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Leffingwell takes Austin Energy, generation plan to Senate Committee

Thursday, May 20, 2010 by Michael Kanin

Much of the debate about the future of Austin Energy and power generation in the city it serves found itself in front of the Texas State Senate Committee on Business and Commerce on Wednesday. There, Mayor Lee Leffingwell, interim Austin Energy General Manager Robert Goode, and representatives from both supporters and opponents of the plan rehashed questions about the utility’s transparency, its newly passed generation plan, and its finances.

 

Committee Chair Sen. Troy Fraser (R-Horseshoe Bay) mostly made good on his promise to keep the hearing from turning into an “Austin bashing.”

 

“I take it as a big deal that the mayor (came to the hearing),” said Fraser. “(This) sends a signal to me that they’re paying attention.”

 

Indeed, the committee warmly welcomed Leffingwell, who was testifying for the first time in front of a state legislative body. He gave committee members a selection of background information, singling out Austin Energy’s high bond rating and its diverse energy portfolio. He also emphasized the equal consideration given to each of the three “core values” — clean, affordable, and reliable energy — in the utility’s mission statement.

 

He then focused on the generation plan. Here, Leffingwell offered the committee an assessment that would be familiar to any loyal City Hall watcher: “First, the plan is flexible,” he said, “it can be changed to respond to changing technology, changes in state and federal law, changes in our business model … a cost of service study that we’re doing in 2011, and a rate case that will be based on that study done in 2012.”

 

“Second,” he continued, “we are committed to balance the generation plan goals with our core values … to put the economic needs of both our residential and industrial customers on equal footing.”

 

Leffingwell cited the City Council’s delay of the generation plan until a cost matrix could be completed as evidence of Austin’s commitment to affordability even as it explores alternative energy options.

 

“We understand that we not only have a moral responsibility to deliver affordable energy to our customers but a practical responsibility to ensure that Austin Energy remains as a viable and competitive business that can survive, prosper, and continue to be an asset to our community,” he said.

 

When it came time for questions, Committee co-Chair Sen. Chris Harris (R-Arlington) began to hone in on what he called Austin Energy’s “dividend.” Austinites will know this better as the utility’s transfer to the city’s general fund. Either way, Harris was interested in how many additional commercial meters the city had brought online since its 1994 rate increase, in light of the fact that it had maintained a 9.1 percent transfer rate.

 

At one point, Harris dryly offered Leffingwell the assistance of fellow Committee Member Sen, Kirk Watson (D-Austin). “Senator Watson wants to jump down there to be your lawyer to object to any questions,” he said. This despite the fact that the former Austin mayor had only stepped in to point out that Austin Energy’s prices had been below the average when natural gas prices were higher and that the utility hadn’t had a rate increase since 1994.

 

Leffingwell told Harris that he could “use all the help (he) could get.”

 

Watson, in fact, remained largely on the sidelines as Leffingwell took fire from Fraser for Austin Energy’s biomass deal, the overall lack of competition in the Austin market, and the city’s early adoption of federal carbon reduction standards.

 

“Frankly, if there is a carbon-capture plan … we’re all going to be saying, ‘Damn, Austin was smart,’” Fraser said. “But, unfortunately, if it doesn’t happen then it’s just the opposite.”

 

As the morning marched on, CCARE’s Ward Tisdale expressed his organization’s concern over the affordability of the generation plan. Here, Watson defused some of his issues by illustrating that CCARE had been involved in the creation of that plan.

 

Austinites for Action co-Chair Roger Borgelt noted that his group was “very concerned” about transparency and accountability at the utility. He suggested independent oversight and a board of trustees that wouldn’t be made up of Austin City Council members. Borgelt, a partner at Potts and Reilly, is also the vice chair of the Republican Party of Travis County. Former Comptroller Carole Keeton Strayhorn founded the group.

 

For his part, Watson seemed to hold fire until the public testimony portion of the hearing. After Dick Brown, a lobbyist with ties to developers and the pro-gambling group Texans for Economic Development, complained about a rate hike and a lack of competition, Watson called on Goode to talk about the general fund transfer and the affordability matrix.

 

Watson assured the committee that Austin Energy didn’t have to make a fund transfer at 9.1 percent every year, a fact that Goode confirmed. Watson then addressed Brown’s concerns with a summation of the affordability matrix.

 

“So those legitimate issues raised by Mr. Brown about cost and potential loss of revenue that are out there — all of that will be taken into account as Austin Energy goes forward on any part of its generation plan?” he asked.

 

Goode again confirmed.

 

As for transparency, Goode told In Fact Daily after the hearing that the utility was still in the process of addressing those concerns. “We’ve got a list of over 100 items from (the) stakeholder group about … the things (they’d) like to see from the utility, and we’re working through every one of them to try” to make a determination, he said.

 

Goode added, “If we feel it needs to be (classified as) competitive (information), we’re going to be really clear about why that is.”

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