Author Archives: Bill Oakey

About Bill Oakey

I am retired from the State of Texas as an accountant. I am now an artist in Austin, doing photographic art. I'm also a lifelong music fan and a computer geek.

A Citizen Backlash May Be Needed To Fight Austin Energy

By Bill Oakey – December 1, 2022

The clock is winding down to a potentially devastating wrong-headed decision by the City Council. Austin Energy has not backed down from its terribly misleading crusade for a third round of rate shock. This round will slam seniors and small businesses hard, two constituencies that have not been considered in the alleged “compromise” negotiations, playing out at City Hall.

The Only Thing Being Compromised Is The City’s Credibility

Austin Energy’s revenues exceeded expenses for every month except January, during the fiscal year that ended September 30th. And yet, they say they need to more than double the customer charge, raise base rates and upend the rate design, because of declining energy sales. What?? I couldn’t sell that argument to a fifth grader. So, why is the City Council buying it? The time for softball discussions of this crazy case is over. We need to think about an organized citizen backlash. Here is a summary of what we are up against:

1. A double-dose of rate shock that took effect November 1st – 71% increases in fuel charges, and 24% increase in regulatory charges. These will be spread gradually over 3 years, with this year alone costing the “average customer” $15.00 per month. It will be much higher in the summer month for 3 bedroom or larger homes. These are unavoidable charges, made worse by Austin Energy not warning the City Council. Not until they ponied up tens of millions of dollars, that now must be made up by us, on our bills.

2. A third dose of rate shock that cannot be justified with Austin Energy’s own data. The City Council has apparently swallowed every lame argument that Austin Energy has thrown at them. Try to make some logical sense out of this:

One: A sky-high customer charge and radical rate design shift, that will penalize small users, as they try to conserve. Austin Energy claims that electricity sales have declined, so they need to increase non-sales revenue. But wait…Their own charts don’t back up that claim. Then, adding fuel to their misinformation campaign, they sold more electricity in their entire history, during the record triple-digit summer heatwave. Instead of using that un-budgeted surplus to head off the rate increase, they spent the money without telling the City Council. They did it without following City policy and requesting a budget amendment.

Two: At an Austin Energy oversight meeting this week, the City Council deliberated over a supposed “compromise” solution. This could lead to a $4.00, $6.00 or higher increase in the monthly customer charge. Why? For the same false claim that electricity sales are declining. Revenues actually exceeded expenses for every month except January, in the fiscal year that ended September 30th.

Three: At the same oversight meeting, Austin Energy made another outrageously dubious claim. They want to reduce the number of rate tiers, once again to bring in more money while taking away the customers’ incentive to conserve. To explain this, Austin Energy boldly stated that lower rates for small users of electricity does NOT encourage conservation. Where is the national study to back up that claim. Do Austin environmentalists support that claim? Nobody on the City Council spoke up to challenge it.

Austin Energy Is Clearly Not Serving the Public Interest

That’s the bottom line here, folks. It’s sad to say. But, when you see a spade, and you know it’s a spade, you might as well call a spade a spade. Our City Council appears poised to roll over and hand Austin Energy some sort of “compromise” deal. They may become the only major utility in Texas to deviate from the standard $10.00 monthly customer charge. And our nationally recognized conservation-based rate structure could be weakened. The fate of our solar buyback program is also at risk. And why isn’t anybody talking about the pain that a third dose of rate shock would inflict upon Austin’s struggling small businesses? I will be contacting many of them, and sharing this blog piece.

The Format for the Rate Proceedings Is Grossly Unfair

Every meeting where the City Council invited Austin Energy and the rate case parties to speak, Austin Energy was given the lion’s share of speaking time. The rate case parties were not given a chance to counter the arguments presented by the utility. The entire process is nowhere near as fair as the hearings before the Texas Public Utility Commission. Our impartial Hearings Examiner was paid from Austin Energy’s budget. We must reform that process, when the new Mayor and City Council take office in January!

We Can Mount a Citizen Backlash in the New Year

We will have a new Mayor and several new Council Members in January. This impending turkey of a rate case decision can be revisited, with a six-month end date attached to whatever bad rate decision that this City Council makes. I’m convinced that every individual neighborhood association, and a well-organized coalition of small business owners will rally behind the fight for transparency, integrity and accountability for the electric utility that we the people own.

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The City Council Has Been Snookered – But It’s Not Too Late To Fix It!

By Bill Oakey – November 30, 2022

I am not surprised by what happed yesterday with the City Council and Austin Energy. After all, a good sales pitch can be hard to resist. The odds are pretty good that snake oil, if it were cleverly packaged in souvenir bottles with an antique logo, might sell pretty well. Heck, you could probably sell them in a gift shop on Congress Avenue.

But, when it comes to something serious, like our electric bills, we should all pay careful attention to what’s inside the package that we are being sold. Otherwise, we could easily be sold down the river.

