Tag Archives: Austin electric rates

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

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

Call To Action – Let’s STRIP Austin’s Electric Rate Increase Proposal!

By Bill Oakey – July 25, 2022

On Friday July 22nd, KXAN-TV News aired a story about our oppressively high summer electric bills. The historic triple-digit heat has led to these burdensome bills, that are straining family budgets at a time of record high inflation. But, as I pointed out in the news segment, Austin Energy has a nasty surprise for us, lurking around the corner. They want to pile on a new base rate increase!

In the news interview, I explained that Austin Energy will be sweeping up the highest peak season profits in their history, from May through September. This will pour tens of millions of extra dollars into their coffers, well above their current year’s budget. The City Council will have every reason to nip the rate increase in the bud, as well they should.

But my jaw dropped to the floor, as I listened to Austin Energy’s response to that suggestion on KXAN. Here are their misleading and faulty arguments:

1. We don’t make any profits. The extra revenue is returned to the City.

2. We will earn extra revenue, but we also have additional expenses, with “the high cost of energy.”

The full costs of fuel and ERCOT power purchases are passed through to us, the customers. That charge appears on the Power Supply Adjustment line on our electric bills. The summer demand surge will undoubtedly push the charge higher. The fixed monthly amount is modified each year in November.

It’s true that Austin Energy’s revenue transfers to the general fund are not the same as a private business profit. But, here we’re talking about a revenue surplus – a windfall. In a recession or a time of high inflation, the revenue surplus can be used to keep customer rates stable. (Hint for the City Council)!

Imagine this historic seasonal windfall, with a new base rate increase stacked on top of it! That would generate even more tens of millions of extra revenue – every year. There are suspicions that the City wants to dodge the Legislative property tax cap with higher general fund transfers.

Here’s The Rub – Get Ready for a Snub!

The rate increase proposal would shift some base rate costs away from big businesses, onto residential ratepayers. And it would upend the residential rate tiers, pushing higher costs onto low and middle-income folks. We simply can’t let that happen! It’s a slap in the face in a city with extreme income inequality and an affordability crisis, plus high inflation.

It’s Time For a Call to Action!

S-T-R-I-P: Stop The Rate Increase Proposal

Nip It, Skip It, STRIP It!

My plan is to meet with neighborhood groups and civic organizations across the City, to explain what’s going on here. This is my fifth decade of affordability activism. I served on the City Electric Utility Commission from 1985-1990. This time around, we may have a victory in the palm of our hands. There are four City Council seats and the Mayor’s race on the ballot in November. Even if the current City Council adopts the lopsidedly unfair rate proposal, the new Council could scale it back or STRIP it completely. It’s up to you and me and our friends and neighbors, to elect a consumer-friendly Mayor and City Council. We can do it! Any future rate increase must not penalize small users, and it must protect residential and small business ratepayers!

Here’s What You Can Do to Help

1. Contact every City Council member and the Mayor. Ask them to STRIP (Ooooh!…They can do some of it behind closed doors, subject to the open meetings law limitations).

2. Ask the City Council to put senior discounts on the fixed customer charges for every category on our utility bills. It’s high time for the City to help our longtime residents.

3. Alert your friends, family, neighbors and co-workers. Send them the link to this blog piece.

4. Subscribe to this blog to stay up to date on our path to victory. A convenient STRIP Guide will soon be made available. It will tell it like it is in plain, simple language. The veil of special interest subterfuge will be peeled away and clearly exposed. We will wrestle our publicity-owned utility away from the special interests, and give it back to the people!

Use These One-Click Links to Send Emails to the City Council:

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 “Chio” Vela jose.vela@austintexas.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

Musical Accompaniment for This Blog Posting:

1. “Let’s Call The Whole Thing Off” – Harry Connick Jr., from “When Harry Met Sally”
2. “The Stripper” – David Rose, 1962 #1 song
3. “Behind Closed Doors” – Charlie Rich
4. “The Streak” – Ray Stevens
5. “Heat Wave” – Martha & the Vandellas
6. “Windfall” – Rick Nelson
7. “77 Sunset Strip” – Don Ralke
8. “Tell It Like It Is” – Aaron Neville
9. “The High Cost Of Living” – Wood’s Tea Company
10. “When The Lights Go On Again” – Mary Duff

Two More Electric Bill Shocks Are Coming!

By Bill Oakey, July 21, 2022

If you have seen your latest electric bill, you know that the historic heatwave has pushed it way up. That’s bad enough – with rents skyrocketing, along with gasoline, grocery bills and property taxes. But strap yourself in…The second and third episodes of this ugly electric bill drama are right around the corner. At least we may have a chance to slow down or significantly curtail Episode 3. But that will require a call to action, with a united citizen backlash. (I’ll be on the front lines for that!)

