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AE proposes raising residential service charge

Wednesday, June 22, 2016 by Jack Craver

The independent consumer advocate that the city hired to represent the interests of Austin residents and small businesses as it reviews electricity rates is crying foul. John Coffman, who heads the advocate team, accuses Austin Energy, the city-owned utility, of surprising the team with a change to its rate proposal that will increase costs for residential ratepayers by an average of $2 to $4 per month.

“Austin Energy changed their story,” Coffman told the Austin Monitor.

In its rebuttal of the rate proposals submitted by the ICA and other parties involved in the rate review, Austin Energy unveiled a plan to roughly double the Energy Efficiency Service charge paid by residential customers. The monthly fee funds a variety of programs the utility runs to help people and businesses reduce their energy consumption.

The utility’s argument for increasing the EES charge for residents is pretty simple: Residents are the ones benefiting from the programs it finances. Specifically, AE wrote in its rebuttal testimony, commercial customers account for 66 percent of electricity consumption but receive only 40 percent of all discounts and rebates. Therefore, contended the utility, it was only fair that residents pick up the lion’s share of the cost of such programs.

In fact, the utility noted, pursuant to a policy previously approved by City Council, certain large industrial customers do not pay the EES charge and cannot participate in any EES programs.

Additionally, AE maintains that city businesses have been paying more through their electric bills than what it costs the utility to provide them service.

“Unlike the intervenors, who myopically focus on the class or classes that they purport to represent, (Austin Energy) presents a holistic, and legally sound, approach to setting new base rates for its customers,” the utility said.

Coffman argued that it was inappropriate for the utility to spring the proposal on the other intervenors in the case when it hadn’t been included in its original rate proposal, which was submitted in January.

He was also concerned that the amount will grow over time.

Mark Dreyfus, Austin Energy Vice President of Regulatory Affairs and Corporate Communications, declined to comment on the criticism, saying that the utility will not address the substance of the proposals outside of official rate review proceedings. He said, however, that allegations that the process was unfair were “unsubstantiated and specious.”

The independent hearing examiner overseeing the rate review sided with AE and rejected a motion filed by the ICA and the Sierra Club last month to bar the new testimony from the three-day hearing that took place shortly afterward, between May 31 and June 2.

Coffman contends that commercial customers are benefiting mightily from the utility’s energy efficiency programs. Even if they are not the ones getting their buildings weatherized by the city or receiving discounts for energy-efficient light bulbs, big businesses enjoy the system-wide cost savings that results from energy efficiency programs, he said.

“The benefit of energy efficiency programs is that it helps the utility delay or avoid building new power plants,” he said. “In many instances, paying for energy efficiency programs is extremely more cost-effective than building a new power plant.”

Although AE has forcefully pushed back on claims made by some large commercial customers, notably NXP and Samsung, which have jointly filed briefs urging a major reduction in commercial rates, it maintains that city businesses have been paying more through their electric bills than what it costs the utility to provide them service.

Residential customers, meanwhile, paid $46.3 million below cost of service. And yet AE still did not propose increasing residential base rates, the utility states in its most recent brief.

By Mircea Madau (crop and edit by Lucas) – Cropped version of Image:Lightning over Oradea Romania 2.jpg., Public Domain,

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