Wednesday, January 20, 2021 by Jo Clifton

Consumer advocate seeks audit of Austin Energy program

Consumer advocate Paul Robbins, who has argued for years that Austin Energy is wasting money and inadequately screening participants in its Customer Assistance Program, is asking City Auditor Corrie Stokes to audit the program for wasted expenditures.

The program, which serves low-income customers of Austin’s electric, water and drainage utilities, provided more than $15.3 million in discounts for electricity, water, wastewater and drainage in Fiscal Year 2020. Approximately 35,000 customers per month receive these discounts and the average discount is about $437 a year, according to Austin Energy spokeswoman Jennifer Herber.

Herber told the Austin Monitor via email that “CAP enrollment fluctuates monthly. The discount is a percentage off the total bill and/or monthly charges; it’s not just about which services a customer has, but also about consumption.”

Robbins has prepared a lengthy document demonstrating that a number of customers enrolled in CAP either lived in expensive homes or owned more than one property. In his complaint, Robbins provides photographs of expensive properties belonging to Austin utility customers participating in the program.

He says, “The program is intended to assist customers at or below 200 percent of the poverty level, but most CAP customers who are automatically enrolled are not screened for income.” The automatic enrollment is a result of the utility enrolling households with a member who receives benefits through one of seven social service programs, such as food stamps.

According to Robbins’ research, Austin has the loosest restrictions for enrollment in CAP among the top 10 public utilities in the U.S. Eight of those utilities, from the Jacksonville Electric Authority to Seattle City Light, require income verification, he says.

After Robbins complained about some customers who may have been ineligible, Austin Energy enacted some reforms requiring customers with a certain level of real estate assets to be income qualified. However, Robbins says the utility is ignoring customers who do not live in expensive homes or own more than one property.

In order to find out whether the utility was doing a good job in its efforts to qualify applicants by income, Robbins studied records of CAP enrollment for Austin Water discount participants in October 2020. He said he discovered the following:

  • 123 participants who were receiving the discount owned homes worth more than $250,000 or owned two or more properties, or both. In one case, he said, the customer was receiving discounts at two different properties.
  • 28 of those customers owned two or more properties and 50 customers had properties with values of more than $500,000
  • Five of the customers lived in homes larger than 5,000 square feet, while 28 lived in homes larger than 3,000 square feet
  • 18 of the customers had expensive additions to their homes, such as pools, large decks and terraces

Jerry Galvan, an Austin Energy VP, said via email, “We are proud of our Customer Assistance Program and we continue to assess our programs to maintain integrity while removing barriers to entry, all with the goal of making utilities more affordable to those who qualify for assistance.”

Robbins also complains that the utility is “spending some of its funding on discounts to customers consuming lavish quantities of energy, and on funding on a program that is much less effective at saving money than direct discount programs.” He says while he has tried to work with Austin Energy in the past, he now finds the staff “complacent and unwilling to make further changes. I am reluctantly forced to turn to your (Stokes’) office to investigate this continued misallocation of limited funds meant to assist the poor.”

Robbins said the total CAP funding for all three utilities would be more than $18 million in the current fiscal year. “If even 10 percent of CAP funds are being given to the wrong people, it could amount to almost $2 million in wasted funds that could be rerouted to customers with legitimate needs if income qualification were to completely replace automatic enrollment,” he said.

Austin Energy’s residential electric rate structure is intentionally designed to charge more for greater amounts of consumption, in an effort to encourage energy conservation. However, as Robbins pointed out, CAP customers receive a 10 percent discount on consumption regardless of how much energy they consume. As he noted, the discount was raised to 15 percent in the last year because of the pandemic. That will continue through at least the end of September 2021, according to Herber.

Of the top 10 public utilities in the United States, Austin is one of only two utilities that offer discounts for unlimited consumption, Robbins said. Five of the programs offer a flat discount and three offer no utility-funded program. He noted that there has been an argument defending discounts for high consumption on the assumption that households with larger numbers of people use a lot more energy. But Robbins points to a residential energy consumption survey showing that “a three-person household in the southern U.S. used only 17 percent less than a household with six or more people.”

He concludes that “CAP discounts are structured in a way that discourages energy conservation, while at the same time depriving customers with lower consumption from receiving larger discounts.”

In addition, Robbins also complains that Austin Energy is using CAP funds on the utility’s free weatherization program without adequately determining whether the recipients are qualified under the rules of the Customer Assistance Program.

Finally, Robbins reports that during his six-year-long effort to monitor CAP, Austin Energy has exhibited “a lack of transparency and responsiveness,” that has made it more difficult for “a responsible consumer advocate to get accurate information.”

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Photo by Larry D. Moore, CC BY-SA 4.0, via Wikimedia Commons.

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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.

Office of the City Auditor: This city department is created by the city's charter in order to establish and ensure "accountability transparency, and a culture of continuous improvement in city operations."

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