Episode 2 – The Power Supply Adjustment Charge

The sky high bills that we are seeing this summer are simply based on our usage – the number of kilowatt hours that we consumed in order to beat back the heat. Most of us were propelled into the third tier of the base rate structure. Anything above 1,000 kilowatt hours is billed at a higher rate. It doesn’t take much to jingle the cash register to $25, $50 or $100 above the normal charges that we are used to seeing.

So, you might wonder, how could it get any worse? Well, there’s the little matter of power generation costs – Austin Energy’s fuel costs, plus their energy sales and purchases through the ERCOT power grid. Those net costs are passed through to the customers, but there’s a hitch. The Power Supply Adjustment is a fixed monthly charge. Austin Energy and the City Council only recalculate it once a year. So, this summer it’s relatively small. That’s because we had a mild summer last year, before the latest calculation was made. The adjustment charge will be reviewed next month, as part of the City’s annual budget discussions.

That’s when the next shockwaves will probably come to light. Many Texas utilities adjust their fuel charges and ERCOT net costs on a monthly basis. Statewide news reports are filled with grim accounts of skyrocketing electric bills. They cite the huge spike in national gas costs for power plants. That’s because of the war in Ukraine and the worldwide heatwave. Texas is one of the highest U.S. gas producers. We are exporting lots of it to Europe.

That’s where supply and demand kicks in. It falls to ERCOT to regulate the daily sales and purchases of electricity across the state. Because of the Big Special Interests who created this system, and lobbied the Legislature to keep it, we’re screwed! During peak demand periods, the price per megawatt hour for ERCOT transactions can skyrocket. The normal rate of $40 to $50 per megawatt hour can legally spike up to $5,000 per megawatt hour. It shouldn’t hit that cap unless the grid goes into a weather emergency, like it did during the 2021 winter storm. But it has already swung to well over $1,000 per megawatt hour at times, during this heatwave.

For now, we are at arm’s length from Episode 2 of electric bill shock. I have asked the City Council to give us some sort of estimate of how bad it might be. Austin Energy actually made a $100 million profit during the winter storm. They produced more electricity than they were allowed to use. So, they sold it through the grid and netted a profit. But without any usage restrictions yet this summer, we are probably on the hook for high power purchase costs.

Episode 3 – A Ludicrous and Outlandish Rate Increase Proposal

As mentioned in my last blog posting, Austin Energy wants to jack up the fixed monthly customer charge from $10.00 to $25.00. That extra $15 per month would generate a stunning annual windfall of $84 million. Suspicions abound that a great portion of that would be transferred to the City’s general fund. They could be planning to circumvent the Legislature’s 3.5% revenue cap on property tax increases.

In addition, the rate proposal calls for increasing the charges for small users of electricity. This is a shameful act from Austin Energy. Austin’s “inverted block” rate structure was never based on “cost of service.” It was proudly established over 40 years ago, pioneered by Austin consumer and environmental icon, Shudde Fath. Sticking low-income residents with such a penalty during a city affordability crisis should be unthinkable. Let’s just hope that the City Council agrees. In the meantime, we’ll have to wait out a formal rate hearing process, peppered with reams of paper full of lawyerly crosstalk and legal jumbo-jumbo.

By the way, we may not even need a rate increase. Austin Energy will be earning historic profits from a record hot season from May through September. I’ve asked the City Council to request an updated estimate on that.

A Blast From the Past

This is my fifth decade as a consumer activist in Austin electric rate battles. In the early 1980’s, I defeated a 20% electric rate increase, by getting it cut in half. Late one night, I discovered a “magic sentence” in the City Budget. It stated that the 20% rate increase was based in part on the passage of lignite bonds in a City election. Well, the budget was adopted before the election, and the lignite bonds failed. City staff forgot to mention that detail to the City Council when they passed the rate increase.

Part 1 – The Wild, Crazy Adventures Of A City Hall Watchdog

By Bill Oakey – May 5, 2021

If you have been reading this blog, you may be wondering – Why does this guy think he can beat City Hall? Well, I didn’t ask myself that question, back in1983. That’s when all the crazy adventures started. Stick around for a few wild stories, all of them the honest-to-God truth.

My First Encounter With the City Budget

In 1983, I had never met a City Council member. I don’t think I even knew all of their names. But I did know one thing. The newspaper sitting on the desk in the downtown accounting office where I worked was begging for my attention. So, once my lunch break came, I read the front page article.

It said, “City Council Approves 20% Electric Rate Hike.” I asked myself, how in the world could that be? Who ever heard of a rate increase that high? City Hall was only a few blocks away, so I took off walking over there. I was told that the rate increase was all explained in the City Budget. They gave me a copy, and I took it home that evening.

