By Bill Oakey, October 4, 2022

The City Council Never Saw This Coming

You may have heard about the new skyrocketing fuel charges and regulatory charges coming soon to your electric bills. These unwelcome shocks could begin as soon as the stroke of midnight on Halloween night. The City Council has little choice but to approve the recommendation from Austin Energy. But, they are not at all happy about the short notice given to them. The news hard to swallow – a 71% increase in the monthly Power Supply Adjustment Charge, and a 24% increase in the Regulatory Charge. This is in addition to the controversial base rate increase plan that is still undergoing City review.

Readers of this blog will recall that I predicted the fuel charge rate shock, back on July 21st. But Austin Energy did not send their memo to the City Council until September 21st. Mayor Steve Adler said this to City Manager, Spencer Cronk at last Tuesday’s Council work session, “There has to be a different and better way for us to deal with this situation.” Mayor Pro Tem Alison Alter complained that the details are too complex to explain to the folks in her district. So, the City Council voted to delay voting on the new charges for two weeks.

Get Ready for a Double-Whammy Wallop!

The war in Ukraine touched off a worldwide surge in the cost of natural gas. Many Texas utilities adjust their fuel charges every month. So, their customers saw the higher fuel prices throughout the summer. Austin Energy only changes the Power Supply Adjustment charge once per year, starting in November.

In addition to the war-related gas prices, the ERCOT power grid was pushed to its limits over the summer. Austin Energy must purchase some of its gas-generated power at the exorbitant ERCOT bid prices. The special-interest backed Texas Legislature gave a sweet gift to the oil and gas industry, with far and away the highest price caps for gas in the entire country. The last legislative session saw those price caps lowered from outlandishly outrageous to simply unconscionably exorbitant. The Legislature also agreed to shore up the grid, but we will be the ones paying for that, with higher regulatory charges on our bills.

The Bill Impact Will Be Worse Than $20 For Many of Us – And Worse Than the Proposed Base Rate Increase!

Austin Energy has publicized an impact to the average customer, using only 860 kWh, of $20 per month. Let’s suppose that we have another triple-digit heat spell next July. Below are the calculations that you can use to see the difference in your own July bills. I challenge every City Council member and their staff to do these calculations on their July bills. Here’s what it looks like on my bill for the period ending July 11th. My living unit in a triplex has 1,439 square feet, and I kept my thermostat at or slightly above 80. I used 1,478 kWh of electricity.

New Power Supply Adjustment 1,478 kWh X .04917 = $72.67
Current Power Supply Adjustment 1,478 kWh X .02877 = $42.52
Difference = $30.15

New Regulatory Charge 1,478 kWh X .01495 = $22.10
Current Regulatory Charge 1,478 kWh X .01206 = $17.82
Difference = $4.28

Total Difference From Both $30.15 + $4.28 = $34.43

If your place is at or above 1,400 square feet, and you kept your thermostat below 80 in July, then you should run the numbers to see your bill impact. It won’t be pretty.

We Need Senior Discounts for All Utility Customer Charges

On May 22, this blog issued a proposal for broad-based senior discounts, across several City departments. There is now a new urgency to adopt discounts on each of the customer charges on our utility bills. I recommend 50% senior discounts on the electric, water, wastewater and solid waste services customer charges. Those should be put in place as soon as possible, even if it requires complex reviews or proceedings.

Austin’s longterm residents are being squeezed to the max by inflation, high rents and property taxes, and high utility bills. We seldom get the attention from City Hall that is bestowed upon developers and recruitment efforts for new residents moving to luxury high rises. We’re the ones who established Austin’s reputation and high quality of life.

The City Council Should Consider These Actions and Reforms

1. I challenge every City Council Member and their staff to run the above calculations on their own July bills.

2. Move Austin Energy to a monthly or bi-monthly change in the Power Supply Adjustment and Regulatory Charges, to minimize rate shock. Consider a two or three month rolling average.

3. Require Austin Energy to report their net cash position to the Austin Energy Utility Oversight Committee on a quarterly basis. This will keep the City Council in the loop on unexpected shortfalls or surpluses.

4. Put the proposed base rate increase on hold. Conduct a series of meetings with rate case participants and community experts, to identify revenue options and other strategies to wipe out the increase.

5. Get to the bottom of the big mystery surrounding Austin Energy’s huge windfall revenue surplus, from the summer heatwave. It has to be the highest seasonal surplus in their history, given the long series of record-breaking triple-digit temperatures. Insist that Austin Energy produce fiscal year-to-date budgeted vs. actual base rate revenues. Austin Energy asked for a bass rate increase of $48 million in April. The summer surplus started in mid-May. They could not have budgeted for the unforeseen record-breaking summer bills, So, how much is the surplus, and where is that money now? The public deserves to know the full story.

6. Pass a City Council resolution that clarifies Austin’s policy goals on conservation, adoption of customer-based solar and other conservation-related technologies, and climate change mitigation. Include mandates for Austin Energy not to adopt policies, rate designs or customer charges that discourage conservation. or hinder progress on climate change mitigation.

7. Take on the challenge of helping Austin Energy find and implement a modern, innovative business model. They need to recognize that selling less electricity is a positive outcome, and should be a core element of their mission. They should not attempt to discourage conservation. Nor should they try to counter its impact with new fees and a parade of base rate increases. The market for customer-based solar, battery storage and other technologies is expanding by the day.

8. Review the entire scope of Austin Energy’s well-documented resistance to public transparency. Determine precisely which, if any, of Austin Energy’s operational and contractual records should be considered “proprietary,” and thus hidden from public scrutiny. Adopt a firm, enforceable policy, describing a complete, detailed list of any such items. Require by written policy the full public disclosure of all other types of records, requested by anyone, now and in the future. Austin Energy is owned by the citizens of Austin.

Review all of the information requests that were either rejected outright or not answered to the satisfaction of the current rate case participants. Hold City Council executive sessions with Austin Energy, to compel full responses to any of those information requests identified as “proprietary.” As Austin Energy’s Board of Directors, the City Council should have full authority to see and review all records, including any deemed “proprietary.” Compel Austin Energy to release the non-proprietary information to all the rate case participants, and to the City Council.

9. Austin Energy, their stakeholders and the City Council should review the best established European business models. And they should meet with the leadership of the National Conference of State Legislatures (NCSL). They have published a report on conservation-based business models.

10. Establish 50% senior discounts for each of the monthly customer charges on our utility bills –  electric, water, wastewater and solid waste.