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Austin Energy plans new rate structure for Green Choice programs

Wednesday, August 14, 2013 by Michael Kanin

Austin Energy is planning a new structure for its Green Choice elective all-renewable generation program. If completed, it would transition customers off of a system that ties them to specific resources as part of batch sales and onto a more flexible program that assess costs by adding one penny to ratepayers’ existing Power Supply Adjustment charge.

 

Average customers (defined by the utility as users of 1,000 kilowatt hours a month) enrolled under the new program could expect to see a cost of roughly $10 a month added to their bills, according to Austin Energy officials. If the change is enacted, the program would begin on Jan. 1.

 

Austin Energy Vice President for Distributed Energy Debbie Kimberly told Council members at their first all-Austin Energy work session that the utility’s recent surpassing of a 35 percent renewable generation goal allows for expansion of the Green Choice program.

 

“Now that we have reached – and will reach early, ahead of schedule – 35 percent of our resources from renewable resources, we looked at a way that we could transition the Green Choice rate that might be able to be expanded to additional customers,” she said.

 

Current Green Choice customers will continue to purchase energy under the terms of the contracts they signed with Austin Energy.

 

According to Kimberly, commercial-scale customers currently purchase 90 percent of Green Choice power. There are just over 1,400 of these, including the City of Austin.

 

There are nearly 6,000 residential Austin Energy customers who purchase Green Choice power. However, thanks to the scale of their electricity use, they account for just 10 percent of the program.

 

The new Green Choice program would remain portable for residential customers – that is, they can remain subscribers if they move within Austin Energy’s service area. It will now offer that ratepayer class the option of cancelling participation in the program, and would allow customers who turn off Green Choice to sign-up again the following January.

 

Currently, Green Choice users cannot cancel and return to the program.

 

Despite the changes, Kimberly noted that customers who might qualify for the residential Green Choice effort could still elect to sign a contract with the utility – if they are after rewards that necessitate that sort of documentation. Kimberly cited LEED certification as an example of that eventuality.

 

Council Member Bill Spelman asked Kimberly if she thinks that the new program will prove popular. “We’re early on in that, but what customers have indicated is that (the $10 a month) is a very modest price to pay,” she said.

 

However, Kimberly also noted that the program “will appeal to customers that fall within the, say, mid- to higher-income demographic.”

 

Council Member Chris Riley wondered about the notion that, as Green Choice expands, whether it might “affect the amount of renewables would be willing to buy.”

 

Austin Energy General Manager Larry Weis noted that the situation could become “interesting,” should an extreme number of the utility’s ratepayers elect to switch over to Green Choice. Such an event would pose a dramatic shift in the number of customers eligible to reimburse utility for all of its power costs, while simultaneously forcing it to purchase more renewable energy to meet demands.

 

Weis was cryptic in his conclusion: “We would have to start making some interesting choices,” he offered.

 

Commercial Green Choice ratepayers would still function under contracts. However, the utility would offer those customers a fixed price that would expire after three years. That figure would start at 4.9 cents per kilowatt hour.

 

Those ratepayers must require a minimum of 1.2 million kilowatt hours of power annually. As with the current program, commercial and contract customers could not cancel their contracts.

 

Council Member Laura Morrison summed up what she termed a gamble for commercial customers. “They have to make a bet, if they are only looking at the bottom line…that 4.9 cents over three years might average out to less than 3.71 (cents) with adjustments.”

 

Weis affirmed that this is the case.

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