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Austin Energy proposes new fee for extending lines

Monday, August 19, 2013 by Michael Kanin

Austin Energy has proposed a major change to the way it charges – or doesn’t charge – for line extensions. If approved, the action would eventually assess a fee equal to 75 percent of the cost for constructing new lines and associated equipment.


Current utility policy allows the city to collect only costs incurred if the extension of overhead lines is more than 300 feet. In all other cases, the utility employs a formula that, in some cases, results in little or no reimbursement.


At the June meeting of the Electric Utility Commission, Austin Energy General Manager Larry Weis told commissioners that the utility’s dated line extension policy is costing it a significant amount of money.


“I’ve been very candid in saying, as we’ve gone through the (rate case) and everything that, ‘yeah it is a significant amount of revenue that could be recovered,’” Weis said at the time. (See In Fact Daily, June 18.)


Though the utility is asking for a new $100 fee attached to each new Electric Service Planning Application immediately, staff called on Austin City Council members at last week’s Austin Energy Committee meeting for more help.


The new plan phases in a 75 percent charge for “all costs including transformers” over four years beginning in 2015. The fees would start at 15 percent, climb to 30 percent in 2016, to 45 percent in 2017, to 60 percent in 2018, and finally to the full amount in 2020.


Line extensions, like their water counterpart service extension requests, play a key role in the debate over who should pay for the continuing growth of Austin and its suburbs. Consumer advocates argue that, if the utility picks up a significant portion of the tab, existing residents – ratepayers who see accompanying bill increases – are stuck with the bill.


Consumer advocates aren’t the only observers interested in a change in Austin Energy’s line extension policy. The city’s Electric Utility Commissioners, pushed along by veteran commissioner and watchdog Shudde Fath, also sought some sort of action over the matter. The commission is set to pick up the topic again, now that Council has seen it.


On Tuesday, Council Members Kathie Tovo and Laura Morrison pushed for a quick application of the line extension policy changes. Though Weis suggested that a slower approach might prove smoother, Tovo continued to push.


“I would like to see us really taking some action on this,” she said. “It strikes me as I looked at these numbers that we’re asking ratepayers to absorb these costs. You have folks who are renting apartments who are, in effect, helping subsidize somebody’s new home. And that doesn’t strike me as very fair.”


For his part, Council Member Mike Martinez suggested that the extension fee be used to drive development toward the city’s desired development zone. “To me, a policy consideration is whether or not we incent growth in certain areas,” he said. “To the eastern side of Travis County and the eastern side of Austin is our desired development zone and where we’d like to see growth occur.”


Martinez suggested higher fees for line extensions outside of the desired development zone.

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