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Friday, January 15, 2016 by Tyler Whitson

Prehearing held in Austin Energy rate review

Austin Energy stakeholders provided feedback Thursday in a prehearing on the rules of a legal proceeding that will kick off later this month as part of the utility’s ongoing rate review.

Attorney Alfred Herrera, the impartial hearings examiner in the proceeding, said he would take into account the feedback he heard when providing his opinion on the city’s draft rules.

“What I intend to do is to prepare my thoughts and put those in writing and send them to the city of Austin,” said Herrera. “I do not have the authority to change the rules. They are what they are as written, but I would certainly provide my input on what I think the rules should be.”

The city has posted the draft rules and the timeline for the proceedings and rate review online.

There are certain stakeholders, however, who argued in favor of changing those rules during the prehearing and have proposed their own procedural rules to Herrera.

Attorney Chris Reeder represents Austin Energy’s two largest industrial customers, Samsung Austin Semiconductor LLC and NXP Semiconductors — formerly known as Freescale Semiconductor, Inc. — and he said that it is “fundamentally unfair … for the utility to establish the procedural rules that will govern the proceeding.”

Reeder argued that the proceedings should more closely resemble the kind that would take place before the Public Utility Commission of Texas, or PUC, and that Herrera should have final say over the rules governing them.

Attorney Lanetta Cooper, representing the Texas Legal Service Center, proposed a set of rules that she said are half as long as those drafted by the city and proposed by Reeder. “We just need to keep the rules, in my opinion — so everybody can effectively participate, given the time constraints — as clear and as forward as possible,” she said.

Speaking to Herrera, Cooper said that, in her proposed rules, she has “ensured that your honor would have the discretion to amend the rules in the public interest.”

Assistant City Attorney Andrea Rose responded to these and other comments.

“When Austin Energy set out to design this process based on the experiences in the 2012 rate case and with some guidance from (City) Council to consider hiring an impartial hearings examiner, Austin Energy and the city considered the PUC process in its full extent and determined that, as a municipal utility, imposing the full PUC structure on itself as part of a voluntary procedure was excessive and would be unduly burdensome,” said Rose.

“The city concluded,” Rose continued, “that they would extend this process to make it broader than it was in 2012, to give parties more opportunities to get involved but to not create additional rights than would have existed had the same process been used as was used in 2012.”

The city last reviewed Austin Energy’s rates in 2012, after which Council passed an ordinance requiring such reviews to take place at least every five years.

Rose said that “the city is open to examining and considering and looking at making some modifications to the rules,” based on the comments provided by Reeder and Cooper and recommendations from Herrera. “However, given the overarching framework that this is not a PUC proceeding, this is not a proceeding subject to the (Administrative Procedure Act), there are some changes that we are not in a position to accept, specifically with respect to confidentiality.”

Reeder and Cooper raised concerns during the prehearing about the confidentiality requirements that the city has drafted, which require parties seeking information that Austin Energy considers confidential to submit their requests using the procedures outlined in the Texas Public Information Act.

Reeder wrote that such a system is “unworkable with the current schedule” in a Dec. 30 letter to Herrera and recommended the alternative that the parties involved sign nondisclosure agreements.

In her written comments, Cooper instead recommended that Herrera issue a protective order “to allow access to confidential info by the parties.”

“I think that (confidentiality) is one area where, unfortunately, I don’t believe we’re going to be able to find a great deal of common ground,” said Rose. “We do not perceive that the city has the authority to issue a protective order, and thus Mr. Herrera does not have the authority to issue a protective order and we cannot guarantee the confidentiality of that information.”

Herrera jumped in. “I understand you all’s position with regard to the need for access to confidential information and some mechanism … to access that. I also understand the concern that Austin Energy has expressed in terms of that information inadvertently becoming public,” he said.

Rose also responded to a concern that Reeder raised about who would be able to identify the issues that would be covered in the proceeding. “We will go back and work on making the rules clear on that point,” she said. “It is not Austin Energy’s intention to set the outer limits of what can be considered by the hearings examiner. Austin Energy is going to identify the issues that we believe must be considered by the hearings examiner based on input that we receive from the (Electric Utility Commission) and from Council, but the hearings examiner has the authority to identify additional issues that he believes should be considered based on his review of the rate filing package and the parties’ input.”

While those present at the hearing discussed other issues, the timeline of the rate review surfaced often.

Rose said that Austin Energy intends to file its “rate package” — its proposal for a new rate structure — no later than Jan. 21. Utility staff would then present the proposal to the City Council Austin Energy Utility Oversight Committee on the morning of Jan. 25 and the Electric Utility Commission that evening.

According to Austin Energy’s timeline, Herrera will begin proceedings after the briefings in late January and is expected to release his report in early May. Council will then consider Austin Energy’s recommendations, Herrera’s report and public testimony leading up to a June 23 meeting at which it will be asked to make a final decision on the rate structure so that the city would be able to implement it at the start of the coming fiscal year in October.

The city intended to hire an independent consumer advocate to represent residential and small commercial Austin Energy customers in the proceedings, but that contract has been tied up in a dispute relating to the city’s Anti-Lobbying Ordinance.

Reeder argued that the city should lengthen the timeline, even if it means not having a new rate structure in place at the start of the coming fiscal year, in order to allow more time for the proceeding.

Rose responded. “If we receive direction from the city manager or from the majority of Council that that is the direction that they want us, the department and the city, to take, we will obviously take that direction,” she said. “We are, however, currently operating under specific direction to have the rates done by the end of June.”

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Key Players & Topics In This Article

Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.

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