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Thunderstorms can be expensive for Austin Energy

Thursday, May 10, 2012 by Michael Kanin

It was a spectacular spring storm last weekend in Austin, with brilliant lightning, loud thunder and high winds, bringing downed power lines but no major damage. According to Austin Energy, it was relatively tame as Central Texas thunderstorms go.


Early estimates of labor costs for Austin Energy clean-up efforts run close to $200,000. The figure accounts for both crew overtime and extra contract help called in by the utility to bring power back to its customers.


Those figures are relatively mundane for an organization with a $1 billion budget. The two storms that hit Saturday and Monday were also relatively small in scale. The utility is not always so lucky when it comes to cleaning up after a storm roles through.


In Fact Daily asked Austin Energy officials to provide historic labor costs for some of the more memorable weather events in recent city history. These figures illustrate the random – and expensive – nature of such clean-up efforts. The figures could also provide a window into the utility’s stated desire for well-funded reserves. Austin City Council members are currently examining whether a reduction in Austin Energy’s reserve funds could be one way to cut back on the utility’s pending rate increase.


An ice storm in 2000 resulted in 90,000 outages. It took the utility five days to restore power to all of its customers and cost $1.17 million. Another ice event in 2003 took three days to clean up. All told, the utility spent $627,000 to do so.


In May 2006, a wind storm struck downtown Austin. At peak, Austin Energy faced 60,000 outages associated with the event. Austin Energy’s labor costs – including $500,000 for emergency tree cutting – were roughly $1.2 million.


When asked by In Fact Daily, utility spokesperson Ed Clark said that the utility prefers to pay for such emergency costs out of its operating fund – an account that Clark termed the utility’s “first reserve” – though it could also elect to charge those expenses to its repair and recovery fund.


Austin Energy’s operating fund held as much as $200 million in 2007. As of the last few weeks, it has been depleted to somewhere between $2 and $5 million, depending on circumstances. With reserves so low, it is possible that the utility would have to dip into its Strategic Reserve fund – its reserve of last resort – to pay for any emergency costs.


Current Austin Energy expenses are roughly $3 million a day. It takes in slightly less than that in revenues.


Asked how quickly Austin Energy has to pay off its labor costs after storm work, Clark said, “You have to pay your staff within two weeks and you’re going to pay your contractors within 90 days.”


Austin Energy maintains that dramatic cuts to its reserves could spell trouble for its high bond ratings. Some Council members have suggested that cutting funding for Austin Energy’s reserve funds could give the Council a way to reduce the utility’s eventual rate hike.

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