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Good news on state transmission fees just temporary for utility customers

Wednesday, September 2, 2009 by John Davidson

The good news for Austin Energy customers is that they won’t see an extra 60-cent charge on their monthly bills in 2010.


The bad news is that they will almost certainly see extra charges on their bills in 2011–charges that will increase to about $5 a month in five years.


The reason for the extra charges is a “cost recovery” method Austin Energy is pursuing in order to generate tens of millions of dollars it owes other utilities for an expansion of the statewide electricity grid. Last year, the Public Utility Commission (PUC) announced a $4.9 billion plan to generate approximately 18,456 megawatts of wind power in West Texas and transmit it to populated areas throughout the state.


Each utility company that uses the state grid is required by law to pay for its share, which is calculated using a formula based on usage rates during certain peak hours in June through September. For Austin Energy, that came to about 4 percent of the total cost last year–about $5 million.


If Austin Energy were to begin recouping costs in the coming year, that would translate to about 60 cents per customer per month.


But in a meeting of the Electric Utility Commission last week, Austin Energy  presented its FY 2010 budget and recommended postponing the extra charges until 2011 because of the current economic conditions.


“The decision to postpone was a result of not wanting to burden customers with another cost this year,” said Roger Duncan, Austin Energy’s general manager.


However, as utilities continue to build out the state grid and transmit wind power from West Texas, those charges are expected to ramp up quickly. The total expense for the use of the statewide grid is $64 million in FY 2010, but that number will likely double in five years and could even climb as high as $200 million, according to Austin Energy officials. That means Austin Energy customers could be facing extra monthly charges of $5 or more in five years.


For Austin residents, the increasing charges are coming because the city is importing more electricity than it’s using from transmission lines it already owns. As a result, the city’s use of the state grid has gone up in recent years and so has its share of the transmission costs.


It’s unclear at this point if the city can do anything to mitigate the transmission costs associated with the PUC grid expansion plan, Duncan said.

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