About Us

Make a Donation
Local • Independent • Essential News

Cool July not good for city-owned utility's sales

Tuesday, August 20, 2002 by

Austin Energy’s (AE) electric sales revenues are down $16.6 million through last month, according to AE General Manager Juan Garza, who said a major factor in the decline is cooler than normal temperatures in July.

Garza told members of the Electric Utility Commission last night that sales for the fiscal year are about four percent below budget projections, adding that July’s daily average temperatures were eight degrees cooler than last year. August seems to be following the same trend, he said, with average highs about five degrees lower than last August. There has been no growth in kWh sales this year either, Garza noted.

The commission had no questions about the revenue section of Garza’s report but that changed when Garza outlined the costs of deregulation. Even though Austin Energy is not required to join deregulation in the retail market, the utility must pay a share of the administrative fees generated by deregulation. Garza said AE’s payments to the Electric Reliability Council of Texas (ERCOT) were less than $50,000 per year prior to deregulation. However, “AE’s share of ERCOT administrative fees this year is over $2 million.” ERCOT’s budget, which was previously only $5 million, is now more than $100 million.

Commission Chair Barry Sarma wanted to know why. Bob Kahn, vice president of legal services for the utility, said one reason for the dramatic rise in costs is that ERCOT grew from 30 or 40 employees to about 300. Utilities throughout the state are required to pay a share of that cost. Kahn said AE has taken the position—as have other municipal utilities and co-ops—that they should not be charged as much as utilities that have chosen to enter the deregulated retail market. Although AE participates in a deregulated wholesale market, buying and selling electricity with other utilities, the utility has not entered deregulation. Neither have any of the 77 electric cooperatives or 72 other city-owned utilities in the state, according to AE.

Commissioner Shudde Fath asked Kahn whether the utility would be getting a refund from ERCOT for overcharges. Kahn replied, “They’re working on it.”

Garza said natural gas prices have remained steady and are not expected to go up this year. AE still has one of the lowest fuel charges in the state at 1.7 cents per kWh. He provided a list of proposed fuel charge increases from investor-owned utilities, ranging from 16 percent at the Dallas-based Texas Utilities to 22 percent at Central Power & Light in Corpus Christi and West Texas Utilities in Abilene. However, AE is proposing to revise the fuel adjustment clause for FY 2002-2003, Garza said, to help offset costs associated with ERCOT. According to the utility, the average residential customer would see an additional fifty cents added to his electric bill as a result of the change. The Council is scheduled to hold a public hearing on proposed changes to the fuel adjustment clause and some other fees at 6pm Thursday. The Commission met in executive session to receive information about financial matters and deregulation, but did not take a position on the budget or fee changes.

Department will carry shortfall into new fiscal year

The proposed operating budget for the city’s Water and Wastewater Department next year calls for no rate increases, Director Chris Lippe told the Water and Wastewater Commission last week.

Last year’s combined rate increase was 5.8 percent. Service revenues are down this year because of a wet winter and the department will carry a $3.7 million shortfall into the new fiscal year. But Lippe predicted no rate increases, no new programs and no employee layoffs. The budget will be presented to the City Council on Wednesday, with a hearing on proposed rates scheduled for Thursday.

Commissioner Jim Haley praised Lippe for such a budget in a year with tremendous economic difficulties and plenty of rain.

“I think you have done a magnificent job,” Haley told Lippe. “The fact that you don’t have to do a rate increase—I am personally very impressed that you were able to pull that off, really make that happen.”

The operating budget has been trimmed by almost $25 million, down to $258.5 million for the upcoming fiscal year. The capital budget will be $159.8 million, compared to last year’s $173 million. Most of the capital dollars will go to addressing overflow issues in the wastewater system.

The operating budget will include a $19.5 million transfer to the general fund and $24.1 million in current revenue transfers to underwrite the department’s capital projects. Another $19 million will be transferred out to other departments that support Water and Wastewater functions. And $5.5 million will be set aside for the Austin Clean Water Program, which addresses aging infrastructure, Lippe said.

Lippe noted that $6.6 million in operating costs were cut from the budget. Those cuts included $2.4 million in personnel cost reductions, although the department remains at 1,044 employees and has for a number of years. Among other cuts were $1.4 million in increased charge-backs to capital projects and $1.2 million in electrical power savings. Process improvement initiatives in the department will include addressing the use of the department’s fleet of vehicles and the process for improving service extension requests.

Commissioner Lanetta Cooper questioned why 5 percent of the budget needed to go to billing and customer service. She wanted to know how the utility’s percentage compared to other utilities.

“I find our billing costs to be extremely high, way above average from other utilities,” Cooper said. “It’s something I harp on every year, but I’d like to see some benchmarking with similarly-sized utilities.”

