By Bill Oakey, November 29, 2022
To the untrained ear, Austin Energy’s presentation to the City Council this afternoon would sound very convincing. It had all of the slickness of a clever, seasoned used car salesman. But if you kick the tires, even just a little bit, those nagging flaws start spewing out like a noxious cloud of dust.
Here Is a Quick Breakdown:
1. The positive year-end revenue balance was offset by the negative impact of not getting paid for the sale of Austin Energy’s old headquarters at Town Lake Center.
Reality Check – They could have delayed some planned expenses until this fiscal year, when they will get paid for that building. (Duh)! Regardless of what they wanted to do with the un-budgeted summer revenue surplus, they should have requested a budget amendment approval from the City Council. Then, the lengthy explanation made this afternoon would not have been necessary. Transparency, anyone?
2. A dramatic increase in the monthly customer charge, and a radical upending of the rate design is necessary to “move residential ratepayers closer to “cost of service.” Right now, large users of electricity are “subsidizing” the small users.
Reality Check – All of the large electric utilities in Texas maintain a standard $10.00 customer charge. What is so strange and unique about Austin Energy that makes a high customer charge necessary? Absolutely nothing, unless you believe in balderdash and poppycock. (I used to believe I could fly, at the age of 6, when I saw Peter Pan on TV). As for the large electricity users “subsidizing” the small users, that is a policy decision established in Austin in 1981, to encourage conservation. This afternoon Austin Energy made a bold pronouncement. They arbitrarily declared that the current tiered rate structure does not incentivize conservation. Oh, really? Is that a universally accepted notion? Is there a national study to back up that capricious claim? If there is, show me!
3. Residential ratepayers are not paying their “true cost of service.” This is unfair to the commercial ratepayers.
Reality Check – That is a worn-out discussion that has crept into Austin rate cases, since Gary Hart tried to run for President in 1984. Read this blog piece for the full lowdown on that crazy issue.
Observation – The City Council today spent a great deal of time talking about the low-income CAP Program. This is an important program, and it should be strengthened if we have a rate increase. But Austin Energy has planted the notion that they are the only citizens who will suffer from a triple dose of rate shock. Renters, seniors and property taxpayers of several income levels deserve a seat at this table!
Conclusion – No other utility in Central Texas has asked for a base rate increase. San Antonio returned nearly $50 million to their ratepayers from the summer surplus. These utilities have obviously done better planning and better financial management, with better oversight.
Warning – If you believe that three doses of rate shock will only cost you perhaps $30.00 per month, good luck if you live in a 3 bedroom house. Your bill increase during several months each year will be much higher. Unless you carry a fan in each hand, and keep your thermostat above 80 degrees.