So, How Can We Un-Snooker the City Council?

The answer is pretty simple. Just let the numbers do the talking. I like to talk, but I would be willing to sit still without uttering a single word, if we could just get the right set of numbers. So, let me try this, and let’s see how it goes…

Dear Friends On the Austin City Council,

Most of you know me pretty well. I don’t have a reputation for making up things that are not true. I try to ensure that my research produces accurate information. If I make an honest mistake, I will accept responsibility for it, and correct it promptly. You probably know that I have successfully challenged Austin electric rates in the past. I was appointed to the Electric Utility Commission, after getting the City Council to cut a 20% rate increase in half, in April 1984. In between music events and art shows, I have been following electric rate cases for 39 years. So, I know more than just a little bit about them.

Here is my simple challenge for you in the current rate case. Stop listening to me, and all of the other competing voices. Ask for a few sets of numbers, and then let those numbers do the talking. Please do that, and I promise that this whole confusing matter will be put to rest.

These Are the Numbers That You Need to Ask For

For each proposed rate increase scenario, ask Austin Energy to provide residential customer bill examples for the following consumption amounts and timeframes:

1. 860 kWh (the average customer amount) in a typical winter month

2. 1000 kWh in a typical winter month

3. 1500 kWh in a typical winter month

4. 2000 kWh in a typical winter month

5. The same four examples in a typical July

6. The same four examples, using  July, 2022 data

 7. Try to get some estimated bill impacts for typical small business ratepayers. Those folks are still trying to recover from pandemic-related financial losses. They need your compassion, and the best possible diligence that you can provide.

Of course, every individual customer has different conditions in their home that will affect their energy usage. But any examples are better than no examples at all. You folks on the City Council could offer your own electric bills, or the bills of people on your  staffs. The point of this exercise is to demystify the actual impact of whatever rate increase that you consider. Will a triple-dose of rate shock give most of us a $30 monthly bill increase, or will it be significantly higher for a 3 bedroom home, especially in another summer heatwave?

Please ask for those sets of numbers, and take a good, hard look at them. Don’t pass a highly controversial rate increase, without knowing up front how it will impact the community. Thank you for your time and consideration.

On a Lighter Note, Here’s the Lowdown On Snookering

Here’s the official definition by Merriam-Webster. Click to enlarge the images.

The transitive verb describes what has befallen our City Council.

And a lesson can be learned from the noun definition.

Don’t be snookered on your Christmas gift purchase of professional snooker balls. You can get them for less than the full retail price of $452.03.

Balderdash And Poppycock – Austin Energy’s Convoluted Presentation To The City Council

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.

Austin Energy’s Triple Rate Shock – Look At The Forest And Not The Trees!

By Bill Oakey – November 29, 2022

My view of this rate case is simple and straightforward – It’s a matter of many people involved not seeing the forest for the trees! I look at it like this:

1. Austin Energy asked for a base rate increase back in April.

2. They asked to increase the monthly customer charge by 2 1/2 times, to $25.00. No other major utility in the State has done that! Shouldn’t that raise a huge red flag? Why are people saying that we should “compromise” with a $12.00 customer charge? $10.00 is standard throughout the State.

3. Austin Energy wants to upend our conservation-based rate design, that dates back to 1981. Why would we want to do that? Reducing the incentive to conserve would jeopardize the City’s adopted Climate Equity Plan. A “compromise,” to reduce the rate tiers from 5 to 4 might only reduce our conservation incentives by 20% or so. But why cut back on conservation at all?

4. Austin Energy said they need a base rate increase because of declining energy sales. But their own charts, presented to the City Council at the very beginning, don’t back up that claim. The only years where costs exceeded revenues were 2020 and 2021. Well, duh, we had a 100-year pandemic and a highly unusual winter storm. Of course less energy was sold, but only in those two years.

5. Now, here’s the clincher. In 2022, this year, Austin Energy sold more electricity from mid-May through mid-September, than in any other summer season in their entire history. And, they are still insisting that they need a rate increase? What’s up with that?? Well, apparently, they spent that huge summer surplus, without a required budget amendment being approved by the City Council. The public deserves to know the base revenue amount of that surplus, and how those un-budgeted funds were spent.

6. Austin Energy sprang a last-minute surprise on the City Council in late October. We got a double dose of rate shock for fuel and regulatory charges on Halloween at midnight.

7. One final important note – The so-called $15 increase in the “average” customer’s bill for the fuel and regulatory charges is mythical. It is only that low if you use 860 kWh per month. Try going that low in a 3-bedroom house in the sweltering July heat. So, obviously, if the City Council approves a third round of rate shock, be careful with the “average user” cost estimate. It might be as lowball as another $15.00. Well, for starters, even $30.00 more per month is tough to swallow during an affordability crisis. So, just imagine the actual, much higher costs for a 3-bedroom homeowner, in every neighborhood across the City!