The utility will transfer $2.5 million to the city’s sustainability fund. Cooper also wanted to see what projects would be underwritten by the city’s sustainability funds. The public should be able to see exactly what projects are being funded and whether those projects really support sustainability issues, Cooper said.

Cab companies, others say it's just the economy

Cab drivers concerned about increasing competition, longer hours and decreasing profits took their complaints to the Urban Transportation Commission on Monday evening, calling for the city to take back some taxicab permits or to adopt a temporary freeze on issuing new permits. But commissioners declined, apparently convinced that the problems facing cab drivers were the result of the slow economy and not city policy.

Michael Petterson, chairman of the Texas Taxicab Workers Association, asked that the number of permits be rolled back because the number of permits has increased while business has not. Other cab drivers and cab company representatives disagreed, saying that a moratorium on permits would not solve the problem. They claim the economy is to blame.

Petterson said his income has dropped dramatically over the past three to four years. He said the problem in the taxicab industry is the result of increased number of permits, more parking at Austin-Bergstrom International Airport and competition from airport shuttles. He said that drivers are working between 70 and 80 hours a week to make enough money to support their families. Petterson added that fatigued drivers may endanger passengers and that the glut causes cab drivers to drive around looking for parking while waiting to get customers.

Hannah Riddering, independent taxi owner/operator and chair of the Airport Advisory Commission, agreed that the moratorium would help the taxi industry. She said they lost customers when the city annexed areas that were already being served by cab drivers, thus adding to the population and increasing the number of permits. Riddering also said that other forms of transportation, such as shuttle companies, needed to be limited. “Anyone can buy a van and call it a shuttle.”

Transportation Regulation Manager Morris Poe said the numbers of permits probably has affected the taxi industry. But he also said that given economic conditions, the current formula for the number of permits might need another variable. Currently, the city allows one permit per 1,200 residents. However, no other cities comparable to Austin have made any such changes. Also, during the economic boom, there weren’t enough cabs. There are currently 565 regular taxi permits and 33 special wheelchair permits on the books. Poe said they allocated 24 permits in June, but that they wouldn’t issue any new ones until June 2003.

Kayla Wells, general manager for Yellow Cab, said it wasn’t the increased number of permits, but the economy that was the problem. Ellis Houston, district manager of Coach USA, agreed and said he would object a proposal to take away permits that would park $20,000 cars. He said other markets have been adversely affected, but that Coach USA has only one other market that does better than Austin. “When there are two cab drivers, one will always think there is one too many,” Houston added.

Commissioner Michael Dahmus said, “There’s not a lot of support for taking back permits.” But commissioners decided a moratorium would be useless since no more permits would be issued until next year.

© 2002 In Fact News, Inc. All rights reserved.

Mayor puts money into clean air quality . . . The City of Austin has worked with other entities to try to reduce the amount of ozone and other pollutants in our air. And now Mayor Gus Garcia has made a personal investment to help clean Austin’s air. Garcia is the proud owner of a new Toyota Prius, a hybrid vehicle. “If our efforts to improve air quality in Austin and other parts of Central Texas are going to make a difference, people are going to have to change their behavior and attitudes about everyday conveniences. Purchasing this car isn’t about making a statement. It is about making changes in my life that will have a positive effect on the environment,” the Mayor said . . . Candidates luncheon today . . . Candidates for Travis County Judge, Commissioner Pct. 2, State Representative Dist. 48 and State Senate Dist. 14 are scheduled to participate in a moderated panel at a luncheon sponsored by the Young Women’s Alliance and the Young Men’s Business League. The luncheon begins at 11:30am at the University of Texas Club, 2108 Robert Dedman Dr., behind the football stadium. Walk-ins will be accepted if space is available . . . LCRA board meeting in Burnet . . . The Board of Directors of the Lower Colorado River Authority (LCRA) will meet today and Wednesday at Canyon of the Eagles in Burnet . . . Dallas grand jury says no . . . The Associated Press reported last night that the grand jury investigating allegations concerning money for an opponent’s endorsement in the election of Mayor Laura Miller did not merit an indictment. Miller and her runoff opponent, Tom Dunning, were both accused of offering to pay candidate Domingo Garcia’ s campaign expenses in return for his endorsement. The special prosecutor said he thought no indictment was the appropriate response from the grand jury . . . What’s happening on Guadalupe? . . The Villas on Guadalupe, one of the more controversial Smart Growth projects to split the City Council, may have run into a snag. Neighbors, who fought the project but lost, say the site plan submitted to the city does not fit the footprint of the project approved by the Council in April. (See In Fact Daily April 5, 2002 .)

© 2002 In Fact News, Inc. All rights reserved.


You're a community leader

And we’re honored you look to us for serious, in-depth news. You know a strong community needs local and dedicated watchdog reporting. We’re here for you and that won’t change. Now will you take the powerful next step and support our nonprofit news organization?

Back to Top