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Friday, August 26, 2016 by Jack Craver

Austin Energy agrees to start planning coal plant retirement

Two key environmental groups announced their support Thursday for a settlement to the Austin Energy rate review, the public process the city goes through periodically before setting new electricity rates for the city-owned utility’s commercial and residential customers.

Sierra Club and Public Citizen, which had acted as joint intervenors in the rate review, said they were willing to join 18 other businesses, nonprofits and advocacy groups in support of the settlement.

Initially, the two organizations withheld their support for the deal, citing a lack of commitment from the utility on two key environmental initiatives.

On Thursday, however, the two groups, along with Mayor Steve Adler and two City Council members, announced during a press conference that the utility had addressed their concerns, having agreed to develop a plan to move away from its use of coal and to craft a policy to offer credits to businesses for generating solar power.

Specifically, AE agreed to present a report to Council no later than January that will offer a number of ways in which it can begin the process of retiring its share of the Fayette Power Project, a coal-burning facility that the utility owns jointly with the Lower Colorado River Authority. In June, AE will present a recommended approach toward retiring the plant, along with information about its financial implications for the utility.

The goal, as expressed in an aspirational plan adopted by Council in 2014, is to retire the city’s share of the plant by 2022.

In addition, the utility has agreed to “pursue an examination” of providing to businesses a “value of solar” tariff that is similar to what AE currently gives to residents who put solar panels on their homes. Although AE currently offers a “performance-based incentive” that encourages businesses to install solar panels, it will soon be phased out, a change that environmental advocates do not oppose “as long as there is a good long-term policy in place to fairly compensate customers,” Kaiba White, policy analyst for Public Citizen, told the Austin Monitor.

Council Member Greg Casar framed the city’s move toward greener energy as a matter of social justice as well as environmental stewardship.

“It takes real integrity to look at what we’ve done and accept that we’ve made mistakes, and that the unintended consequences of burning coal and fossil fuel are wrong and that we need to change course,” he said. “It takes integrity to recognize that climate change endangers those with the least resources.”

Council Member Leslie Pool also made a point of thanking the utility, particularly Mark Dreyfus, AE’s vice president of regulatory affairs and corporate communications, “for staying at the table” with the environmental community.

Adler, who was visibly delighted (and likely relieved) by the settlement that was announced last week, expressed even greater happiness when announcing the new environmental aspects of the deal. Few people would have predicted that the city would be able to reach a deal supported by such a wide range of constituencies, he said.

Calling Austin a “magical city,” Adler said he was proud to be part of a Council that had overseen a public process “virtually unheard of in municipal governance.”

Standing alongside reporters, environmental and consumer activist Paul Robbins, one of the few intervenors in the rate review who has not signed on to the settlement, asked the speakers why they were agreeing to a deal that would raise the price of electricity for the lowest of five tiers – those customers who use the least electricity.

Adler responded that the utility’s data had shown that those enrolled in the Customer Assistance Program, which is aimed at low-income residents, largely fall into the middle three tiers of electricity use. It was a sincere but somewhat ironic explanation to deliver to Robbins, who has criticized CAP for enrolling many customers who are not poor.

A few hours later, however, at a Council public hearing on the matter, Adler told Austin Energy staff that he was “disturbed by the messaging of having a rate increase in tier one.” He wondered if AE could come up with a new proposal that would not increase the rate for the first tier and that would not result in hikes for the many low-income customers in the middle tiers.

Other Council members echoed his concerns, suggesting the settlement might not be as settled as it seemed.

Dreyfus, who framed the utility’s proposed residential rate structure as a balance among competing priorities – including affordability, conservation and the generation of enough revenue for the utility to operate – expressed skepticism, saying that what the mayor was suggesting appeared to be “more art than science.”

Robbins said that his own research in Austin has showed that the wealthy tend to use much more energy than the poor.

Environmental groups had also criticized the “flattening” of the tiered rates that AE proposed, saying that raising the cost for the first tier and lowering the rates for the higher ones reduces the incentive for residents to try to conserve.

Council will hold another public hearing on the rate review Monday.

Photo by snowpeakPower PlantUploaded by PDTillman, CC BY 2.0

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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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