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Extreme weather causes Austin Energy’s revenues to jump

Friday, August 5, 2011 by Michael Kanin

The heat is good for Austin Energy.


According to the utility’s third quarter report, this summer’s high temperatures have contributed to an $11.2 million jump in its expected 2011 electricity sales. However, impressive as that figure may be, it still won’t bring in enough revenue to keep the utility from dipping into its reserves to cover its 2011 costs.


“Anytime we have a large jump in sales, it’s good news to our bottom line,” Austin Energy General Manager Larry Weis told In Fact Daily. “But it costs money to produce power too … Overall it does have a positive impact. Does it affect rates? No.”


That news came as part of Austin Energy’s latest quarterly council briefing. With that report, Weis delivered an update on the utility’s upcoming rate case.


Austin Energy’s Chief Financial Officer Elaine Hart was clear about the source of the income bump. “Weather is dominating much of our performance this year,” she said.


Indeed, the utility’s base sales for 2011 have jumped to $624.6 million. In addition to the fact that this is $11.2 million more than Austin Energy officials had anticipated, the total includes a $20.4 million increase from what the utility made in the third quarter of 2010.


Still, Hart told the Council that whatever extra money the utility brings in will not be “sufficient … to resolve our deficiency issues.”


“We’re still relying on our operating reserves,” she added.


Weis also delivered a projected timeline for the progress of the utility’s attempt to raise its rates. That schedule aims to have analysis and recommendations about the new rates by Sept. 1. This would coincide with a special meeting of the city body that will advise Council on the rates – the Electric Utility Commission – set for that date at Council Chambers.


It would also come in the heart of the City of Austin’s budget season – the same day, in fact, that Council members are set to decide on the tax rate for 2012. Mayor Pro Tem Sheryl Cole raised concerns about the timing.


“We always have lots of challenges during the time frame that we’re trying to balance the budget,” she said. “It would be even more challenging to try to address the rates at the exact same time.”


Weis told her that the confluence of major issues was entirely coincidental. He did not offer to move the date.


Should the schedule hold, the Council would have a work session sometime in November to offer its input on the rates. Council Member Bill Spelman was careful to illustrate the fact that he felt the body should have a say in the new policy.


City Manager Marc Ott told Spelman that he expected Austin Energy to present a recommendation. However, he bowed to Spelman’s point. “The Council always has complete leeway because you are the ultimate decision makers,” he said.


After the Council sets the new electric rates, Austin Energy ratepayers who don’t live in city limits can appeal them with the State of Texas’ Public Utility Commission.

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