By Bill Oakey, August 29, 2022
On August 27, 2020 Austin Energy sent a memo to the City Council, announcing the results of a routine rate review. This statement appears in the memo, “The cost‐of‐service study indicates that Austin Energy’s current base rates produce an approximately $19 million revenue surplus.” (See Page 2, 3rd paragraph). The surplus could come in fiscal year 2021. But future uncertainties led them to question the surplus. Among those were the impact of the pandemic and the planned 2022 exit from the coal-burning Fayette Power Plant. However, Austin Energy has been unable to reach an agreement with LCRA to relinquish our share of that plant.
Here is the strange irony of the projected $19 million 2021 surplus. Austin Energy presented its current rate review to the City Council this past April. At that time, the utility suddenly decided that their financial picture was much worse. Indeed, there were revenue shortfalls in 2020 and 2021, because of the pandemic and the winter storm. But Austin Energy’s charts in the April presentation describe an alleged trend that does not yet exist.
The chart below shows costs outpacing revenues in 2020 and 2021. They attribute that to falling kWh sales of electricity. And they depict this as a proven trend that will hurt their revenues going forward. That reasoning is clearly faulty. Their own projections indicate the opposite trend, as shown in the same chart. You can see that from 2014 to 2019, there were revenue surpluses. Had it not been for the pandemic and the other anomalies, their projected surpluses would likely have continued into 2021.
We have every reason to believe that Austin Energy is seeing a historic revenue windfall this summer, because of the heatwave. San Antonio has already publicized their $75 million surplus. You can add to that the accounting errors discovered by the City’s Independent Consumer Advocate. And a boatload of other solid recommendations, produced from the hard work and sweat of the other rate case participants. (Thank you Paul Robbins, Lanetta Cooper, Cyrus Reed, Clarence Johnson and many other good folks)!
This blog will soon show even more examples of cost-saving opportunities and needed reforms at Austin Energy, for the City Council to consider. When the Hearings Examiner announces his recommendation early next month, I will repeat a better suggestion to the City Council. Study all of the good ideas from the rate case. Then, gather up all of the papers that recommended a rate increase, and gleefully toss them into the recycle bin.