My newest circle of friends were folks I had met at Austin Neighborhoods Council meetings. Larry Deuser, their president, held some fun, informal gatherings at the Copper Skillet at 3418 North Lamar. I showed up with my nose stuck in the City Budget. That raised a few eyebrows. Who is this guy, they wondered? Is he really one of us? Who lingers over those boring numbers in the City Budget?

Late one night, probably close to midnight, I sat straight up in bed. I stared at one amazing sentence in the introduction to the Budget. I read it twice, just to be sure. To paraphrase, it said, “The 20% electric rate increase is based in large part on successful passage of the lignite coal bonds in the October election.” Well, the Budget was adopted and signed in late September. It took effect on October 1st. The lignite bonds failed by a comfortable margin in the October 22nd election. That was thanks to flower salesman, Max Nofziger’s clean energy campaign. Max was later elected to the City Council.

The next day after the big sentence discovery, I called Council Member Sally Shipman’s office, and asked for an appointment. Her name had been mentioned positively by some of my new friends. I had zero clout at City Hall, but my revelation prompted them to schedule an appointment with Ms. Shipman at the Avenue Restaurant at 908 Congress.

To this day, I wish I had a picture of the look on her face, when I slid the Budget across the table and showed her the “magic sentence.” She gave me the most vociferous apology I had ever heard. She said the City Staff had never called it to their attention. She swore that she would never have voted for a 20% electric rate increase if she had known that information. I took her advice and spoke to the City Electric Utility Commission at their next meeting.

Fast forward a few weeks to a City Council meeting that holds special memories. The Electric Utility Commission gave their monthly report. Included was my recommendation to cut the rate increase in half, to just 10%. The City Council agreed. Then my mom in San Antonio finally quit saying, “You can’t fight City Hall.”

One of Austin’s most colorful characters back then was Peck Young. Among many other things, he served as chairman of the Electric Utility Commission. It’s hard to describe him. He always wore a drooping, white cowboy hat. If he launched into a tirade, just the wind coming from his direction was enough to make people scatter. But I was not easily intimidated.

In my humble opinion, Peck was right on the issues, most of the time. But we came to verbal blows one morning on KLBJ-AM, on the Olin Murrell show. I was trying to get the City Council to pass an ordinance regulating the transfer of Electric Utility profits to the General Fund. I understood its purpose, but the amount had been growing by about 20% per year. Peck argued vigorously against me, but the City Council passed the ordinance that I suggested.

The 1985 City Council election was a moment for triumphant celebration. We elected a progressive slate of candidates, hoping to slow down the developers, protect neighborhoods, and save Barton Springs and the Barton Creek Watershed from pollution. The new Mayor, Frank Cooksey, was joined by George Humphrey, Sally Shipman and Smoot Carl-Mitchell.

I joined a group of friends on election night. In those days, we took our campaign signs to Palmer Auditorium, and stood behind our candidates in the bright glare of the television lights. The whole town was caught up in the excitement, for better or worse. Shortly after I walked into the auditorium, I saw a familiar figure heading towards me. It was the first time I had seen Peck Young since the KLBJ radio encounter. He approached with a broad grin on his face, and stuck out his hand. “How would you like to be on the Electric Utility Commission?” he asked. Needless to say, I was flabbergasted.

On the Commission, we oversaw more than a few heated rate battles, mostly because the big high tech companies always wanted deep cuts, at the expense of residential customers. Peck Young, Merl Moden and Shudde Fath stood squarely on our side. Shudde was, and still is an iconic Austin legend. As a founding member of the Commission, she was my mentor. Shudde turned 105 this past January.

My Name Is Bill And I Would Like To Lower Yours

As the electric rate battles raged in the 1980’s, I often found myself buried in thick reports, laced with arcane terminology and mounds of details. It wasn’t until late in the decade that most people had personal computers. So, I relied on a pocket solar calculator that I had purchased at Foleys for $20.00.  My biggest challenge was trying to reach the public with plain and simple facts. We were up against powerful special interests, who had more clout with the City Council.

I was in several media debates with the chairman of the Federation of Austin Industrial Ratepayers. During that time, I wrote a letter to the editor for the Austin American-Statesman. It went something like this:

Isn’t it interesting how many English words have more than one meaning. Take, for example, the word, “bill.” Birds have bills, entertainers are listed on bills, the Legislature passes bills. But the worst kind of bill is the kind you have to pay – the kind that keeps going up, like an Austin electric bill. Well, I have a very simple message. My name is Bill and I would like to lower yours.

The last line became my slogan.

Coming up in Part 2 – The City spends over $200,000 on a hearings examiner and other trappings for a convoluted rate-setting spectacle. And the strange case of $43 million that disappeared from the Electric Utility accounts.