This Is Not Rocket Science…

It just requires you to stand back and look at that big forest in front of you. Don’t get bogged down in all of those confusing trees. No other Central Texas electric utility is asking for radical, controversial changes to their rate structure. And they are not asking for a base rate increase. They are getting along just fine, with the historic summer heatwave providing a nice revenue cushion.

What Austin Energy does badly need is a big reality check. Austin’  hard-working residents and small business owners deserve much better transparency and accountability. Because, after all, we are the folks who own Austin Energy!

Musical Accompaniment for This Blog Piece:

1. “A Walk In the Black Forest” – Horst Jankowski
2. “A Walk In the Black Forest” – Rare vocal version by the Modernaires
3. “Tall Tall Trees” – Alan Jackson, Excellent George Jones cover version
4. “Tall Oak Tree” – Dorsey Burnette, Stereo version
5. “I Fell In Love Again Last Night” – The Forester Sisters

Austin Energy Spent Summer Surplus Without City Council Approval

By Bill Oakey – November 28, 2022

For the past several months, consumer advocates have tried to break through Austin Energy’s transparency barrier, for details on the huge revenue surplus that the utility earned from the historic summer heatwave. The critical question is how much un-budgeted base revenue did they reel in, from mid-May through mid-September? The public still has never been told. And yet, Austin Energy wants the City Council to approve a conservation-busting, highly controversial base rate increase, as soon as this week. We simply can’t let that happen! Our hard-working families and small business owners deserve a better solution.

Where Was the Required Budget Amendment?

Austin City policy requires departments to seek City Council approval, by way of a budget amendment, if they want to significantly raise or lower their annual budget. Austin Energy has routinely complied, as recently as late September. But there is no visible record of any budget amendment request to spend the surplus summer base revenue. We are talking about tens of millions of dollars, from the biggest and longest triple-digit heatwave in Austin history. It is conceivably possible that the utility did request a budget amendment. But, if so, it was done at a low-profile meeting, and it left no online tracks.

A Google search for “Austin Energy”  “budget amendment” shows only these two recent results:

1. Sept. 29, 2022 – Budget amendment to increase monthly electric charges related to fuel and ERCOT expenses. This was the double-dose of rate shock that hit at midnight on Halloween.

2. April 9, 2020 – Budget amendment to authorize $15 million in COVID relief.

Back on July 22nd, I suggested on the 6:00 PM KXAN-TV News, that the summer surplus should wipe out the need for a rate increase. It is time for City officials to finally explain why San Antonio’s public utility gave nearly $50 million back to their ratepayers from their summer surplus, while Austin Energy kept the money and asked for a rate increase. No other Central Texas utility has asked for a rate increase. And the vast majority of large Texas utilities maintain a standard $10 monthly customer charge. Austin citizens, who literally own Austin Energy, deserve much better transparency, and the more prudent financial management, in the face of record inflation and our affordability crisis.

Hey City Council, Please Answer One Big Question

By Bill Oakey – November 22, 2022

We’re into the final stretch of the Austin Energy rate case. All of the official legal parties have made their recommendations. The Electric Utility Commission could not agree on everything, so they made a partial recommendation. But guess what…Everybody so far has overlooked the one big question that still begs to be answered…

What Happened to the Huge, Un-Budgeted Surplus From the Summer Heatwave???

If you just sit back and think about it for a moment, the request for a rate increase just doesn’t add up. In fact, it makes no sense at all. And yet, whole groups of people have completely overlooked the obvious – Why do we need an electric rate increase, when Austin Energy made more money from mid-May through mid-September, than in any other summer season in all of Austin’s history? And that goes back to 1839, when the City of Austin was founded.

I have raised that issue before on this blog. How it has managed to escape more attention is strange and mystifying. One could ask a few more obvious questions:

1. Why is Austin Energy the only electric utility in Central Texas asking for a rate increase?

2. The revenue windfall from the historic heatwave was not predicted, and was not part of Austin Energy’s budget. Their budget was approved by the City Council in August 2021. So, why was the utility allowed to spend a historic surplus, without asking the City Council for amendments to their budget?

3. Since the rate increase under discussion is an increase in the base rates, shouldn’t the public be told how much un-budgeted base revenue came in from the summer heatwave? It is quite reasonable to assume that it runs into the tens of millions of dollars. And, it could easily have a material impact on the $35.7 million revenue request for the rate increase.

4. If Austin Energy has already spent that money, without City Council budgetary approval, then what did they spend it on?

5. Does the City Council have a formal process for City department to make budget amendment requests? If so, how often is that process overlooked and not enforced?

A Disturbing History Lesson About Austin Energy and the Ratepayers’ Money

I have followed Austin electric rate cases for 39 years, since 1983. I served on the City Electric Utility Commission from 1985 through 1990. During that time, I researched and unraveled some fascinating financial scenarios. But none compares with the twisted tale that you are about to  read. I am not smart enough to make this up. The whole thing is true, and I still have the newspaper archives that tell part of the crazy adventure.

