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Analysis: Council utility sessions vary greatly from EUC work

Tuesday, April 3, 2012 by Michael Kanin

Three sessions into the Austin City Council’s extended review of various elements of the proposed Austin Energy rate hike, there have been lengthy discussions of, and – some members say – a better understanding of the utility. Though Council members appear to be gaining insight from each session that examines a separate set of issues, they will eventually need to put all the pieces together to understand the big picture.


Last Tuesday, Council heard from the utility about its Customer Assistance Program, goals for distributed solar power generation, and energy efficiency. They discussed the impact of these various programs on the utility’s revenue requirements. However, during the session, Council members did not discuss how those issues might be connected to other sections of the rate design – other sections that will be and have been covered during other work sessions.


In addition, the Council’s process runs contrary to the one adopted by the city’s Electric Utility Commission to deliver its rate case recommendations. For its deliberations, the commission employed what it called a “decision point list,” that Austin Energy designed to allow the commission to come up with a set of sequential decisions about the rates.   


For her part, Council Member Kathie Tovo – who was instrumental in the development of the work session scheduletold In Fact Daily that she believes the segmented approach to the rate discussion is working. “I’m optimistic that the work session process will be very productive,” she wrote in an email. “The issues surrounding rate design are enormously complex, and tackling elements one topic at a time allows us to better prepare in advance and to have informed discussions with staff, community stakeholders, and each other. Although we’ve made just a few tentative decisions at this point, we’ve had some thoughtful discussions and have begun to consider some alternatives that I believe will better serve the Austin ratepayers. I believe that the final rate proposal we consider will be improved as a result of this process.” Tovo told IFD would should give credit to Council Member Laura Morrison for developing much of the schedule. Nevertheless, it is seen at City Hall as Tovo’s.


Council members ratified a version of Tovo-Morrison schedule that originally called for 11 work sessions in seven weeks. Though the schedule has changed since – and, indeed appears to be constantly evolving – the basic approach of chopping the discussion into insulated segments remains.  Four members are campaigning in addition to their other duties, so they are constantly pulled from City Hall for other appearances.


A Dec. 6, 2011 memo from Austin Energy Vice President of Distributed Energy Services Karl Rábago illustrates a portion of the inter-connectedness of some of the issues at the heart of the utility’s rates. In the memo, Rábago runs down the strategy that the utility aims to use to achieve its goal of an 800-megawatt reduction in peak demand by 2020.


In his conclusion, Rábago illustrates the multi-factor nature of Austin Energy’s operations. “It will be vital that Austin Energy maintain and strengthen the flexible, integrated approach it has used successfully to date – connecting energy efficiency goals to fundamental business and financial goals, leveraging the power of well-designed rates for electric service, accounting for and leveraging the impacts and opportunities presented by codes and ordinances, and partnering with local and regional business communities,” he wrote.


This raises the question: Does a silo approach to ratemaking provide Council members with the best approach to answering their many interrelated questions?


When asked to comment, EUC member Steve Smaha said in an email, “The Council’s ordering of sessions does not correspond to a chain of sequential cumulative decisions with an outcome of a rate proposal.” He added, I advised two different Council members’ offices to use our ‘Decision Point List, but they declined, saying it didn’t correspond to the political decisions they felt they needed to make.”


Rábago set out the list the EUC used but says he was not the actual author (See In Fact Daily, Aug. 30, 2011). Smaha says that list “set up a correct ordering of decisions” about the rate case.”


“There may be more than one possible way to do the ordering, but we accepted Karl’s, which we requested after we heard him describe how he prepared such sequences when he worked for the Texas Public Utility Commission,” Smaha continued.


The Council will conduct its next work session this afternoon.

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