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Wednesday, February 7, 2018 by Jo Clifton

Council rejects appeal of gas conservation fees

City Council on Thursday rejected an appeal from environmental and consumer activist Paul Robbins to overturn a staff decision to accept Texas Gas Service’s 2018 conservation adjustment clause rate. The conservation adjustment clause rate is the extra money consumers pay for the utility to fund its conservation programs, such as rebates for appliances and attic insulation.

Only Council Member Ellen Troxclair voted against the motion to accept the rate.

Telecommunications and Regulatory Affairs Officer Rondella Hawkins and her staff are responsible for administratively approving or rejecting conservation programs proposed by Texas Gas Service. They presented the proposal to the Resource Management Commission, which approved it last fall. Robbins pointed out that only six of the 11 commissioners were present for that meeting, and four of them had been on the commission for less than a year.

According to the utility’s calculations, the average monthly residential charge for conservation in 2018 will be $1.48 per month, as compared to $1.41 per month in 2017. Robbins calculates that the gas utility is wasting about $5 per year from each of its approximately 235,436 customers.

Although Council voted to allow Texas Gas Service to move forward with the slightly increased charge on consumers’ gas bills, remarks from several Council members indicated an interest in looking more closely at the gas company’s conservation rates in the fall.

Robbins told Council that he was protesting the conservation adjustment clause because he thinks “about 43 percent of the residential conservation program budget is not cost-effective.”

“By eliminating this fund, you will save ratepayers about $1.2 million,” he said.

Robbins explained that he had done the math on all of Texas Gas Service’s conservation programs, including individual rebates for purchases of gas furnaces and tankless water heaters. Those two items in particular, Robbins said, are not cost-effective.

“My calculations estimate that the efficient furnaces will take 32 to as much as … 89 years to pay back. … Since they typically last 13 to 18 years, this is obviously not a good return on the ratepayers’ money. There’s nothing technologically wrong with the equipment. They might be a good investment in Maine, Minnesota or Canada, but not here in the South.”

Larry Graham, manager of regulatory affairs for Texas Gas Service, told the Austin Monitor on Monday that the utility evaluates its conservation programs every year. The high-efficiency furnace is particularly interesting, he said. When the utility did the cost-benefit analysis in the summer, using the previous 12 months of weather data, it found “the winter of 2016-17 was the warmest in Austin history. This year we know that December and January have been colder than normal, so we’re pretty confident that in the analysis for next year there’s going to be a different result on the furnace and we think the high-efficiency furnace will come in as very cost-effective. We don’t know that, but that will happen this summer.”

As for the tankless water heaters, Robbins said, they will take 29 to 48 years to pay back. Tankless water heaters, he said, would save gas in laundromats but not in residences. He compared Austin Energy’s award-winning conservation programs to those provided by Texas Gas Service, saying, “in essence, you have two conflicting policies, where a program run by the city hews to cost-effectiveness, while a program run by the private gas company that you regulate is lax.”

Hayley Cunningham, who manages the conservation program for the utility, told Council, “Some of the programs that he is proposing that we eliminate contribute significantly to those savings goals. While it might not be cost-effective in this iteration of the test or in one of the five tests it does contribute significantly to that overall savings goal we’re trying to meet.”

In response to a question from Council Member Ora Houston, Graham told Council, “The way the tariff reads is the city approves the budget, and then we back into a rate. And I think it’s contemplated that the rate is going to go up and down because the rate is collected volumetrically, so if people – as it’s colder, people use more gas. We collect more. And so last year was very warm, so we under-collected.”

He explained, “This year, we’re raising the rate to make up for that, and if the weather is cold, next year this rate will go back down. … And we did not propose a budget that was any significantly bigger – I think it might have been smaller, it was about the same as last year. … The way we collect this is related to the weather, and it’s contemplated that every year there’s going to be a slight adjustment.”

In addition, Graham said if certain portions of the program prove to be not cost-effective in the future, the company will drop them.

In addition to Troxclair, Council members Jimmy Flannigan and Ann Kitchen and Mayor Pro Tem Kathie Tovo seemed interested in following up on the questions Robbins raised in his appeal.

Flannigan thanked Robbins. “You know, sometimes – I’m going to say this with love because I’ve been described this way too. Sometimes a passionate nutjob is what you need. And I’ve been that guy from time to time myself, and so thank you for sticking with it and hopefully we’ll have a more substantive conversation next year.”

Photo by Lisafern (Own work) [CC0], via Wikimedia Commons.

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Key Players & Topics In This Article

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

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