Let’s travel back in time to the late 1980’s, when the Electric Utility Commission met at the Electric Building Auditorium on West Avenue. Before it was rebranded as Austin Energy, it was simply called the Electric Utility Department. At the Commission meetings back in those days, we had more than a few dramatic rate battles.

Shudde Fath was a founding member of the Commission, and she was my mentor. It was Shudde who pioneered Austin’s conservation-based rate design. It was first implemented in 1981, and it served as a highly respected national model. This year, unfortunately, it is being threatened by Austin Energy’s radical new rate design recommendation. Ironically, the formal rate case hearings this year were held in the honorary Shudde Fath Conference Room.

So, back to the history lesson…One night at a Commission meeting, we were presented with a report that focused on a legal dispute over a coal contract for one of our power plants. The report explained that this contract allowed Austin to purchase coal on the spot market, if the market price dipped below the contract price. So, our utility exercised that option, and started purchasing the cheaper coal.

The coal contractor sued the City, claiming that we did not have the right to purchase the cheaper, spot market coal. So, the Electric Dept. presented our Commission with a report, detailing how the electric rates were impacted by the price of coal and the legal dispute. Our utility decided to continue collecting the full contract price for the coal. We were told that the difference between the contract price and the cheaper spot market price was being deposited into an escrow account. Thus, if the coal contractor won the legal case, we could pay off their claim from escrow funds. But, if Austin won the lawsuit, we would be able to keep the extra money.

Shudde Fath and I kept copies of the financial reports that were included in our meeting packets. I carefully observed the growing amounts of the clearly labeled, “Escrow Ending Balance.” By the time the lawsuit was finally settled, the escrow balance had climbed to $43 million. During this same time period, President Ronald Reagan, John Poindexter and Oliver North were accused of violating an act of Congress, by diverting large sums of money to the Nicaraguan Contras. I happened to notice that the total amount involved was less than the $43 million in our Electric Utility coal contract escrow account.

Finally, at one of our evening Commission meetings, it was announced that Austin had won the legal case with the coal contractor. Therefore, we would be able to keep the $43 million that was in the escrow account. So, I made a motion that this money should be credited back to the ratepayers on their electric bills.

Suddenly, I noticed what looked like a huddle in the middle of a football field. The top executives of the Electric Utility Dept. scrambled to prevent us from taking a vote on my motion. One of the financial officials took a seat in front of our Commissioners. He asked us to please postpone the motion until our next monthly meeting. He said they needed more time to consider the administrative impact of distributing the $43 million.

We agreed to the delay. Very soon after that, the issue landed in the lap of the City Council. City Finance Director, Virginia Rutledge stood before the Council. She performed the most artful and creative dog and pony show that I have ever beheld. I used to have it all preserved on a VHS tape, but it eventually gave way to more important music concert. The gist of her presentation was that distributing the $43 million back to the ratepayers would cause “too much of a cash flow problem,” and she recommended against doing it at that time.

Then, the entire issue blew up in the news media. Everyone began asking, “What really happened to that $43 million. Why couldn’t the Electric Department simply withdraw it from the escrow account, and credit it back to the ratepayers?” If I had known then what I found out later, that would have been one heck of a news story!

Instead, Mayor Frank Cooksey came forward with an ideal solution. He recommended that the City hire not one, but two outside auditing firms, to review the financial records of the Electric Utility Dept. This, we were told, would get to the bottom of the mystery surrounding that big chunk of money.

So, Shudde Fath and I decided to make an appointment with one of the auditing firms, Coopers and Lybrand. We took our latest copy of the financial report, that showed the escrow ending  balance of $43 million. We wanted to ensure that the auditors looked into what happened to that money, and whether it was available to be credited back to the ratepayers. They told us that they would need to check with the City first. It would be up to whichever manager had been assigned to oversee their audit.

Well, about three weeks went by, and Shudde and I never heard back from the auditors. So, I called them to check on our request. They said they were not allowed to include our request, because the manager overseeing the audit determined that it was outside the scope of the audit. Then, I asked who that manager was. It turned out to be the City Finance Director, Virginia Rutledge. That gave me a queasy feeling. Could it be that the fox was guarding the henhouse?

The next thing we heard was that both auditing firms had completed their work. The results would be aired on the 6:00 PM local TV news. Lo and behold, both auditing firms gave the Electric Utility Dept. a clean bill of health. They each concluded that “The $43 million was properly posted to the deferred fuel revenue column in the financial statements. That is in full compliance with Generally Accepted Accounting Principles.” Very well, indeed. It was a spectacularly perfect whitewash. The auditors were never asked to investigate what happened to the money, or how much of it had been spent.

