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Out-of-town ratepayers continue criticism of electric rate proposals

Monday, February 13, 2012 by Michael Kanin

An organization founded by out-of-city ratepayers opposed to the current Austin Energy rate-increase proposal has signaled its opposition to an interim rate hike pitched by two Austin City Council members last week. That came in a letter addressed to Council Member Kathie Tovo from the group headed by lobbyist Dick Brown, known as Homeowners United for Rate Fairness, or HURF.

 

Signing the letter was Mark L. Farrar, a project manager with Northrop-Grumman Information Systems. In the letter, he is listed as executive director of HURF.

 

The letter does not specifically mention an idea floated by Tovo and Council Member Laura Morrison last week to enact a year-long across-the-board two-to-five percent hike in bills that would allow council more time to debate the deeper issues of the rate hike. But Farrar is clear about his group’s opposition to the notion that rate-payers who live outside of Austin’s city limits should subsidize the city’s spending on items not associated with Austin Energy.

 

“Portions (of our bills) are appropriately attributable to AE’s operations, while other portions are not,” Farrar writes. “Regardless of the precise amount, we believe that an independent third party would agree with us that it is an excessive burden to impose on outside-city ratepayers.”

 

That statement appears to reflect HURF’s willingness to take the matter to the state’s Public Utility Commission, should they remain unhappy with the proposed rate increase. That course is an option left only to utility ratepayers who live outside of the political boundaries of a city, and are served by that jurisdiction’s publicly-owned utility. Ratepayers who live inside city limits can theoretically act to change the direction of their utility by voting their current Council members, who make-up the utility’s board of directors, out of office.

 

In addition to the threat of action from the PUC, there is also an implied threat of legislative action. Last week, Lt. Gov. David Dewhurst ordered the Senate Committee on Business and Commerce to study the relationship between city governments and municipally-owned utilities, their governance and transfer payments.  

 

Backing Morrison and Tovo at their press conference last week were representatives of a wide coalition of consumer advocates and religious leaders concerned about the economic impact of the rate proposal. Numerous speakers at a public hearing on Thursday also lauded their plan. (See In Fact Daily, Feb. 10.) It would not extend a 6.1 percent discount that is included in the current Austin Energy plan for out-of-city ratepayers, a detail that met with support from some corners.

 

HURF’s letter to Tovo emphasizes the importance of the proposed discount. “To force us to subsidize the city’s tax rate and budget through our Austin Energy bills is unjust,” Farrar continues. “However, the 6.1% rate discount proposed by the AE staff is a good-faith step toward rectifying the problem.”

 

The Morrison/Tovo plan joins the second draft of a rate proposal from Austin Energy and a compromise long-term plan from Council Member Bill Spelman as options currently on the table for Council. Spelman’s plan also met with some support at the Thursday hearing. A decision on the matter could come after another public hearing at Council’s next meeting on March 1 or it could be postponed.

 

The 6.1 percent rate discount for out-of-town residents is intended to address the concerns from that segment of the opposition that they are unfairly supporting services that they don’t use – and perhaps entice them into not taking the case to the PUC. Still, even if the city were to reduce out-of-city ratepayers’ bills by 6.1 percent, nothing would prevent HURF or any other citizen group from filing an appeal with the PUC.

 

Should the Morrison/Tovo plan pass, and should a group file such an appeal and win, the city would have to refund a portion of the rates. That scenario could then repeat itself a year later, should the council enact a more permanent rate hike, and a citizens’ group file another appeal.

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