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Austin Energy’s Generation Plan makes progress toward approval

Friday, April 9, 2010 by Michael Kanin

An update of Austin Energy’s Resource, Generation, and Climate Protection Plan will include a few changes as the utility’s roadmap to 2020 heads for an April 22 City Council vote. Austin Energy Interim General Manager Robert Goode told Council Members on Thursday that these would include adjustments to his department’s forecasts for system load and its current ability to reduce carbon dioxide emissions.


Goode’s briefing also detailed the eventual rate hike that would accompany Council’s approval of the plan. If approved, the new approach would mean a 9.5 per cent increase to Austin Energy bills above what the current plan predicts by 2020. The current plan calls for an increase in the ratio of renewable resources in Austin Energy’s portfolio to 30 percent.


The new load forecast found that Austin Energy’s prediction of its needed energy supply between the years of 2012 and 2020 had increased from a 2009 estimate. The new figures, which represent a 5,107-gigawatt hour difference, are still below demand estimates made in 2008.


Still, the latest predictions find the utility able to generate more than enough capacity to use its own energy production, even at peak times.


Current forecasts also find Austin Energy unable, with its current mix of resources, to meet its goal of reducing its carbon dioxide emissions levels by 20 percent of its 2005 figure by 2020. Even so, Goode told In Fact Daily that his department would keep to its original goal.


“I don’t think you change that target,” he said. “We need to have something to shoot for.”


He added that the approach the utility takes to remedy the situation—the addition of more natural gas to its resource mix in order to reduce the level of coal-based energy generation, for example–would be updated annually.


If it meets its goal for emissions reduction, Austin Energy would be three percent ahead of the standards proposed in the federal Waxman-Markey bill, (also known as Cap-and-Trade) which would mandate a 17 percent reduction in greenhouse gas emissions by 2020 and 83 percent by 2050 from 2005 levels. The bill has passed the US House but is pending in the Senate.


Goode’s figures for the rate increase did not include any calculation for inflation. He told the Council that he’d left out that math for two reasons.


“For one,” he said, “it’s very difficult to predict and we cannot control (it). For two, based on our portfolio, some of our energy mixes…are not as subject to inflation as other parts of our portfolio. So it’s very difficult to put just a lump sum inflation on any of these costs because it’s very specific to each energy source.”


He added that the rate figures could change as the utility passes its 2020 forecast. “We’re buying energy for the long term, we’re not in this for the short term,” he said. “And the longer you look at energy costs from a planning horizon, the more beneficial it looks.”


If the plan passes, a bill of $86.96 would, under current estimates, increase to $110.16 without considering inflation. Using a detailed chart that showed an annual average rate change of 1.65 percent, Goode took pains to illustrate for the council that “Austin Energy has historically…provided energy at good rates.”


When it came time for questions, Mayor Lee Leffingwell asked Goode to include language in the plan that would require Austin Energy to complete a detailed look at its pricing—called an affordability matrix—before it signed any purchase power agreements for more than 10 megawatts.


Trey Salinas, a spokesperson for the Coalition for Clean, Affordable Reliable Energy believes that “progress has been made” with respect to lingering questions about the affordability of the plan. In an email sent to In Fact Daily, he wrote that his group “appreciate(s) the Mayor’s recognition of the need for an affordability metric.”


“We are also encouraged by Mayor Leffingwell and other Council members’ comments that no new purchase power agreements of 10 megawatts or more would be approved until the metric is in place,” he added.


Council Member Sheryl Cole told Goode that she felt that Austin Energy had “heard the community and (the Council) when we say the other thing that we’re really concerned about is affordability.” She then asked him to offer a more detailed description of what the utility’s affordability matrix and its practice of benchmarking would look like.


Goode told Cole that the company would hire a consultant to “help us benchmark costs of any available data we can get on all classes of customer—residential, commercial, and industrial—in an effort to show where we’re at in the comparable cities and comparable power utilities in the state and in ERCOT” (Electric Reliability Council of Texas). He said that the result would be a set of numbers that would serve as a gauge for future decisions about energy management in Austin.


Cole then asked Goode to clarify the fact that the affordability matrix, in addition to the rest of the plan, would be subject to Council review every two years. Goode said that he was “hearing that clearly.”


She also stressed that the “affordability piece of this” remain as open to the public as possible. Goode told her that City Manager Marc Ott has “given me clear marching orders on that aspect (of the project).”


“So yes,” he added, “I can commit to doing that.”


In a move that seemed directed at Carole Keeton Strayhorn’s announcement of a campaign to force the Austin Energy plan into a public referendum, Cole asked City Attorney David Smith if he could help her “understand what potential the generation plan has for legally going before the voters.”


Though Smith said that he didn’t think that he knew the answer to her question “off the top of his head,” he noted that, “as a general rule, the city can’t just simply choose to refer things to the voters.”

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