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Draft recommendation suggests EUC will push back on Austin Energy rate case

Tuesday, October 25, 2022 by Kali Bramble

With the end of the year steadily approaching, schedules are packed and the city is at full throttle preparing for a ruling on Austin Energy’s controversial rate review case.

Last week, the Electric Utility Commission spent its meeting deliberating a draft resolution that would ask City Council to substantially deviate from Austin Energy’s proposed revenue requirement and rate design. As the only commission charged with a formal recommendation before Council’s vote this December, members opted to push the final call to Nov. 14 in hopes of reaching greater consensus and more definitive alternatives.

Austin Energy’s proposal to increase revenues by $35.7 million has generated robust debate, particularly among residential customers who earlier this month saw Council pass a $15 increase to fuel cost fees on monthly bills. While the utility says adjustments are needed for its financial health, critics are skeptical of the urgency, and concerned that the proposed 150 percent increase to fixed monthly charges (from $10 to $25) could be devastating for low-income residents already in the midst of an affordability crisis.

“I’ve been following these rate cases carefully since 1984, and the research I’ve done on this current case is both fascinating and shocking,” said former Electric Utility Commissioner Bill Oakey, who claimed that pandemic lockdown measures, Winter Storm Uri, and an unusually mild summer all skewed Austin Energy’s revenue data and inflated the projected gap. “This rate proposal is built on a false foundation from the very beginning … when I talked to the participants in the rate case, I learned that there are plenty of revenue options and cost-saving measures that could completely eliminate this increase.”

Many commissioners seemed to agree, with the draft recommendation asking Council to consider a revenue requirement in the range of $6.5 million (from the independent consumer advocate’s own proposal) and $15 million. The draft also provides direction for an alternative rate design, suggesting a four-tier structure that maintains conservation signals, caps the rate increase for any customer class at 7.5 percent and raises the fixed monthly service fee by no more than 20 percent.

“Our principle is that anyone getting a rate increase should be treated equally, and anyone due for a rate decrease should be treated equally,” Commissioner Cyrus Reed said of the rationale for the draft. “We just want it to be gradual and equal, so if the allocation shows some classes haven’t been paying enough, it should be an equal hit on folks. No customer class should be overburdened with an increase or overpromised with a decrease.”

The challenge now is to find an equation that checks all of those boxes, with some commissioners skeptical that such ideals can coexist. For now, Austin Energy has agreed to go back to the drawing board with the new parameters, and will bring back numbers to the commission’s working group in the next few weeks.

The Electric Utility Commission will reconvene Nov. 14 to hash out a consensus recommendation that Chair Marty Hopkins will present to Council the following day. In the meantime, participants in the rate review case are gearing up for one more round of testimony at a special meeting of the Austin Energy Utility Oversight Committee on Nov. 9.

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