Tag Archives: Austin Energy

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

The Big Electric Utility And Climate Change Dilemma – And How To Solve It

By Bill Oakey, August 1, 2022

Electric Utilities Can’t Make a Profit

It’s simple economics. If homes and businesses get too energy efficient, the utilities can’t sell enough electricity. And yet, most offer home weatherization programs, and credits for rooftop solar panels. These utilities have whole divisions that do nothing but promote energy conservation, and they directly help customers achieve energy efficiency.

But now, many utilities find themselves facing a potential death spiral. Here in Austin, rapid growth requires expanding the utility services. City regulations do not require enough developer fees to cover all the costs associated with adding new customers. In addition, homes and businesses have become more energy efficient. As a result, Austin Energy has been losing money. They are not selling enough electricity throughout the year. Their solution is a hefty base rate increase. Austin Energy’s revenue bonds were downgraded to AA- in June. They told the Fitch bond rating service that additional rate increases, beyond this one, may be necessary.

The Utility Death Spiral Is Easily Explained

Austin Energy faces a daunting dilemma that they share with other utilities across the country. Rate increases as an ongoing business strategy will almost certainly backfire. They will push builders, homeowners and businesses to implement energy efficiency solutions at an accelerating pace. Businesses that sell solar panels have already stepped up their advertising. It’s easy to see that a whole series of rate increases, each followed by similar market responses, would drive the utility into a death spiral.

Within the next ten years, Austin residents and businesses will have a significantly lower demand for purchased power than they have today. We will always need electric utilities. As connected customers, we are assured of reliable service, assuming that the power grid holds up. But, future declines in electricity sales are inevitable. So, it is imperative for Austin Energy to find a new direction, and change their business model. Their very survival depends on it. If they don’t get it right, the City will face an additional, ominous revenue shortfall. Austin Energy’s transfer to the General Fund will have to be reduced.

If Utilities Try to Wage a Battle Against Technology, They Will Lose. And the Country’s Climate Change Efforts Will Suffer

I recently wrote a blog piece about an incredibly exciting climate change opportunity. CNN did a major study on the potential benefits of large-scale rooftop solar installations at big-box retail stores. Read that piece to get all the details.

But, the big dilemma comes back to bite us again. What if every Walmart, Home Depot, Lowes, big warehouse and distribution center across the country put solar panels on their rooftops? What if Austin put one on their massively expanding convention center? Austin Energy and the other utilities would sell a lot less electricity. And yet, we’d be addressing climate change. Severe drought, intense hurricanes, wildfires, epic flooding and West Coast water shortages might finally begin to subside. Further mitigation will become possible, once battery storage technology gets more efficient and affordable.

Some Utilities Are Pushing Back Against Solar Panel Credits

The seriousness of the utility profit / climate change dilemma is laid out in a disturbing article from NBC News, published in May. Utilities in some states are reducing their solar energy buyback rates. Austin Energy’s solar buyback program could be weakened, as part of their new rate proposal. The Sierra Club and Public Citizen are intervening in the case, to protect solar-use customers. In Mississippi and other places, utilities are telling their State regulators that maximum buyback benefits are no longer economically viable for them. The most stunning example is California, where drought and wildfires are prevalent. A battle over huge reductions in solar buyback rates has been raging there since January. Governor Gavin Newsom should step in and defend solar credits.

Utilities Need to Embrace Declining Electricity Sales

The pushback by utilities against technologies that help their customers is a major threat to national climate change efforts. The outdated utility business models are as dangerous to the environment and the planet as fossil fuels and carbon emissions. To put it quite simply, gradually selling less electricity over time must become one of the utilities’ primary goals. How to make that happen, while keeping the utilities in stable financial condition is the challenge.

Maybe the U.S. Congress Can Help

Congress is poised to pass a historic climate change bill this week. Funding will be available for energy efficiency programs and infrastructure improvements on a large scale. I have requested an appointment with Congressman Lloyd Doggett, during the August recess. One of the topics I would like to discuss is the daunting dilemma that is described here. Maybe Congress could    facilitate a series of discussions among climate scientists, utility company executives, State regulators and business strategy experts. They could task them with studying the dilemma and finding ways to resolve it. Our utilities need to counteract the death spiral, before it’s too late.

A First Step Toward the Solution

We only need to look at the frightening condition of the Colorado River to “get it” about climate change. A recent Washington Post report highlights the West Coast lakes that are drying up. The Austin City Council should stop Austin Energy’s rate increase proposal dead in in its tracks. And they should insist on maximum solar panel credits. The revenue windfall from the historic summer heatwave will buy some valuable time. With innovative planning and a fresh new approach, our city could shine a light on the rest of the nation. We should turn the daunting dilemma into an exciting opportunity for positive change.

A note about the author of this blog: I am a longtime affordability activist, with nearly 40 years of experience observing and participating in electronic utility rate cases.

Austin Energy’s Rate Increase Tied To Not Selling Enough Electricity

By Bill Oakey – July 28, 2022

That headline should jolt anyone out of bed, if they are not awake already. Yes, you read it right! This is a deja vu from a few years ago. We were urged to conserve water. Then Austin Water told us they were raising its rates, because they weren’t selling enough water.

The shocking news from Austin Energy seems outrageous on its face. But the philosophy behind it is chilling and disturbing. Here’s the explanation from Austin Energy’s vice president of finance: “Customers have become more efficient in their energy usage, but the current rate design is not as efficient as the customers, causing the revenue to be unable to keep up with costs. This means the old rate structure was built in a way that assumed the top energy users would to an extent subsidize the lower energy users. However, over the last 20 years, customers have become more efficient in using energy. This has eliminated a large portion of the higher-end energy users, causing Austin Energy to lose revenue.” 

