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Austin Energy rate case participants band together behind alternative proposal

Tuesday, November 15, 2022 by Kali Bramble

The race for City Council’s blessing on 2023 electric rates is heating up, as parties in the Austin Energy base rate review case announced their own counter-settlement to the utility’s proposed rate design.

The independent consumer advocate, John Coffman, along with Texas Industrial Energy Consumers, NXP Semiconductors, Sierra Club, Public Citizen, Solar United Neighbors, Solar & Storage Coalition, Coalition for Clean Affordable and Reliable Energy, and attorney Lanetta Cooper, jointly approved the alternative proposal, which would raise the fixed residential fee to no more than $12 per month rather than Austin Energy’s proposed $25. Reducing the revenue requirement from $35.7 million to just $12 million, the new base rates would also incorporate a new four-tiered rate design that proponents say would encourage conservation and more equitably distribute bill increases.

“The last counter-offer is in Austin Energy’s lap, but we have not heard back for a long time,” ICA John Coffman said. “This Joint Consumer Alternative is an effort to move the case forward, and make it easier for you to try to find the middle ground. There were differences between our perspective on things … but we’ve reached an agreement about how the allocation of customer classes should be done.”

Austin Energy says it faces looming financial trouble after being forced in the past two years to dip $90 million into its reserves and suffering two downgrades in its financial credit rating, from AA to AA minus. Its request to recover an additional $35.7 million in base rates largely through residential consumers has proven controversial, with critics concerned about rate shock compounded by an increase to power supply adjustment rates just last month.

The utility has yet to warm up to alternatives, with attorney Thomas Brocato calling the negotiations “inappropriate, unprofessional and irrelevant.” Still, those behind the Joint Consumer proposal maintain that settlements among stakeholders are common practice in base rate review cases throughout the state, with the Public Utility Commission of Texas regularly approving revenue requirements far lower than Austin Energy’s initial request.

Speaking of revenue requirements, the magic number somewhere between the two proposals will likely be the focal point of Council’s next deliberation cycle. Rethinking the scope of the utility’s Customer Assistance Program and a temporary freezing of Austin Energy’s General Fund transfer are also on the table.

“The last time the utility’s reserves were in trouble the way they are now, the Council froze the General Fund transfer for four or five years,” CCARE representative Trey Salinas said. “You have the opportunity to do that again. It will lessen the blow on your ratepayers, who are about to experience a serious rate shock this month with the increase to the PSA.”

Stakeholders will present further details on the Joint Consumer Alternative at City Council today, where the city’s Electric Utility Commission will be stopping by to share its own recommendations. From there, resolving the disparate perspectives will be in Council’s hands.

“One of the key factors deciding business’s investment in Austin is the energy rates applied to consumers,” said Data Foundry attorney Todd Kimbrough, who says the party is “neutral” on the Joint Consumer proposal. “That obviously has an unavoidable ripple effect … it ripples to property taxes, it ripples to jobs and it ripples to the larger community at hand. So, you have a very difficult task in front of you.”

Photo made available through a Creative Commons license.

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