Tuesday, May 29, 2018 by Jessi Devenyns

Austin Energy financials show revenue is coming from the really rich and the really poor

Austin Energy hit the nail on the head in the second quarter with its actual financial expenditures and income tracking almost exactly to the numbers that it forecast.

Even with eight out of 10 City Council districts using below the system average of 861 kilowatt-hours, Austin Energy saw an increase in revenues from last year. “We moved from a $5 million loss in 2017 to a $7 million gain in 2018,” explained Russell Maenius, the interim deputy general manager and chief financial and risk officer at Austin Energy.

The numbers that Maenius presented at the May 21 meeting of the Electric Utility Commission have not been audited and are subject to change.

According to Maenius, when consumers are using electricity at the system average rate, Austin Energy does not make money. Nevertheless, Maenius noted that “(average bills are) applicable to the majority of the customers in the majority of the districts.”

Chair Cary Ferchill noted that higher bills must be coming from somewhere to counterbalance the loss that the utility experiences from average users. He pointed to the districts – District 2, 8 and 10 plus extraterritorial jurisdictions like Rollingwood – where Austin Energy identified that it receives higher bills.

He concluded that “either rich people with really big houses or poor people with really crummy houses” are the ones footing the bill.

He explained that this is partially due to the new technology and insulation that is being installed in newer homes and remodels. Older homes that are “leaky” will not be able to effectively utilize their electricity, and therefore those residents are paying more because they have to use more kilowatt-hours on average to keep their houses comfortable. “You can’t affect that with rates,” he said. The other half of the equation, he attributed to customers who had the financial wherewithal to heat, cool and illuminate their above-average size homes.

Curious to track the kilowatt-hour usage over median income statistics, Commissioner Stefan Wray asked Austin Energy if it could analyze the affordability index of its average bills based on income.

Ferchill echoed his sentiments, saying, “I want to make sure we end up with info where we can figure out how to make it more affordable to people.”

Even with the overall average usage being low and the fact that Austin Energy is producing 14 percent more energy than it is using, the utility has retained a stable revenue and has, as a result, implemented a reduction in the power supply rate for customers. Commissioner Michael Osborne noted that “this will be the fourth quarter now in a row that we’re generating more than we’re consuming.” He explained that in years past, the utility only generated 85 percent of the energy it required.

The surplus of energy production is coming from an increase in Austin’s coal plant production as well as renewable energy production.

“I noticed the coal number has gone up,” noted Osborne. “I am concerned that we apparently are generating a lot more of our electricity that we currently consume, and we’re doing it through our coal plant.”

Renewable energy accounts for 59 percent of production, while coal, which generates the second-highest quantity, produces 21 percent. Overall, Austinites consume 40 percent of their energy from renewable sources, which Austin Energy’s Director of Communications and Marketing Robert Cullick told the Austin Monitor isa new record.”

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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.

Electric Utility Commission: The advisory body charged with oversight of Austin Energy, the City of Austin's municipally-owned electric utility.

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