Tag Archives: Austin climate change

Austin Energy’s Rate Case Debacle – A Stunning Management Failure

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By Bill Oakey – August 8, 2022

Update: Listen to my Rag Radio interview from Friday, August 12th, in the permanent archives.

Austin’s Values Turned Upside Down

A fiction writer couldn’t make this stuff up. Austin Energy wants to raise rates because you and I and our neighbors have become too energy efficient. Their plan would multiply the fixed monthly customer charge by 2 1/2 times, from $10.00 to $25.00. Why? Because “the current rate design is not as efficient as the customers, causing the revenue to be unable to keep up with costs.” That’s what Austin Energy’s vice-president of finance, Rusty Maenius, told the Community Impact newspaper last month.

And it gets worse. The new rate design would overturn the conservation-centered policy that Austin’s environmental icon, Shudde Fath pioneered and the City adopted in 1981. (See Page 6). This system is called inclining block rates. We currently pay less when we conserve and use less electricity. The big users in larger homes pay more. The new plan, with the $25 customer charge and fewer rate tiers, socks it to the small users and reduces bills for big users in fancy houses. Why? Because the utility’s current rate structure is “not as efficient as the customers”…Wow! Are you kidding me??

Oh my, how things can change! My dear friend, Shudde Fath was my mentor, when we served together on the City Electric Utility Commission in the 1980’s. I conserved and saved money, thanks to her rate design. In 2016, our City honored Shudde on her 100th birthday. Here is a photo of…uh…Austin Energy…presenting her with a birthday plaque. You can click the link and see this on Austin Energy’s Twitter feed.

A Parade of Rate Increases

Now, back to June, two months ago. A bond downgrade report from the Fitch bond rating service says, “Austin Energy expects additional base rate increases will be necessary, to improve the utility’s operating cash flows, etc. on a sustained basis.” But, as my recent blog postings here and here point out, multiple rate increases won’t guarantee revenue stability. They will simply push customers to rush toward efficiency measures that will reduce electricity sales even faster than before.

Fun and Games In the Current Rate Case

In rate cases, Austin Energy uses a “test year” to illustrate their revenue deficiency, and justify a rate increase. This time, that test year just happens to be 2021, during the COVID pandemic. Many offices across the city were still closed, while people worked from home. New COVID variants kept people from going out as often. Just imagine all of those office buildings, theaters, restaurants, hotels, bars, shopping centers, etc. that didn’t use a lot of electricity. In addition, there was less electricity usage before, during and after Winter Storm Uri.

Whether that wildly abnormal year’s revenues and costs were adequately adjusted to reflect normal conditions was a big issue in numerous legal briefs flying back and forth. (See Page 3). Austin Energy’s notorious, hard-nosed lack of transparency was on full display. But get this – In the years immediately before the 2021 test year, their revenues were positive (for crying out loud)!

You can learn more by slogging through the appendices in the utility’s rate filing package. But you might find it less agonizing to have your own appendix taken out, while being fully awake during the surgery (!)

Looming Penalties for Solar Users

Here comes another Holy Cow Moment! This quote comes from one of those cringe-worthy rate package appendices. “Some staff expressed concern over Austin Energy’s Value of Solar (VOS) pricing scheme, stating the current VOS structure is unsustainable, if commercial customers continue to adopt on-site solar and reduce their peak demand charges.” (Appendix 2.1.1, Page 408). (Gulp)! 

Residential solar credits are threatened as well. Kaiba White, with Public Citizen, published an opinion piece against the rate proposal in the Austin Chronicle. Here is his statement. “While the new Value of Solar tariff would be a slight increase in the first year, it would change – potentially by a lot – each year. The new tariff also doesn’t accurately reflect the benefits that rooftop solar provides to the utility and our community. A volatile Value of Solar rate, or one that undervalues local solar energy, could put the brakes on adoption of solar at homes and businesses.” (Ouch)!

The Big Climate and Energy Bill in Congress

The U.S. Senate passed the sweeping climate and energy efficiency bill on Sunday. The House will pass it later this week. We would all love to celebrate! It is projected to save eligible families $1,800 per year on their electric bills. The whole purpose is to cause utilities to generate and sell less electricity. But, Austin Energy is clearly not prepared for that. They desperately need a new direction and a new business model.