The news medial dropped the story at that point. Nothing we said could convince them that the real issue had not been resolved. So, we all went about our lives and moved on. The issue was the farthest thing from my mind about three years later, when I walked out of a West Austin restaurant after lunch. The current Mayor, Lee Cooke, walked up to me with a friendly smile. “Hi there, Mr. Oakey, how are you doing?” “Just fine, Mayor,” I responded. “Hey, I have a question for you. Did you ever find out what happened to that $43 million?”

The Mayor didn’t even hesitate. I was totally unprepared for what he said that day. “Well, Mr. Oakey, I think you can be pretty sure that the money found its way over to cover the deficit at Brackenridge Hospital.”

Those of us who took on volunteer positions at various times over the years, all have our favorite stories to tell. This one never made it into the news. It was all water under the bridge, as the old saying goes. But at least I can say that I graduated from the School of Hard Knocks. Sometimes, I unleash my emotions on this blog. But my motto when dealing with public officials is, “Walk softly and carry a big memory stick.” Try to let the facts speak for themselves. That doesn’t always work. Sometimes, what seems like the most blatantly obvious questions never get asked, and never get answered.

Like…Hey guys…What happened to that unprecedented windfall revenue surplus from the record summer heatwave? It was never budgeted and never approved for spending by the City Council. So, how much was it anyway, and where did it get spent?

Perhaps someday, a future Mayor will whisper the answers to somebody. Then, at least one other fortunate soul will know the full and complete truth.

Musical Accompaniment for This Blog Piece

  1. “The Fox” – Elton John
  2. “Foxy Lady” – Jimi Hendrix
  3. “Fox On the Run” – Tom T. Hall
  4. “Such An Easy Question” – Elvis Presley

A Simple Austin Energy Rate Case Timeline And Proposal

By Bill Oakey – November 16, 2022, Revised November 21, 2022

Forget all of the confusing excuses and convoluted explanations surrounding this long, frustrating ordeal. Share this timeline that makes it simple, and ties all the loose ends together.

August 2021 – The City Council approved Austin Energy’s annual budget, which began October 1st.

April 2022 – Austin Energy made a presentation to the City Council, requesting a $47 million base rate increase. The reason given was declining electricity sales. But, Austin Energy’s charts show revenues exceeding costs from 2014 through 2019. No evidence of declining energy sales is provided, except for 2020 and 2021. A 100-year pandemic and a highly unusual winter storm caused the lower sales in those years. Not mentioned in the presentation is an August 2020 memo from Austin Energy to the City Council. At that time, they forecast a $19 million revenue surplus for 2021. So, it is crystal clear that the lower energy sales caused by the pandemic and the winter storm were abnormal. There is no evidence of an ongoing trend. The rate case was flawed from the very beginning.

May Through September 2022 – Rate case participants offered a broad range of revenue and cost-saving opportunities to reduce or eliminate the rate increase. Austin Energy agreed to correct two accounting errors, reducing the rate request to $35.7 million. (See pp. 1,2)

Late Spring Through Early Fall 2022 – Austin ratepayers filled up Austin Energy’s coffers, by paying for the biggest, baddest and longest triple-digit heatwave, since the city was founded in 1839. This huge increase in revenue was not predicted, and not budgeted. Austin Energy spent tens of millions, without budgetary approval from the City Council. They never publicly disclosed the base revenue surplus amount. San Antonio’s municipal utility announced a $75 million budget surplus, and gave $50 million of it back to the ratepayers.

October 2022 – The City Council was blindsided by Austin Energy’s eleventh-hour announcement of a 71% increase in the monthly Power Supply Adjustment and 24% increase in the Regulatory Charge. The City Council voted to spread the rate shock over 3 years. Austin Energy estimates that these increases will cost the “average customer” only  $15 per month this year. But folks living in 3 bedroom houses will pay much more, especially during the hot summer months.

Early November 2022 – Rate case participants presented a compromise rate proposal to the City Council, even though their rate filings offered enough options to completely wipe out the rate increase.

Here is my proposal:

This Proposal Is Simple, Fair and Financially Prudent

1. The public deserves to be told the amount of the un-budgeted base revenue surplus from the summer heatwave, and how it  was spent.

2. The City Council may decide that a small base rate increase is needed to cover the pandemic and storm-related losses from 2020 and 2021. If so, it should be done as a temporary adjustment to the base rate charges in the current rate tariff. The City Council can determine how long to keep the temporary rate increase in effect.

3. No changes to the rate design, customer charge or Value of Solar benefits should be included in the temporary rate adjustment.

4. The City Council should regularly monitor Austin Energy’s financial position. They should conduct a financial review, towards the end of the adjustment period. If the utility’s financial position has stabilized, the City Council should suspend the temporary base rate increase.

5. Austin Energy, with City Council oversight, should develop new short term, midterm and long term plans. These plans should guide the utility toward the inevitable future of rapidly accelerating customer adoption of solar and other energy-saving technologies. They should examine and implement some of the emerging business strategies outlined in the 2019 report, commissioned by the National Conference of State Legislatures.

