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Council gets an earful at first hearing on proposed Austin Energy rate plan

Friday, January 13, 2012 by Michael Kanin

The first formal Austin City Council hearing conducted to hear citizen input about a potential raise in Austin Energy rates featured a wide range of organizations and complaints—but not much in the way of variety of opinion.


Indeed, residents stayed until late Thursday evening to offer mostly negative comments about various aspects of the new rates. Some attempted to couch their opposition in terms that were meant to speak directly to what should be the concern Austin’s decision-makers: Whether or not Austin Energy’s new rates will pass muster when appealed to the state Public Utility Commission. Many argued that a proposed shift in cost burden that would move some of that load from commercial to residential customers is unfair.


Despite the late hour – after testimony from more than 100 participants – when the dust cleared, Council members still had a long way to go before making a decision. Up next will be a public discussion scheduled for the Council’s Tuesday work session. There, they will get the opportunity to question Austin Energy officials without the time crunch of roughly six hours of public testimony. There will also be two more public hearings.


Former City Council Member and potential 2012 mayoral candidate Brigid Shea took the opportunity to compare her experience with Austin Energy’s 1994 rate case with its current effort. Shea was one of many who urged Council to re-start the process from the beginning. “The big difference is that we had a rate advocate who, from my perspective, worked really vigorously with all of the different rate groups,” she said. “And we didn’t end up with an increase that caused all of this pain.”


Texas ROSE executive director Carol Biedrzycki listed four major concerns for her organization. Her testimony seemed to sum the broader concerns of many in attendance. “There are four big issues,” she said. “One is that the monthly fees are way too high and unfair, (another is that) the rate design does not encourage energy efficiency in the manner that we would like it to, that there is too much cost that was shifted from industrial customers onto residential customers…and whether or not Austin Energy actually needs all of the money that it is asking for in order to stay whole.”


Veteran activist Paul Robbins led off with a cry that would be repeated throughout the evening. “It is upside down and backwards,” he said of the rates. “The utility proposes to change rates that inflate the need for more revenue, penalize low-income people, and discourage energy conservation.”


Robbins went on to express concerns about a utility plan to break the costs of Austin Energy’s green programs out as a line item on rate payer bills. “While the majority of Austin’s population is generally supportive of these programs, during times of economic stress, fiscal conservatives will seize on line item charges as unnecessary and costly,” he continued. “To give you a good example of the problems with this approach…Austin Energy has 131 staff members who make over $100,000 a year. If this money were apportioned by line item, that average Austin residential customer would pay $1.27 per month for their collective salaries.”


He closed this argument with this: “Having a line item for ‘executive salaries’ would create resentment from a certain percentage of the population, and, tellingly, you don’t see Austin Energy proposing this as a line item on the bill.”


A group of well-organized solar contractors and their supporters came to plead for the return of incentives for rooftop installation. Collectively, they also asked the Council to implement a goal of 300 megawatts of energy generated from rooftop solar units.


There was also a large contingent of clergy, who argued that the rate increase would affect Austin’s houses of worship in an unbalanced manner.


Data Foundry Business Development Manager Andrew MacFarlane suggested cuts in the utilities allocated reserves, which would, he argued, mitigate some of the rate hike. As In Fact Daily reported, the company believes that Austin Energy can shrink its revenue requirement by reducing its debt service coverage ratio – the figure used to account for debt service payments and other contingencies (See In Fact Daily, Oct. 6, 2011).


The director of Global Community Affairs at Advanced Micro Devices, Ward Tisdale, spoke for a coalition of large-scale industrial energy users. He told the Council that the group supported the proposed model.


Even after the public discussion, the issue is almost certainly headed for appeal before the PUC. State Rep. Paul Workman (R-Austin) – who Mayor Lee Leffingwell allowed to testify first – made that argument. “My purpose is to address the issue of charging out-of-city voting customers more than what is required to cover cost of service,” he said. “Because of the large fund transfer, which subsidizes the services of citizens within your corporate limits, this amounts to nothing less than taxation without representation.”

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