Instead, their incompetent planning, tone-deaf excuses and heartless approach to rate design would stick us with sky-high bills next year. Especially during the summer. We simply can’t let that happen!

Let’s Ask the City Council to Take a Stand!

This isn’t the same responsive City staff that we worked with when I served on the Electric Utility Commission back in the 1980’s. If raising base rates and reducing solar credits is the only solution Austin Energy has to offer, then we the people need to vigorously protest to our Mayor and City Council. After the rate hearing is completed, they should:

1. Carefully study the recommendations from all sides.

2. Demand answers to all the information requests from the parties, that Austin Energy refused to comply with. Discuss them in executive session, if necessary.

3. Raise developer fees for new utility customers. The CIAC, Contributions In Aid of Construction (See pg. 9), should be modeled after the much better policy used by Austin Water. That is a proper way to increase revenues.

4. Enshrine Shudde Fath’s legacy by making her signature achievement on rate design permanent. Adopt its framework and general parameters into the City Code.

5. Establish senior discounts for all of the monthly customer charges on our utility bills. Make a bold statement, for once and for all, that our longterm resident still matter, and that we still belong, in the affordability-challenged “New Austin.”

6. Reject Austin Energy’s plan to modify the Value of Solar credits for rooftop solar customers. Conduct a study and adopt best practices for Value of Solar, as outlined here. (See pp. 20-28). Do not exempt any high load factor customers from the Community Benefit Charge or Energy Efficiency Charge. (See pp. 29-36).

7. Approve the BIP cost allocation model (See pp. 22-26) recommended by the Consumer Advocate in the rate case. Ask every participant to submit their best ideas, to make Austin Energy more cost-effective and more accountable. Ask the City Manager to adopt those suggestions.

8. Put the electric rate increase on hold. Let the summer heat windfall revenues buy some time. Time for the City Council and the public to engage in open discussions – about how Austin’s biggest asset, our publicly-owned electric utility, can best meet the realities of a new, carbon-reduced energy future.

9. Develop near, mid, and long term planning scenarios with Austin Energy. Compare our current “Rate Increases Chasing Declining Revenues” business model with better alternatives. Examine modern utility systems in Europe and elsewhere. Prepare comparison charts and graphs, extending from now into the future. Bring in a variety of experts. Create an innovative plan. Consider hosting a national conference right here. Let Austin lead the way on this!

10. In your planning, make sure that Austin never has to cut back on home and business solar buyback credits. Please think about what might happen in the future. What if most of the customers get to solar, before Austin Energy finds a sustainable plan? Help them now!

Please share this blog link with your friends, neighbors, email lists, social media and civic organization membership, etc. And ask each person to share it widely, as well.

Use These One-Click Links to Email Every City Council Member:

Mayor Steve Adler steve.adler@austintexas.gov
1. District 1 – Natasha Harper-Madison natasha.madison@austintexas.gov
2. District 2 – Vanessa Fuentes vanessa.fuentes@austintexas.gov
3. District 3 – Sabino “Pio” Renteria sabino.renteria@austintexas.gov
4, District 4 – Jose “Chito” Vela chito.vela@astintexas.gov
5. District 5 – Ann Kitchen ann.kitchen@austintexas.gov
6. District 6 – Mackenzie Kelly mackenzie.kelly@austintexas.gov
7. District 7 – Leslie Pool leslie.pool@austintexas.gov
8. District 8 – Paige Ellis paige.ellis@austintexas.gov
9. District 9 – Kathie Tovo kathie.tovo@austintexas.gov
10. District 10 – Mayor Pro Tem Alison Alter alison.alter@austintexas.gov

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Opposing Forces Up The Ante On Climate Change / Electric Utility Dilemma

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By Bill Oakey, August 3, 2022

I have written about the big conundrum facing Austin Energy and other utilities. As their own employees help homeowners and businesses become more energy efficient, the utilities find themselves wanting to raise rates, because they’re not selling enough electricity. Austin Energy has forecast the potential need for more than one rate increase. And as I’m writing this, a dear friend is preparing for contractors to install solar panels on her roof. A 10 kilowatt battery to store excess energy comes with her package.

