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Council OKs measure to have Austin Energy collect all line fees

Friday, June 13, 2014 by Michael Kanin

The Austin City Council unanimously Thursday approved an item that directs Austin Energy officials to collect full reimbursement for the cost of line extensions. The measure, long supported by veteran Electric Utility Commissioner Shudde Fath, would allow the utility to recoup millions.


Just before Council members approved the item, consumer advocate and utility watchdog Paul Robbins lauded the move. “It will mitigate the next rate increase. It will be a step toward making growth pay for itself. It will be a strategy to discourage wealth flight.”


For his part, Robbins, a well-respected voice, suggested the new rules could bring the utility as much as $14 million annually. Austin Energy officials currently budget about $20 million annually to cover the cost associated with the extensions.


However, there have been some concerns over whether the move might add extra costs to new homes as builders look to absorb new costs. As the Monitor reported, Roger Borgelt, representing the Real Estate Council of Austin, told the Electric Utility Commission that the move could increase housing costs by $1,000 to $2,000. (See Austin Monitor, May 21, 2013)


Council Member Kathie Tovo reminded her colleagues about Fath’s efforts. “It took longer than it should have to reach a Council agenda, but I’m very pleased to bring it forward,” she said.


Fath and her EUC colleagues passed the item unanimously.


In a note to city officials last year, Fath said the utility stopped collecting full extension costs in September 1994, as the Texas Legislature began to deregulate the state’s electricity market. The suspension came as Austin Energy tried to remain competitive in a 10-square mile service area it shared with TXU (now Oncor). Austin Energy serves a 437-square mile service, Fath said.


Fath said that at in 1998, Austin Energy had prepared for deregulation, but the legislature only deregulated investor-owned utilities, not co-ops or municipals.


Recent months have seen Fath driving hard to get Council members to take action on shifting their AE extensions policy back to full cost recovery. Utility officials initially balked at full recovery, favoring a policy that would allow them to collect roughly 75 percent of costs. Fath kept pushing, with a veritable avalanche of letters to Council along with less than gentle nudging from her place on the Commission.


Then, in May, utility officials shifted their position and embraced Fath’s call for full recovery.

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