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EUC advocates major policy change on line extensions

Tuesday, December 3, 2013 by Bill McCann

Taking a cue from the Austin City Council’s recent action to increase fees for hooking up new water and wastewater service, the city’s Electric Utility Commission has voted to ask the City Council to take similar action for extending new power lines.


Austin Energy has recommended recovering 75 percent of the cost of extending new electric lines over a five-year phase-in period starting next October. But the advisory commission, prompted by longtime Commissioner Shudde Fath, concluded that the utility’s proposal did not go far enough to help relieve electric ratepayers of paying for new growth.  


Fath’s resolution, which was approved 5-0 by the commission, calls for Austin Energy to collect 100 percent of the line-extension costs as soon as the utility is able to accomplish the task. It also contains a provision, added by Chair Bernie Bernfeld, recommending that the Council consider exemptions for new housing in low-to-moderate income neighborhoods and for other affordable housing projects.


“This is a change, which is why we have proposed phasing it in,” said Austin Energy’s Chief Operating Officer Cheryl Mele. “It is a policy decision as to how much is recovered through rates as opposed to up-front recovery charges.”


Fath, who has been on the commission since it was created in 1977, said the utility stopped collecting fees for extending new power lines in the late 80s or early 90s. She and others have long argued that the utility has gone on way too long in letting new construction get subsidies from existing customers. Right now, for example, property owners do not pay for an overhead line extended to a new building unless the line is more than 300 feet long. 


“Just think how long I have been paying for new growth,” said Fath, who is in her late 90s. This time she said she believed timing was right for a change because of the Council’s action last month to hike the impact fees on water and wastewater extensions.


The thinking expressed by some commissioners is that the payments would help new development pay for itself, and might help hold the line on future rate increases. Austin Energy currently budgets about $20 million a year in its capital program to cover the cost of new service delivery. If the new policy is adopted, there will be no immediate impact on rates, Mele said. 


Austin Energy General Manager Larry Weis acknowledged the problem last June when he told utility commissioners that the city’s dated line extension policy was different from the policies in his previous experiences, where developers contributed considerably more money for infrastructure construction. He said that a significant amount of revenue could be recovered. Subsequently, some Council members have expressed support for changing city policy.

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