Early December 2022 – The City Council faces critical choices. They should protect our existing     conservation-based rate design, and honor their commitment to the City’s adopted Climate Equity Plan. A higher customer charge would threaten affordability for customers across several income levels.

The City should postpone the rate decision until the new Mayor and City Council take office in January. They should comb the rate filing briefs, consult with the participants and citizen experts. They should adopt the various measures to wipe out the rate increase. If any rate increase is deemed necessary, a temporary adjustment is the most reasonable approach.

New Year’s Eve 2022 – This is a time for Auld Lang Syne and fun celebrations. It would help to know that our City leaders are committed to that word that is so often casually supported, but so seldom backed up with concrete action – affordability.

Musical Accompaniment

”Auld Lang Syne In Austin”

A Better Compromise For The Austin Energy Rate Case – Make It Temporary

By Bill Oakey – November 15, 2022

On Monday, I met with Mayor Adler’s Senior Policy Advisor. The rate case is coming down to the wire. The City Council has planned a final vote for early next month. Any change in the rates would ring in the new year, on January 1st.

Mayor Adler took the lead, and did an excellent job in tackling the doubled-barreled rate shock of increased fuel and regulatory charges. Those new charges hit our monthly bills at the stroke of midnight on Halloween night. Mayor Adler’s efforts led to the City Council’s decision to increase those charges gradually over three years. The first round may seem somewhat small over the winter months. But, if we have another triple-digit heatwave next summer, folks living in three bedroom homes will definitely feel the rate shock.

Why Does Austin Energy Want a Base Rate Increase?

As this blog has pointed out, Austin Energy says they want it because “our rate design is not as efficient as our customers.” In other words, there are too darned many energy efficient small living units. Those customers aren’t buying enough electricity. Well, there are many problems with that reasoning. Zapping those customers with a $25 monthly customer charge would send the wrong signal on conservation. If you have to pay more, you might as well use more and get your money’s worth. And the biggest users would see their electric bills decrease. So, their motivation to conserve flies right out the window. Austin Energy’s rate plan runs in direct conflict with the City’s adopted Climate Equity Plan.

My Proposal Offers a Fair and Financially Prudent Solution

I recommend that the City Council keep the current rate design and customer charge in place. If they review all the input from the rate case participants, and still conclude that a compromise base rate increase is necessary, then approve it – but make it temporary.

A standard rate increase would have to stay in place for a few years, until the next routine rate review comes around. Austin Energy’s rate request was determined by using 2021 as their “test year.” They soldi less electricity than they needed to cover their expenses in both 2020 and 2021. Well, we all know that we had a 100-year pandemic that affected both of those years. And in 2021, we had a historic winter storm and a milder than normal summer, on top of the pandemic.

The charts that Austin Energy presented to the City Council, clearly show revenues exceeding expenditures in every year leading up to 2020. So, their own data fails to show any proven trend of not seeing enough electricity. The need for an ongoing rate increase was built upon on a false foundation. If any rate increase is needed, it should only cover the losses caused by the unusual circumstances in 2020 and 2021. Most importantly, the record-setting summer heatwave this year certainly doesn’t portray a dire decline in electricity sales.

Austin Energy’s Big Credibility Problem

When Austin Energy filed the rate request last April, no one had predicted the upcoming heatwave. It was not included in last year’s budget, that ended on September 30th. There is no doubt that the utility sold more electricity than in any summer throughout their history. San Antonio’s ratepayers received bill credits from part of their $75 million surplus. So, what did Austin Energy do with all that money from their windfall budget surplus? Until they satisfactorily answer that question, the public has every reason to question their credibility.

Is a Temporary Rate Increase Needed? If So, Then How Much?

The rate case participants have each submitted a treasure trove of expert testimony, chock full of data-driven analyses and thoughtful conclusions. It’s as if the City has been handed a stack of expensive consultant reports, each of which represents many months of tedious, detailed work. In my opinion, the experts have identified more than enough revenue and cost-saving options to wipe out any rate increase. But the City Council may disagree.

It so, they should consider a six-month temporary amendment to the existing rate tariff. The only thing that should change is the base charges for each customer class. The solar benefits should not be changed until more study and citizen input takes place.

Review Austin Energy’s Financial Position After Several Months

The City Council could monitor Austin Energy’s financial position. By late next spring, they should know whether another triple-digit heatwave is coming. So, what happens with rates next fiscal year should start with a spring financial review. During that review period, the City Council could decide whether to leave the amended rate tariff in place, or whether they can revert back to the base rates that we are paying now.

This approach is certainly not a common practice, and Austin Energy would be less than thrilled with the idea. But we are in a time of record inflation, sky-high rents and crazy-high property taxes. We have a large number of folks at various income levels, struggling to make ends meet. And seniors living on fixed incomes. Many small businesses are still trying to recover from the pandemic. One double-dose of rate shock is bad enough. We certainly cannot afford any other type of rate increase, for any longer than it is absolutely necessary.

