About the Author
Mike Kanin is the Publisher of the Austin Monitor. As such, he doesn't report on much--aside from the workings of the Monitor--any more. In his previous life as a freelance journalist, Kanin has written for the Washington City Paper, the Washington Post's Express, the Boston Herald, Boston's Weekly Dig, the Austin Chronicle, and the Texas Observer.
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Watchdog says electric rates too low for customers outside Austin
Consumer advocate and longtime Austin Energy watchdog Paul Robbins is shopping a set of calculations that he says illustrates a dramatically unbalanced subsidy to utility ratepayers that live outside of the City of Austin. In addition to making a stop with the figures at the city’s Electric Utility Commission, Robbins shared his math with In Fact Daily.
According to Robbins, revenues received by the utility from residential customers who live outside of the city will drop by 5.6 percent as a result of the 2013 rate case settlement agreement. That agreement was between the city and parties that challenged the first rate increase for the utility in nearly 20 years. For West Lake Hills alone, Robbins says that revenue will drop by 6.7 percent. He tops that figure with the three percent franchise fee number that he says the city pays to eight non-Austin municipal customers.
The franchise fee – and an interpretation of how it is applied – is at the center of Robbins’ argument.
Though he admits that his interpretation of the numbers is a “lay reading,” Robbins tells In Fact Daily that the utility should revise the franchise fees “for as many cities as possible.” Robbins puts the gross profit off of energy sales for those regions at 8.3 percent. By his calculations, he says, “people living outside the city are getting electricity below cost.”
“This rate reduction to ratepayers outside the city violates about every principle of progressive urban planning since about 1950,” Robbins wrote in an email. “It serves as an incentive to encourage people to move outside of
Austin Energy Spokesman Ed Clark says that it is not. He notes that “all franchise fees paid by Austin Energy were paid from general revenue,” a fact that means that all ratepayers – including ones that live outside the city – contribute to that payment. In addition, Clark notes that those fees cover the sort of right of way access that “just about every utility in
In his email, Robbins makes a handful of other suggestions. These include a call to “revise agreements (that the utility can change)…from one based on payments from Austin Energy’s profit to one based on a franchise fee on top of gross revenues.”
Robbins’ statements come as the city continues to wrestle with major utility issues well after the settlement of its rate case. Most recently, that has translated into an entrenched debate over how Austin Energy should be governed.
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