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Wednesday, August 24, 2016 by Jack Craver

Austin Energy gradually reforms Customer Assistance Program

For nearly two years, Paul Robbins, a longtime environmental and consumer activist, has been hounding Austin Energy about its operation of the Customer Assistance Program, which is intended to give energy discounts to low-income households.

Robbins, who earns groans as well as grudging respect from AE, contends that the utility is spending hundreds of thousands, if not millions, of dollars subsidizing customers who are far from poor. In a series of presentations to City Council, he has called attention to magnificent homes in wealthy neighborhoods, such as West Lake Hills, that are receiving monthly discounts.

“The guy owned three, four 44 properties worth $11 million,” said Robbins, describing one CAP enrollee to the Austin Monitor.

That a mansion owner would be getting discounts is possible because eligibility under the program’s current rules is based not on income or property value but on whether one of the people living in the home receives one of seven public benefits aimed at the poor, including Medicaid, the Supplemental Nutrition Assistance Program and Supplemental Security Income from Social Security.

AE has conceded that not all of the program’s roughly 45,000 beneficiaries are the community’s neediest. However, it has been reluctant to embrace some of the reforms that Robbins has proposed, including requiring program beneficiaries to provide documentation of their income.

The utility has said that the cost of investigating customer incomes would likely be greater than the savings achieved by kicking undeserving beneficiaries out of the program. In a cost-benefit analysis provided to Council members earlier this month, AE staff claimed that an income verification program would cost $33,000 to implement but would save the utility only $20,000.

“The thing I’m concerned about is that we may be spending dollars to collect dimes,” said Electric Utility Commissioner Cary Ferchill during a June meeting on the subject.

Robbins is convinced that the utility’s calculations are wrong and believes it would save between $70,000 and $250,000 a year.

Advocates for the poor also worry that ending automatic enrollment would inevitably result in many low-income customers losing their discounts as well.

“I don’t know of any situation where enrollment was more complete with a paper process than with an automatic enrollment process,” said Carol Biedrzycki, a member of the Electric Utility Commission who also serves as executive director of Texas Ratepayers’ Organization to Save Energy, which advocates for affordable and environmentally responsible electricity.

Other measures Robbins has proposed would have a much greater financial impact, the utility admits.

AE would net $2.2 million if it stopped offering discounts to CAP customers who are in the top two tiers of residential electricity use for the electricity they use above a certain point — when they reach the top two tiers of residential electricity use — a move that Robbins argues would encourage energy conservation. And it would save $1.8 million if it stopped automatically offering discounts to homes if the name on the electric bill does not match the name of the person receiving one of the seven public benefits that triggers enrollment.

But AE opposes both of those changes, saying that they would likely result in thousands of worthy customers getting kicked out of the program or receiving larger utility bills.

The poor are also less likely to have energy-efficient appliances and well-insulated homes, making them vulnerable to higher-than-average electricity consumption, said Biedrzycki.

So far, the only step the utility has taken to end discounts for the well-to-do has been to send letters to CAP customers who own homes valued over $250,000, asking them to voluntarily “opt out” of the program, which it started doing about a year ago. It estimated that measure to cost roughly $60,000 and anticipated that it would result in around $125,000 of savings.

Robbins said that he has seen through his “informal monitoring” of the program that some customers have chosen to drop out but others with expensive properties have also been added to the program during that time.

The utility has agreed to expand that effort in the coming year by sending opt-out letters to beneficiaries who own multiple properties. That will cost $50,000 and save $140,000, it estimates.

In addition, the three-year, $3.9 million contract Council approved last week with Solix, the company that administers the CAP enrollment process, includes a new algorithm aimed at preventing people from receiving double discounts, a problem that AE has acknowledged exists.

For the time being, AE staff said it is considering additional measures for the future, including some type of income verification. For that to happen, however, Council would first have to change the eligibility requirements for the CAP program by setting an income threshold. Robbins has suggested 200 percent of the federal poverty level.

This story has been corrected to make clear that Robbins does not propose ending discounts for high-use customers entirely, but for the top two tiers of residential electricity use.

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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.

Austin Energy Customer Assistance Program: a utility-run program that offers discounts based on eligibility for low-income ratepayers, as well as those with "serious medical problems."

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