantify it?”

It will be the City Council’s choice whether to quantify the guidelines for opting into deregulation, Manning said. If those parameters are set, they are likely to be set on conditions as they occur. At this point in the deregulation process, it is too early to predict how this will play out, Manning said.

Elaine Kuhlman, vice president for finance at the utility, said that if the utility was directed to opt into deregulation and losses occurred, those losses would fall upon Austin Energy ratepayers and not the City of Austin. That is because the utility’s bonds are separate from City of Austin bonds.

Commissioner Caroline LeGette put the motion forward to support the resolution, with some minor changes to include the language “citizen owners of Austin Energy” suggested by Commissioner Shudde Fath. Fath, in fact, wanted to make sure that the more than $60 million transferred from Austin Energy to the city’s General Fund each year would remain intact.

The resolution passed unanimously, along with another seven energy related items on Thursday's Council agenda. Those items also included the addition of the GreenChoice Energy Rider to the electric rate schedule of tariffs.

Manning to chair public utilities'

Meeting on environmental rules

Group hopes to reach agreement on Clean Air issues

The nation’s top public electric utilities will consider a policy statement on the Clean Air Act and other environmental matters next week in a meeting facilitated by Austin Energy General Manager Chuck Manning.

The nation’s 20 largest public utilities have joined together in the Large Public Power Council (LPPC). The LPPC Environmental Committee will meet to prepare advice for Congress on environmental and energy policy.Next week’s meeting is intended to see if there can be consensus among various utilities as to what they can do about environmental issues such as the reduction of carbon dioxide, greenhouse gases and nitrous oxide.

“We represent interests from all over the United States,” Manning said. “We come from different places, but it’s necessary to bring the issues to the table to see if we can reach a consensus.”

Manning said the group may or may not come to any consensus. One of the critical issues will be deciding whether hydropower should be considered renewable. That position—yea or nay—will probably lead to a policy position for the group, Manning said.

On a more local front, representatives from Austin Energy were at the joint meeting of the Senate Business and Commerce and House State Affairs committees on Monday afternoon. The committees heard testimony on the state’s impending electric deregulation measures. Manning said Austin Energy is comfortable with the bill crafted to implement deregulation last session, Senate Bill 7.

“Senate Bill 7 contains the provisions that we believe are correct for public power,” Manning said.

That includes the option for municipal utilities to participate or not in deregulation. Given the recent problems with power blackouts and price spikes in California, Manning said that House Bill 918, recently filed by State Rep. Sylvester Turner (D-Houston) did not surprise him.

The bill asks the Public Utility Commission to determine whether power companies in each region are capable of offering fair competition and reliable service. The results of that study must be released no later than Dec. 1, according to the bill. Austin Energy spokesman Mario Espinosa said the bill will require the state to go back and review market solutions and make sure those market solutions can stand up to new regulations.

On Thursday morning, Manning will also present Austin City Council with an overview of how electric deregulation has impacted states such as Pennsylvania, Montana, Nevada, Oregon and California and how deregulation might impact Texas. He will include discussion of states like Washington that are feeling the backlash of deregulation because of a proximity to California.

The impact on utilities, in many cases, has been financial, Manning said. Some utilities have been faced with lowered bond ratings, even junk bond status because of the impact of “unintended consequences” of deregulation on the utility's fiscal solvency.

©2001 In Fact News, Inc. All rights reserved.

New environmental officer. . . Mike Heitz is taking on new duties and will relinquish one of his jobs, that of City Environmental Officer. Heitz says Pat Murphy, deputy environmental services manager, is the most likely candidate . . . Water line lawsuit . . .The LCRA filed its brief on Friday in the case filed against the agency by the Hays County Water Planning Partnership and the Save Our Springs Alliance. The plaintiffs’ attorneys were racing to the federal courthouse late yesterday to file theirs. The LCRA’s latest brief argues that the water project would have a positive impact on water quality in Hays County, rather than a negative one as the environmental organizations believe . . . Private conversations . . . Kristofer Kasper, an attorney with Armbrust Brown & Davis, came to the Electric Utility Commission last night, hoping to videotape a discussion of “legal issues regarding development of automated technology for improving system reliability.” He went home empty-handed, however, since the item was only discussed in executive session.

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