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AE GM responds to AIBA call for demand charge change

Wednesday, July 22, 2015 by Tyler Whitson

Austin Energy General Manager Larry Weis responded on Thursday to Austin Independent Business Alliance Executive Director Rebecca Melançon’s request that the city change the utility’s policies on demand charges.

“The policy on demand charges is based on Cost of Service and is consistent with policies of utilities operating under the jurisdiction of the Public Utility Commission of Texas,” Weis wrote in a letter to Melançon, referring to the state agency that regulates public utilities. “It is also consistent with community priorities for achieving energy efficiency.”

The current demand charge policy states that small commercial customers whose average electricity use exceeds 10 kilowatts over a 15-minute period between June and September of a given year will be bumped for the next year into a higher class. That class is subject to demand charges that the utility adds to certain nonresidential customers’ bills in order to recover the costs related to transmitting and distributing electricity.

Melançon argued in a July 13 letter that the policy presents a financial burden and risk to small businesses, and she proposed that the city move quickly to increase the threshold to 20 kilowatts and decrease the amount of time that the customer stays in the new class to three months.

Weis countered with a suggestion that Melançon and the AIBA participate in a cost-of-service study that the city is preparing to conduct over the next year, which may result in a new rate structure for implementation in the fall of next year.

Weis also referred to a report that consultant NewGen Strategies and Solutions released earlier this year on current policies.

“The study suggests that the change in rate design is consistent with and has been successful in promoting the city’s efficiency goals,” he said. “Nevertheless, the study does document that some small commercial customers have experienced larger rate impacts than most other small commercial customers.”

He added that the AIBA will be able to voice its concerns during the cost-of-service study and suggested that, in the meantime, the organization take advantage of the city’s energy efficiency programs and related resources and meet with Debbie Kimberly, Austin Energy’s vice president of customer energy solutions.

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