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Council enters home stretch for Austin Energy rate design

Thursday, May 17, 2012 by Michael Kanin

The members of the Austin City Council continue to inch toward a final design for the Austin Energy rate increase. Council members took concrete steps in that direction Wednesday morning when they unanimously agreed on a handful of basic elements that will be included in electric rates for area schools and houses of worship. Representatives of both consumer groups had presented Council members with a set of rate-making challenges.


The move came from a compromise rate proposal announced Monday by Council Members Bill Spelman and Chris Riley and Mayor Pro Tem Sheryl Cole. Their pitch included structural elements that are agreeable to the Austin Independent School District and area religious institutions. Key provisions, which the full Council subsequently embraced include a weekday demand calculation and a 12.5 cent per kilowatt hour charge that will be cheaper for houses of worship and at least a 10 percent billing discount for schools served by Austin Energy.


In a conversation with In Fact Daily on Wednesday afternoon, Mayor Lee Leffingwell said that what he heard at the morning’s work session “sounded like some good progress.” Though the Mayor noted that a “key” discussion about the impact of adjustments to Austin Energy’s proposed rate design on the utility’s bond rating had yet to happen, he sounded as though he could work with the Spelman/Cole/Riley plan.


“I think that a lot of areas of contention have been dealt with,” he said of the trio’s proposal. The Mayor specifically cited the lower fixed charge offered by the three. However, he added that, in addition to discussion about the utility’s bond rating, he also wants to hear about the proposed tiered rate structure.


Leffingwell further noted that Council members “need to figure out how all of it works together. . . It’s like pushing on a balloon,” he said, implying that any single adjustment to Austin Energy’s rate design could affect a host of other elements of the plan.


Even if the Mayor backs the Spelman/Cole/Riley plan when it comes up for a vote, it is not yet clear whether the proposal will have the necessary votes for final passage when it comes up on June 7. Like any other ordinance, the rate design ordinance must garner five votes to pass on all three readings. Otherwise, the process will be drawn out.


With Council Members Laura Morrison and Kathie Tovo expressing doubt about Spelman’s proposal (see In Fact Daily, May 15, 2012), Council Member Mike Martinez seems to control the vote that could allow passage of a proposal along the lines of the Spelman/Cole/Riley pitch on June 7.


Martinez has been publicly silent so far about his feelings about the Spelman/Cole/Riley plan. He backed an earlier effort by Morrison and Tovo to impose a one-year stopgap rate increase on the utility as Council members worked through the various issues involved in rate making. That proposal was eventually defeated.


For his part, Leffingwell saw some light at the end of the very-long tunnel. “I think that we’re on track to have a decision on June 7 or shortly thereafter,” he said.


The Spelman/Cole/Riley plan came Monday with the backing of a wide selection of rate-payers, including representatives of Austin industry, the Austin independent School District, the Electric Utility Commission, and the religious community. Familiar critics including Texas ROSE executive director Carol Biedrzycki remain concerned that the Spelman/Cole/Riley plan puts too much burden on residential ratepayers.


Council members have one last Austin Energy work session. It is scheduled for this afternoon.  


Though past work sessions have been marked by the partial Council attendance, the entire body was present for the bulk of Wednesday’s discussion. State representative Paul Workman (R-Austin) was also in attendance. Workman sat at the front of Council Chambers, until he left about half-way through the meeting.


Workman has been critical of the effect of Austin Energy’s rate increase on out-of-town ratepayers. He could play a part in any legislative action directed toward the utility.

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