It’s easy to see how rate increases to shore up lost utility revenues will backfire. The contractor that is helping my friend will boost their advertising, as will the others in that business. Utilities will find that chasing revenue deficits with successive rate increases could send them into a death spiral. Climate change is the trigger here. It drives summer electric bills to historic high levels. That pushes businesses and residents to go solar, and employ every other efficiency measure they can find.

This daunting dilemma looks to get worse, because of a series of circumstances that have yet to be widely recognized. That’s why I’m making a push to alert the news media and the Austin City Council, as well as Congressman Lloyd Doggett.

Big Changes May Come to the Texas Power Grid

I was jolted awake this morning by a shocking article in the Texas Tribune. Come to find out, there is plenty of West Texas wind energy available. But ERCOT, the Texas grid management agency, has ordered a lot of the wind turbines to be shut down this summer. Why? Because there aren’t enough transmission lines to deliver the cheap wind power to big cities like Dallas, Houston and Austin. The Texas Public Utility Commission is working on a solution (we hope)! Two recent grid assessment reports cited in the Tribune article highlight the many shortcomings in the grid system. Three entities will collide over what response follows those reports – public interest groups, special interest groups and politicians. The problems can be fixed, if the solutions aren’t nixed. The future of your bill rests on political will.

There is reason for hope. From the Tribune article comes two profound statements. “This month, the PUblic Utility Commission formed a task force to develop a pilot program next year that would create a pathway for solar panels and batteries on small-scale systems, like homes and businesses, to add that energy to the grid. The program would make solar and batteries more accessible and affordable for customers, and it would pay customers to share their stored energy to the grid as well.”

And this comment from John Hensley, with the American Clean Power Association. “Storage is the real game-changer because it can really help to mediate and control a lot of the intermittency issues that a lot of folks worry about when they think about wind and solar technology. So being able to capture a lot of that solar that comes right around noon to [1 p.m.] and move it to those evening periods when demand is at its highest, or even move strong wind resources from overnight to the early morning or afternoon hours.”

How Can the Utilities Stay In Business, As Efficiency Drains Revenues?

That’s the big challenge that demands to be addressed. I submit that, above all, it should be discussed and resolved out in the open. Our local leaders, our Congressmen and women, and the public should all be granted a seat at the table. If we stay in the background and hope for the best, nothing good may come of it. With or without Congressional passage of the current climate bill, future legislation will probably happen. Utilities may need to completely rethink their business models. Austin would be an ideal place to host a major conference on resolving the dilemma.

One thing is certain. All utilities will be generating and selling a lot less energy in the years to come. That’s a good thing for progress on climate change. But utilities must not be allowed to charge unreasonable rates, and cut back credits for end users who generate and store their own energy. For now, Austinites are staring down a terribly flawed rate increase proposal. That calls for a poem:

The folks at Austin Energy are way out of touch
They simply don’t care about us very much
In a fancy new building that cost $150 million
They wrestle with a budget of a couple gazillion

Amongst them is a band of renegade abusers
Who want to raise rates for the smallest users
While the Austin economy sees poverty expansion
They would lower the rates for a big, sprawling mansion

Pardon me if I be so bold
But their rate increase should be put on hold
From the month of May to the end of September
They’ll make more money than anyone can remember

The City needs time to assess the situation
And we’re in a recession with high inflation
My idea might be met with a blanket rejection
But there’s an upcoming City Council election

We need transparency, reason and fairness
And a whole lot more public awareness
This is a time for all hands on deck
We and our neighbors should protest like heck!