Also, the six month review period would give Austin Energy, with oversight from the City Council, time to explore and evaluate new utility business models. It is true that solar panels and new, evolving technologies will lead to rapidly rising utility losses from customer adoption of these technologies, in the not too distant future. Energy-efficient building renovations and new construction, combined with energy-saving appliances will add to this trend.

Austin Energy’s existing plans rely on an outdated business model. That model calls for continuous base rate increases, to counter the conservation-driven revenue losses. The City should call upon national experts, to help guide them toward a sustainable and financially viable plan, for the inevitable future that is coming.

Remarks To The Austin City Council – Just Say No To Austin Energy Rate Increase

By Bill Oakey – November 9, 2022

Good Morning City Council,

This year, I learned that I survived cancer for the third time. I plan to dedicate the rest of my life to celebrating my family and good friends. And to doing my very best to help the community. As someone who has followed Austin electric rate cases for 39 years, I have a broad, historical perspective. I served on the City Electric Utility Commission, alongside Shudde Fath, from 1985 to 1990. This year, I have undertaken the most extensive, highly detailed research of any public issue in my lifetime.

The stakes are very high for both Austin Energy and the City of Austin. Please take your time and do this right. Here is a brief summary and my recommendations:

Summary

You have multiple options to choose from, to completely wipe out the base rate increase. Now that the increased Power Supply Adjustment and Regulatory Charges will cause rate shock, it is essential for you to examine every detail of the revenue and cost-saving options available.

Please do not make the mistake of using a base rate increase to compensate for reduced energy sales. The City’s published, Climate Equity Plan requires reduced energy usage and reduced sales. Our nationally recognized rate design, pioneered by Shudde Fath in 1981, has achieved the results that it was intended to achieve. We must continue to encourage conservation and customer adoption of solar and other related technologies.

Within the next several years, Austin will see declining energy sales on a rapidly accelerating curve. This will be driven by market forces that are beyond the control of either the City or Austin Energy. Solar and battery manufacturers have been advertising heavily this year, to residential, commercial and industrial customers. That train has already left the station. There is no turning back.

This means that Austin Energy will need to transition into a modern utility business model, that will accommodate energy conservation and customer-based power generation. Please review the major 2019 report, issued by the National Conference of State Legislatures. It is linked on my blog, AustinAffordability.com. This report presents several new, successfully used utility business strategies.

Recommendations

Consult with every single participant in the rate case. Consider each revenue and cost-saving option, presented in their filing briefs.

Do not take the “easy way out,” by approving a compromise rate increase. The rate case participants and the Electric Utility Commission are operating under traditional rules and practices. They are viewing this case primarily through a traditional lens. 

But these are not normal times. Austin Energy is at a critical crossroads. You can lead them on a road to the past, which will actually make their financial position worsen progressively over time. Or, you can lead them in a prudent, positive direction, toward the inevitable future. That future will see Austin Energy, and every other major utility in the country get smaller. Austin’s new customer growth will not be enough to stem the tide of the changes that are coming.

Elon Musk is building a whole factory to develop both current and evolving battery technologies. Cutting edge companies in Austin are now offering smartphone apps that will control the energy usage in every room of a home. AISD is planning major conservation upgrades and solar panels for a large number of schools. The future energy landscape will look very different from the traditional one that is baked into Austin Energy’s current plans.

You have the option to ignore all of these considerations. You can choose to kick the can down the road. A quick and easy compromise would achieve that result. But, I implore you to study the complex issues surrounding this case. I have put it into a national perspective on my blog. There are a multitude of linked references to credible sources.

I do not take any of these recommendations lightly. I am aware of Austin Energy’s recent bond rating downgrades. But a parade of base rate increases over the next few years, would only drive customers further and faster away from buying most of their power from Austin Energy.

This is a difficult and challenging dilemma. My final thought is that you and Austin Energy should seek outside expertise to evaluate and understand the new, innovative utility business models that are already operating in some European countries and parts of the U.S.

Please note the devastating new Federal report on climate change. The Washington Post this week opened a story with these disturbing statements:

”Climate change is unleashing “far-reaching and worsening” calamities in every region of the United States, and the economic and human toll will only increase unless humans move faster to slow the planet’s warming, according to a sprawling new federal report released Monday.”

“The things Americans value most are at risk,” the National Climate Assessment authors, who represent a broad range of federal agencies, write in the draft report. “Many of the harmful impacts that people across the country are already experiencing will worsen as warming increases, and new risks will emerge.”

The message is clear. Austin Energy must set a firm goal of selling less carbon-generated electricity. They cannot expect to cover those sales losses by raising base rates and curtailing solar customer benefits. Please work with Austin Energy to develop near term, midterm and long term plans to transition into a climate-friendly and financially sustainable future. Thank you for considering these recommendations. And thanks for the good work that you have done to improve the City’s preparedness for potential ERCOT grid disruptions.

