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Flurry of activity on AE rates as public hearing extends to wee hours

Friday, February 10, 2012 by Michael Kanin

Two new proposals from three Council members Thursday looked to reframe the quickly deteriorating effort by Austin Energy to complete a comprehensive rate make-over by the end of March. The first, announced just before Council met, amounts to a stop-gap that would allow Council to dig deeper into the issues over a longer period of time. The second, which came mid-day, offered a potential solution to problems school districts have with specific portions of Austin Energy’s rate proposal.


It all happened hours before the Council heard the second public hearing on the rate increase. As of deadline, only about an hour and a half of testimony had been heard. According to Mayor Lee Leffingwell, citizens had signed up to speak for a total of nearly six hours.


With little apparent agreement on a permanent way forward before the peak use days of summer, Council Members Laura Morrison and Kathie Tovo called a 9:30am news conference. They used the occasion to announce their proposal for an interim rate hike that would aim to bring Austin Energy 3.5 percent more revenue for a period that would begin in June and last for approximately year. If approved, Morrison and Tovo suggest that the move would bring the utility roughly $35 million additional dollars while Council members use the additional time to look at the situation.


Austin Energy says that it needs $126 million more in revenue. Current projections have the utility bleeding $2 million a week without substantial change (See In Fact Daily, Dec. 21, 2011).


“Austin Energy has been stating for some time that there is a need, that we need to restructure things, that their financial situation is not sustainable, that we do need a rate increase,” Morrison said. “I don’t think that things have been rushed, it’s just that now that it’s gotten to the council, I think that we see and know that there really are policy issues embedded in the recommendations and we need to have the time to pull those apart so that we as your elected officials can set the direction on those policy issues and then develop a rate structure based on that.”


After the press conference, Morrison told In Fact Daily that she and Tovo hadn’t yet had a chance to run the details of their plan by Austin Energy. “I had the opportunity to let them know that we were going to do this and we wanted to have some conversations,” she said. “Obviously, there will be a lot of discussion. The key is that we make sure that we pick a number that is minimal but also addresses short-term critical needs.”


Should the Morrison/Tovo plan move forward, and should the utility raise it’s rates, rate-payers who live outside the city’s limits could bring the rate case before the state’s Public Utility Commission – even if it’s a simple interim adjustment. That eventuality would set up a scenario where that challenge could be followed by another challenge whenever the Council takes more permanent action on the rates. Should the PUC decide against Austin Energy in any challenge, the utility would have to refund the rate-payers who bring the case.


The Morrison/Tovo plan eliminates the proposed new 6.1 percent rate discount offered to rate-payers who live outside of Austin.


Meanwhile, Mayor Pro Tem Sheryl Cole has been engaged in an effort to negotiate with the Austin Independent School District that would discount the rate increase for the district, and commit Austin’s schools to energy conserving capital improvements. If consummated, the agreement would solve the school district’s concerns over the costs of multiple meter connections for portable classrooms and building extensions.


MPT Cole is urging all meters at one location for Independent school districts be aggregated so that each site is associated with one account,” reads the release. “Schools today can have as many as 30 meters on a single campus due to portable classrooms and extensions but the cost of servicing them does not correspond to the meter charges that they were set to experience.”


The deal would also give AISD a 10 percent discount on metered rates. In return, the district would “invest a portion of their existing and future bond money into energy efficiency improvements.” Though Cole mentioned that “she was encouraged by the response from other school districts (served by Austin Energy) as well” there was no mention of an agreement with any district other than AISD.


At deadline, representatives from ADAPT of Texas, consumer activist Paul Robbins, Public Citizen’s Texas Director Tom ‘Smitty’ Smith, and representatives of AARP, had all questioned the rate increase. There was wide vocal support for the Morrison/Tovo plan. There was also broad criticism for the plan that would offer non-city residents the 6.1 percent discount.


Austin Energy changed its original rate hike proposal after it became clear that council support for it was disappearing. Among other changes, the new version stretched the rate increase over three years and offered a concession to outside-the-city rate-payers in the form of a 6.1 percent discount. It remains unclear whether those adjustments would earn the proposal either Council support or a reprieve from a rate case.

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