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Austin Energy ponders low-income assistance funding revamp

Monday, June 27, 2011 by Bill McCann

As part of Austin Energy’s current review of its rates, the utility is seriously considering a fundamental change in its efforts to assist low-income customers. The change would incorporate low-income assistance into electric rates and would result in the near-tripling of the number of needy customers who could be helped.

Under the plan, Austin Energy would give an estimated 26,000 eligible low-income customers a $25 discount on their bills each month and cover the cost by imposing a charge of .065 cents for every kilowatt-hour used on the bills of all Austin Energy. The new charge would add 65 cents to the bill of a typical residential customer using 1,000 kilowatt-hours a month, for example.

“This (concept) represents a very firm commitment to low-income people – and it needs to be a very firm commitment,” said Bob Wittmeyer, a rate expert hired by Austin Energy to advise residential representatives of the utility’s Public Involvement Committee.     

The new charge is one of the ideas being considered as part of the rate review currently under way by Austin Energy, which says that it needs a 12 percent increase in revenues to cover its operating costs. That increase is expected to vary widely among customer classes, with some residential users seeing increases much higher than 12 percent, and some lower. The rate review will continue this summer and fall, with the City Council having the final say later in the year. Plans call for new rates to take effect in early 2012. So any changes in the low-income program would occur then.

Austin Energy currently operates a program that gives about 10,000 eligible low-income customers discounts on their bills, including a waiver of the $6 electric service customer charge, and a reduction on the fuel charge. The program costs the utility about $3.1 million a year. Customers qualify if they participate in one of a number of existing assistance programs, such as Medicaid or the Supplemental Security income program.

A separate assistance program, funded by about $300,000 in utility operating revenues and $53,000 in individual voluntary contributions on customer bills, helps needy people who are having difficulty paying their electric bills.

Austin Energy officials told a meeting of the Electric Utility Commission last week that Austin has long been a caring community and incorporating assistance into electric rates is a simple, transparent and fair way to help low-income customers. Besides greatly increasing the number of potential low-income customers served, the new rate-backed program would share the cost burden among all customers, they said.

The funding concept is based on a recommendation made by Wittmeyer, who gleaned the idea from his experience in areas of the state where investor-owned utilities compete for customers. In those areas, the state mandates that the utilities assist low-income customers through a charge of .0655 cents per kilowatt-hour to all customers.

The concept makes sense for Austin Energy, Wittmeyer told In Fact Daily, not only because it demonstrates a commitment to the needy, but it is something that is recognized and used in other parts of the state. As a result, Austin Energy would be on good ground in any case where there might be a complaint that it is unfair, he said.

Working with residential representatives of the Public Involvement Committee, Wittmeyer actually recommended a funding concept somewhat different from what Austin Energy is considering. While he proposed charging businesses .0655 cents per kilowatt-hour, he also recommended that all residential customers be charged $1 a month, regardless of consumption, to help pay for the program. Austin Energy officials instead decided on the across-the-board charge based on consumption.

Meanwhile, Austin Energy officials say they have a good base of information about who would benefit and their relative levels of need, thanks to a community advocacy group that has been meeting with utility staff for a year and a half. The advocacy group, representing nonprofits, churches and others, in recent months has been focusing on eligibility, including who would be eligible under various funding levels, according to Ronnie Mendoza, manager of Austin Energy’s Customer Assistance Program.

“We have a good idea of who is out there and what the needs are,” Mendoza said. “Our goal is that when the final decisions are made on funding in the rate review process, Austin Energy will be ready to implement them.”

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