Electric Utility Commission gets sneak peak at nearly final Austin Energy budget

Members of the city’s Electric Utility Commission have received a fuller picture of Austin Energy’s FY2011 budget. According to the utility’s senior vice president of finance and corporate services, Elaine Hart, her department has managed to trim the latest version by $36.7 million.

 

That action, however, hasn’t managed to close the full gap. With the first City Council budget work session scheduled for July 28, the utility would have to cut an additional $46.5 million to fully balance its FY2011 books.

 

Among other key details, the commission heard that the city’s wind power contract would be replaced with another purchasing agreement when it expires in 2011 and that a wood-waste-burning plant initially scheduled to come online in 2016 will be delayed by a year. These and other changes will help save the utility roughly $76 million in construction costs.

 

As part of its plans, the utility could also eliminate its distribution of door hanger disconnection notices and in-person notification of Austin Energy-initiated tree-trimmings and raise its rebate programs to nearly $19 million.

 

According to Hart, Austin Energy plans to decrease electric service delivery projects by $33 million over five years. This includes cancellation of a $10 million contingency on the Fayette coal power plant’s scrubber project and a slowdown in area cooling projects, putting off expenditures of $31 million “due to economic conditions.”

 

“We have lots of piping connections for customers that are deferred until we see some economic gains again,” she said.

 

When asked by Commissioner Gary Bernfeld if the decrease in delivery projects would have a negative effect on the amount of power available to Austin Energy customers, Hart said that it wouldn’t. She then offered a hopeful reminder.

 

“This five-year plan is a rolling plan just like our forecast; it’s updated every year based on the new load forecast,” she said. “Five years from now, I suspect that the number you see here would be much different.”

 

For commission Chair Phillip Schmandt, nearly $10 million in funds that Austin Energy contributes to the support of the incentivized business growth in the city seemed too much. “That really concerns me … I am very happy with a policy that says we will commit to economic development when we’re not engaged in deficit spending,” he said. “But when we are (dealing with such a deficit), that makes no sense to me. We’re asking to kill the goose that lays the golden egg.”

 

Interim Austin Energy General Manager Robert Goode told the commission that there had been “some headway to look at a reallocation” of how the city collects such funds. He added that he didn’t think that the utility should remove itself completely from economic development incentives.

 

After the hearing, Schmandt told In Fact Daily that he felt that “when we’re in a deficit, we need to conserve this utility for the long haul.” He added that he is concerned “with having Austin Energy commit $10 million towards a very large department (Economic Growth and Redevelopment Services) of the city of Austin on economic development that Austin Energy doesn’t control.”

 

Though Hart told the commission that their input was still “very relevant,” and the numbers they saw “were not yet final,” she also noted that her budget was “substantially complete.”  “While most of the decisions are final,” she said, “we have not put the budget to bed yet, as they say.”