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Council gears up for vote on Morrison-Tovo-Martinez rate plan

Wednesday, February 29, 2012 by Michael Kanin

With time slipping away for Austin City Council Members to have a new Austin Energy rate structure in place before the kilowatt-burning days of summer take hold, Council continues to inch its way toward a resolution, with one series of votes prescribing a mountain of work set for this Thursday.


The four-part resolution includes a small interim rate increase, perhaps 3.5 percent, but it is rather difficult to know what it would mean for the average utility customer. The increase has been pegged to the generation of an extra $35 million as opposed to a specific percentage increase but large customers who have a contract with the city would not be included. Also unanswered is the question of how the utility can get any rate increase into summer bills with contractor IBM struggling just to get the old system into a modern format.


Council Members Laura Morrison and Kathie Tovo introduced the idea of a small immediate increase and Council Member Mike Martinez is the third sponsor. If the resolution gets four votes, City Manager Marc Ott would be asked to come back to council with a final numbers in late May. Then, Council would be asked to approve another, presumably larger increase next year.


On Tuesday, Tovo unveiled a proposed timeline for 11 work sessions on the rate increase between March and late May. Though the rate idea may not pass, the timeline may.


Meanwhile, a plan from Council Member Bill Spelman seems to be gaining traction. If approved, Spelman’s plan would offer long-term solutions more immediately. No formal action on that proposal is expected this week. However, a defeat of the Morrison-Tovo-Martinez plan could signal support for Spelman’s ideas.


In offering the timeline, Tovo tried to read the general will of her colleagues. “It is a very aggressive timetable,” she said. “It seemed like there was a will among the council for a more aggressive decision-making timetable so that we could progress through these issues and get about the business of making some final policy decisions.”


At a special called meeting last week, Tovo stripped hard dates from a similar document in order to secure its passage. The result was an agreed upon set of discussions without a timeframe. In that version of the schedule, the three Council Members aimed to have a council vote on new, permanent rates sometime in September (see In Fact Daily, Feb. 23, 2012).


The work sessions would aim to address a host of complex policy questions that Morrison, Tovo, and Martinez argue need to be answered before a new permanent rate structure goes into place.


Mayor Pro Tem Sheryl Cole looked to move a proposed meeting with out-of-city ratepayers up. She also told her colleagues that she “wanted to be able to tell them, this is the week that we’re coming.”


After the hearing, she told In Fact Daily that much would hinge on the council’s interaction with extra-jurisdictional Austin Energy customers. “The Council must, in the exercise of due diligence, address issues that may be of concern to the Texas Legislature,” she wrote in an email. “Listening to customers outside our city limits is a critical piece of this effort.”


Spelman’s plan, if it holds as it’s been presented, would cut the fixed charges attached to each Austin Energy bill from $22 per customer to $15. It would also seek to pacify Austin’s religious community by removing weekend peak demand charges from the calculations performed to determine their rates. Spelman has posted a full run-down of his plan on his web site (


The interim rate increase portion of the Morrison-Tovo-Martinez plan would offer the utility roughly a $35 million revenue increase over the next year as officials further sort through a permanent hike. Austin Energy staff maintain that they need closer to $80 million (see In Fact Daily Feb. 23, 2012).


The Morrison-Tovo-Martinez resolution also continues to call for an independent consumer advocate to represent low income, residential, and small business ratepayers as officials debate a more permanent rate increase. It further nudges the utility on its recent billing system woes. “(T)he City Manager shall ensure Austin Energy’s billing system is corrected and operating properly prior to implementing a final rate structure,” it reads.


Council Members could individually approve each of those segments of the resolution, including the interim rate hike, and/or another that calls for Austin Energy to base its new rate structure on consumption statistics from 2011. Spelman pointed out that 2011, the hottest year on record in Austin, would not be a good test year, likely exacerbating the problem of insufficient income for the utility. He called the rate increase proposed by his colleagues, “a non-starter.”


Mayor Lee Leffingwell agreed. He also said he does not think it is a good idea to do two rate increases because of the problems Austin Energy has had with its billing contractor, IBM. Asking the company to go through the technical process of increasing temporary rates, then raising rates again in a few months, exposes the city to additional appeals at the Public Utility Commission (PUC) and leaves the city “looking like we don’t know how to run a business,” he said.


Leffingwell also said it seems unlikely that all of his colleagues would make it to the 11 work sessions that would have to be sandwiched in between Council meetings, other regular work sessions, committee meetings and other duties.

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