By Bill Oakey – August 16, 2022
It’s funny how things can come full circle. Sometimes you embark on a journey that winds in confusing directions. Then you find yourself back at the beginning. Something deadpan simple slaps you in the face. And you go, “Oh my gosh, it was right there all along! How did I miss it?”
Flashback to April 5th, Earlier This Year
Austin Energy presented its Base Rate Review to the Utility Oversight Committee. This is the Mayor and the entire City Council. Tap or click each picture to enlarge it. Then hit the Back arrow in your browser, to return to this page.
Justification for a Base Rate Increase
On the first chart, you will notice that revenues exceeded costs in every year, except 2020 and 2021. The chart is intended to show a trend – that Austin Energy is losing money in the current timeframe.
But, put down your mask if you are holding one. Remember what started in 2020 – the pandemic. Businesses were closed that year. People stayed home. All those offices, stores, restaurants, theaters and hotels used a lot less electricity. Then came 2021. The pandemic lingered, although people started going out later that year. But don’t forget the big winter storm. Industrial customers were ordered to power down before the storm. They were not allowed to come fully back up, until days after the storm. Electricity was cut off for most of the City during the storm. Then, we had a milder than normal summer. So, there is no extreme trend that extends into this year and next year. No reasonable assumption that steep future revenue declines will persist.
The Chart That Nails the Big Challenge
It amplifies the message from their Vice President of Finance, “Our rate design is not as efficient as our customers.” Think what that means. It’s a clear signal that their business model has not kept pace with their own conservation goals. A whole division of Austin Energy assists homeowners and businesses with weatherization and transition to solar panels. Within 10 or 15 years, solar panels and storage batteries will proliferate exponentially. How does the utility plan to meet that inevitable challenge? Especially now that the President has signed the historic climate change and energy bill?
Many other U.S. utilities are following the same two-pronged approach – raise base rates, and reduce solar buyback credits to customers. But that will only backfire. It’s hilarious to watch a cat try to chase its tail. Chasing revenue declines with rate increases is just as futile, but without the humor. Customers will adopt solar faster than ever, and the next rate increase will guarantee the same reaction. Here is the chart:
One more note on this chart before moving on. New customers do add to infrastructure costs. But consumer advocates recommend that Austin Energy adopt the more comprehensive capital recovery fees for developers, that Austin Water uses. The City should streamline and reduce developer permitting fees, to offset this change.
Higher Rates for Small Users, and Lower Rates for the Biggest Users
This final chart shows the unfairness and climate change unworthiness of Austin Energy’s rate proposal. Raising rates for struggling apartment renters, especially during record inflation and sky-high summer bills seems unfair. Summers will probably trend hotter in the future. Giving favorable rates to folks in large, expensive homes makes little sense. These rate design changes would discourage conservation at both ends of the usage spectrum.
What this chart proves is that our current rate design has worked exactly as intended. It has driven down the usage of electricity, and pushed Austin closer to carbon-free electric generation. It’s time for the City Council to work with Austin Energy and other experts to seek solutions. We need a new business model that is financially viable, and maintains our admirable progress on climate change goals. Here is the chart:
Read This Poem, and Use the Email Links to Contact the City Council
I’m not accusing them of evil duplicity
It’s true they’re not selling as much electricity
But somewhere deep down into their soul
They should have realized, hey that’s our goal
Climate change affects every part of the nation
And we’re trying to fight it with energy conservation
Take pity on us when we try to conserve
A rate increase is not what we deserve!
This happened a while back with Austin Water
We’re stuck like chickens on their way to slaughter
But this time we’re all going to unite
And stand up for what we know is right!
Thank goodness we own our municipal utility
Or this could end with nothing but futility
Our elected leaders down at City Hall
Have the power to fix this, for once and for all
We’re been through a summer that’s hotter than hell
So they can bid the rate increase a fond farewell
Just like I suggested back in late July
Those windfall revenues will help them get by
One More Good Laugh – Cat Chasing Its Tail
Use These One-Click Links to Email Every City Council Member:
Ask them to do 3 things – Keep our current, successful rate design. Improve our Value of Solar buyback program, instead of weakening it. Accept my recommendation to use the windfall revenues from the historic summer heatwave to cancel the rate increase.
Mayor Steve Adler email@example.com
1. District 1 – Natasha Harper-Madison firstname.lastname@example.org
2. District 2 – Vanessa Fuentes email@example.com
3. District 3 – Sabino “Pio” Renteria firstname.lastname@example.org
4, District 4 – Jose “Chito” Vela email@example.com
5. District 5 – Ann Kitchen firstname.lastname@example.org
6. District 6 – Mackenzie Kelly email@example.com
7. District 7 – Leslie Pool firstname.lastname@example.org
8. District 8 – Paige Ellis email@example.com
9. District 9 – Kathie Tovo firstname.lastname@example.org
10. District 10 – Mayor Pro Tem Alison Alter email@example.com
Superb post – thanks! I would like to forward to you (it was sent to me) a breakdown of fossil fuel usage with comparisons in types of fuel depending on the type of transport/vehicle. May I send this for your assessment? You, not I, have the brain wiring to see if this is a valid assessment of fuel usage. I so appreciate your sense of how we must prioritize the means to achieve climate change goals. Linda McKenna
Hi Linda, Thanks, I just emailed you.
Bill – Is your Affordability Austin blog information on this topic shared with members of the Austin City Council and/or the Austin media? How or are those sources finding out or keeping up with your thoughts and comments?
Hi and thanks. Yes, I keep the City Council up to date on this blog. I have upcoming interviews with the American-Statesman and KXAN News. Please send my blog links to your friends, and post them on social media. Encourage your friends to do the same. Thanks!
Thanks Bill. Good to know and look forward to the interviews. Yes, I do forward your blog contents to friends and foes alike. 😁