Musical Accompaniment for This Blog Piece:

  1. “Blowing in the Wind” – Peter, Paul & Mary
  2. “Wind Beneath My Wings” – Bette Midler
  3. “Candle in the Wind” – Elton John
  4. “Catch the Wind” – Donovan
  5. “Summer Wind” – Frank Sinatra

How Austin Can Lead The Way On Climate Change

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 By Bill Oakey – May 10, 2022

CNN recently published an article that provides a climate change and affordability solution that is perfect for Austin. Big-box stores are starting to install solar panels on their rooftops and portions of their giant parking lots. IKEA has already taken an early lead in this endeavor, with 54 solar installations, covering 90% of their stores nationwide. The cost savings and climate change benefits that could be achieved if more stores did this are enormous. Check out these points, summarizing CNN’s findings:

1. From September to December 2020, IKEA cut its energy purchases by 84% and slashed its energy costs by 57% at their Baltimore store. Meanwhile, the cars in their parking lot stayed cooler in the shade provided by the solar panels.

2. A report from the nonprofit Environment America estimates that solar panels could cut the electricity needed by big-box stores and shopping centers by 50%.

3. The same report found that if big-box stores nationwide installed solar panels, it would generate enough electricity to power 8 million average homes. The climate change impact would be equivalent to pulling 11.3 million gas-powered cars off the road.

4. The average Walmart has 180,000 square feet of rooftop. That’s equal to 3 football fields of space. It’s enough for solar panels to generate the electricity needed to power 200 homes.

Three Words Come to Mind for Austin – Let’s Do It!

 This initiative will require a coordinated effort from both public and private sector officials. There are some hurdles and strategic planning efforts that will come into play. In Austin, we may have permitting and other regulatory requirements. These could be reviewed and possibly adjusted to encourage the installations. The CNN study found that some big box stores have roofs that may need repairs or modifications to accommodate solar panels. The City Council should consider appointing a task force to engage the stakeholders, evaluate the situation and make recommendations on how best to move forward.

IKEA installed solar panels at its Round Rock store in 2012. Just imagine how much the technology has improved since then. What are we waiting for?

Austin Energy Would Need to Rethink Its Future Plans

A sudden large-scale shift to solar panels would impact Austin Energy’s ability to sell enough electricity to keep their operations financially viable. But, more solar installations are coming online already, some of which include entire residential subdivisions. Some serious discussions need to be held, regardless of this proposal. Part of Austin Energy’s reason for their pending rate increase is related to lower sales to customers in new, energy-efficient homes.

Here Are Some Things That Our City Officials Can Do

1. Explore whether Austin Energy can legally sell power directly to other utilities, and / or offer it for sale on the Texas power grid.

2. Do a detailed study on the impact of scaling up rooftop solar installations, and chart a path to gradually accommodate it. This can include reducing power generation from other sources, and rethinking Austin Energy’s future power generation plans. Another critical aspect would be evaluating the optimal mix of base load vs. peaking power capacity. This will ensure that we always have enough power to meet the demand during periods without a lot of sunshine.

3. Reach out to other major cities and large utilities, to determine best practices for a smooth transition toward large-scale solar installations.

4. Explore options to use available Federal funds for expanding solar infrastructure. Contact members of our Congressional delegation to seek assistance under both existing and potential new legislation.

5. This opportunity is hiding in plain sight – Put a solar installation on the roof of our massively expanded Austin Convention Center (!)

Let’s Not Forget About Rapidly Evolving Battery Storage Technology

This is the icing on the cake. Elon Musk and others are already manufacturing and selling new models of home and industrial battery installations to store solar power. These are following the path of solar panels, in rapidly becoming more affordable and of higher quality. City, State and Federal officials should review the excellent 2018 U.T. Honors Program thesis by my good friend, Maddie Bratcher. The title is “Gridlock on the Power Grid: How Battery Storage Technology Reveals Challenges to the Lone Star State.”

The future is now for both large-scale solar and battery storage. To quote an old fashioned saying, the train is roaring down the track. Austin needs to either hop on that train, or get out of the way. My advice is to move to the front of the train and lead the way!

Musical Accompaniment for This Blog Piece

1. “Up On the Roof” – The Drifters
2. “Walk Right In” – The Rooftop Singers
3. “Bring Me Sunshine” – Willie Nelson
4. “Here Comes the Sun” – The Beatles
5. “Walking In the Sunshine” – Roger Miller