Linda Guerrero Supports Major Reforms At City Hall

By Bill Oakey, November 3, 2022

This is Part 2 of this blog’s endorsement of Linda Guerrero for City Council, District 9. In my interview with her, I learned that she wants to fix many of the longstanding problems at City Hall. She supports reforms that some of us have been clamoring for, as far back as the 1980’s.

Linda’s Reform Agenda Starts With Public Engagement

i asked Linda how she felt about public engagement at City Council meetings. Did she support much better clarity on when the public can expect to be heard at public hearings. And would she reform the chaos that keeps people in wheelchairs and parents with small children outside, waiting for hours to speak on an agenda item. Her response was crystal clear. “Absolutely. I am one of those people!” She has been there, done that, and she’s ready for a change. She supports the Austin Neighborhood Council’s recent public engagement resolution. And, she is interested in my City Council public engagement proposal, that was endorsed by the American-Statesman editorial board on January 29, 1988. That proposal will see its 35th anniversary, shortly after Linda is sworn in, if we can get her elected. Linda also told me that she wants to see more opportunities for citizens to speak to the Council, from the comfort of their homes over Zoom.

Transparency Is a Cornerstone of Linda’s Reform Plans

Lack of transparency is a persistent, nagging problem at City Hall. The City has been dragged into court, only to lose, on more than one occasion, for not complying with all the requirements for posting agenda items and providing proper backup materials. Citizens are often given vague or fuzzy answers to public information requests, and are often met with frustrating delays. We long for the good old days, when every mailing envelope from City Hall carried the slogan, “Austin, the Friendly City.” Linda has seen transparency issues, while serving on several City Boards and Commissions. She told me that she would like to see much better transparency at all levels of the City administration.

We Can Count On Linda to Hold City Officials Accountable

Most City employees are genuinely passionate about their jobs, and they  try to do their very best to help the City Council and the public. But it’s in the nature of a bureaucracy for things to slip through the cracks. City resolutions often carry requirements for things to be done by a specified date. Unfortunately, there is no system in place for citizens to easily find previously passed ordinances and resolutions.

In the worst case scenario, citizens will triumphantly depart City Council Chambers, after getting a hard-fought resolution passed. Let’s call it Resolution X. Then, a year or two later, the same problem that prompted Resolution X pops up again. The City Council approves an action that was supposed to be forbidden under that resolution. Why? Because the resolution was never officially acted upon, or else its existence was forgotten. There is no reliable tracking or enforcement system. In the absence of organization, disorganization prevails.

In 2015, I wrote a blog piece called, What Happens When “The City Manager Is Directed To,” And He Doesn’t? Those explicitly worded directives are printed on many resolutions, and they “must be” carried out by a certain prescribed deadline. But if that date comes and goes, and no response ever comes, does anybody at City Hall remember it and follow up? Well, sometimes…or…sometimes maybe not. That little thing called politics can get in the way. Or else it can simply happen as a result of disorganization. Either way, Linda told me that she wants to see ordinances and resolutions better cataloged, and have tracking and enforcement measures put in place for those funny, familiar, forgotten directives.

Linda is aware that some of these reforms will come with a price tag. Staff time would be required to carry them out. And, of course, she would need majority votes on the City Council to get them adopted. But a nice slice of hope is much better than the status quo. Midnight should be a time for hoot owls and prowling coyotes. Citizens should not be expected to join them on their way home, after endless hours of waiting at City Hall. That’s the way I felt about it, back in 1988. Maybe Linda can finally fix it in 2023.

Senior Discounts – Linda Can Deliver Real Affordability Relief!

Linda won’t be sitting around at City Hall, wondering what to do. She is ready to hit the ground running. She likes my proposal for a broad range of senior discounts, on various City and City-related services. It’s too soon for her to know which ones are the most feasible, and what the budgetary impact might be. But she assured me that she wants to explore this exciting opportunity to help older folks, living on fixed incomes. Bravo for Linda! She will stand by us, if we can put her on the dais! Click here to read Part 1 of my endorsement, and see links to volunteer and donate.

A Closing Poem

If you have any friends who are District 9 voters
Give them some news that will rev up their motors
Tell them that Linda is the candidate of choice
She is the one who will lift up their voice

We need a problem-solver who will get things done
Your pitch for Linda will deliver a home run
For transparency, accountability and public engagement
It’s well worth your time to pound the pavement

As the campaign winds down in the final days
We must support Linda in all kinds of ways
Imagine what she could do for City Hall
With long-overdue reforms for once and for all!

A Very Dated and Hilarious 1943 Chamber of Commerce Video

”Austin, the Friendly City” – The fun starts after the opening roll of  scrolling inscriptions.