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Council vote on legal fees could rile AE ratepayers outside city limits

Wednesday, September 11, 2013 by Michael Kanin

Austin could be headed for another fight with Austin Energy ratepayers who live outside city limits.


Council members voted Tuesday to affix about $1.56 million in legal fees associated with the city’s defense of the recent Austin Energy PUC rate case to the bills of utility ratepayers who live outside city limits. The cost, spread out over two years, will run each ratepayer nearly 60 cents per 1,000 kilowatt hours used a month.


The move came on a motion from Council Member Chris Riley as he and his colleagues finished off their work on the City of Austin’s FY2014 budget. It was approved on a 6-1 vote. Mayor Lee Leffingwell represented the sole ‘no.’


“What makes this different for me is that this was not a case settled by the (Public Utility Commission), it was a negotiated settlement,” Leffingwell told his colleagues. “It seems to me that a negotiation in good faith would have included this as part of negotiations.”


Legal counsel for Homeowners United for Rate Fairness – the group that challenged Austin Energy’s rate increase last year – called the development “extremely disturbing.”


“This is a violation of our settlement with the Public Utility Commission,” said Roger Borgelt.


Borgelt pointed to the settlement agreement between the city and the challenging parties. However, that agreement does not appear to clarify the situation. Rather, it says that “the Signatories agree that the Commission has no jurisdiction to consider the rate case expenses incurred by AE after the Council’s adoption of the June 7th Ordinance.”


City legal counsel supported Riley’s motion. “That is a legally defensible position,” said attorney Thomas Brocato of Lloyd Gosselink . “Historically, rate case expenses are collected from all ratepayers over which the (Public Utility Commission) has jurisdiction.”


Brocato noted that ratepayers could challenge Council action. After the hearing, Riley, also an attorney, did not appear worried about such an eventuality. He told In Fact Daily that his intent was not to invite another challenge.


“The intent was to be consistent with how these cases are typically handled,” he said. “What we’ve learned from staff is that, typically, the expenses associated with rate cases are charged to those customers over whom the (Public Utility Commission) has jurisdiction.”


Austin Energy retained outside legal counsel after a 2012 rate hike was challenged by the same out-of-city ratepayers who will now be assessed an added fee on their bills. The case landed at the state’s Public Utility Commission.


Before a ruling – but not before pages of scathing testimony from PUC staff particularly critical of the city’s practice of collecting Austin Energy money for matters not related to the utility – the city reached a settlement with ratepayers.  In so doing, the city avoided what could have been a costly hearing that threatened to change the way that the utility does business.


There have also been legislative threats. The utility routinely dodges state attempts at deregulation and 2012 was no different.

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