Wow! Let’s think about that statement. He is literally suggesting that wealthy people who have moved into Austin neighborhoods, into big fancy homes, have made those homes more energy efficient. Therefore, the outdated rate design does not allow these folks to pay more and “subsidize” the low and middle-income folks who pay less for electricity.

Austin Energy’s shameless solution is to stick the smaller users with the highest portion of the rate increase. It would guarantee that by raising the fixed monthly customer charge by $15.00. On top of that, they want to decrease the number of rate tiers, and flatten their impact. This will lower the costs for the biggest users.

Here’s Why That Philosophy Falls Apart

1. It would exacerbate the income inequality that underlies Austin’s affordability crisis.

2. Instead of solving Austin Energy’s revenue problem, it would make it worse. Residents and small business owners at all income levels would make energy efficiency a high priority. They would use this link and this link on Austin Energy’s own website!  Yes, Austin Energy is offering us rebates and incentives to conserve. Then, with the other hand, they want higher base rates every month because they’re not selling enough electricity!

3. And get this, folks…The future outlook is even worse. On June 28, the Fitch bond rating service downgraded Austin Energy’s revenue bonds to AA-. Here is a statement from the first page of their report. “The planned rate increase is projected to contribute an additional $48 million in base rate revenues. AE expects additional base rate increases will be necessary to improve the utility’s operating cash flows and leverage profile on a sustained basis.”

Yup, that’s Austin Energy’s brilliant management plan. Watch the customer base shrink, as more homes and businesses install solar panels, energy storage batteries, etc. Have they not been adjusting their operational plans to coincide with the evolving market? It looks like they’re desperately trying to keep the ship afloat, by piling rate increases onto the masses of people who can’t afford to join the solar club.

I Have a Much Better Solution

1. Use the list of single-click links in my previous blog posting to email every City Council member and the Mayor. Ask them to cancel the proposed rate increase. The record daily highs and record high overnight lows this summer are producing historically high electric bills. This will easily shore up Austin Energy’s revenues.

2. The City Council owes it to the citizens to hold a series of public engagement sessions to evaluate the best path forward for Austin Energy. As for the ongoing formal rate hearing process – Nip it, Snip it, STRIP it! A new City Council will be sworn in next January. Why suffer through the agony of the other kind of swearing, that would accompany a raucous and contentious electric rate battle this fall? Citizens and small businesses are already being crushed by high summer bills.

3. Ausin Energy is the most important asset that our city owns. It provides us with electricity. But it is also a vital revenue source for the City’s general fund. Their financial dilemma needs to be carefully evaluated by our new Mayor and City Council. And most importantly, you and I and our friends and neighbors deserve a seat at the table!

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.

Get Ready For A Big Shock – Watch Out For Your Next Electric Bill!

By Bill Oakey – July 18, 2022

We all know that electricity can shock you, if you touch a live wire. But within days, hundreds of thousands of Austinites will be shocked out of their socks, by looking at their electric bills. Make sure you are sitting down before you look.

The basic rates have not changed – yet.  But the historic summer heat wave is causing big shockwaves for three important reasons:

1. The war in Ukraine has caused a severe shortage in Europe of the natural gas used for electric power plants. Texas has been exporting lots of gas to European countries. This has caused our own gas prices to skyrocket. And, even worse gas shortages in Europe may be coming soon.

2. Texas has fallen behind in building new power plants to keep up with climate change and population growth. This article explains the grim consequences.

3. Austin Energy is required to sell electricity at the fluctuating market rate determined by ERCOT. Our ERCOT power grid uses a demand-based pricing structure that allows energy producers and wholesalers to charge wildly inflated prices. No other grid anywhere else in the country uses this terribly flawed system. During last year’s winter storm, the legalized price-gouging caused several Texas utilities to take on massive debts. This summer, the exorbitant rates are not as high as that winter. But at close to $1,500 per megawatt hour, they are staggeringly higher than the normal rate of $40 to $50 per megawatt hour.

Why does Texas use such a crazy, unfair system that can cripple the finances of Texas businesses and families? The simple answer is political cronyism. The Good Old Boys in the oil and gas industry laughed all the way to the bank after the big winter storm. Other fat cats got fatter by making lucrative investments in Texas energy futures on Wall Street. All while many Texans, some who died, sat huddled under blankets, freezing in the dark during that storm.

Did the Legislature “fix” the grid during their last session? Well, they applied a few bandaids. On the financial side, they lowered the power grid price cap from $9,000 to $5,000 per megawatt hour. So, now the outrageous price limit is only 100 times the normal rate. Whoopie!

Here’s a Look at ERCOT’s Recent and Current Pricing:

1. Houston provides a good example.

2. A good overview of ERCOT policies and pricing.

3. Check out the ERCOT dashboard to see the current daily prices for wholesale electricity.

4. Keep in mind that Austin Energy buys electricity and also sells electricity through ERCOT. So, the final impact on ratepayers is the net gain or loss from those transactions each month.

5. Check out this link to compare ERCOT pricing with other U.S. power grids.

We just have to hope that ERCOT doesn’t reach an emergency status this summer, like it did during the winter storm. If that happens, the exorbitant price-gouging will reach stratospheric proportions, and could even last longer than the few days of the winter storm.

Are You Ready for a New Austin Energy Base Rate Increase?

Put down your high-priced bag of groceries, grab a beer and try to swallow this news. Austin Energy is just now wrapping up formal hearings on an outlandish rate increase proposal! The details call for a separate blog posting. But here are a couple of highlights:

1. They want to raise the fixed monthly customer charge from $10.00 to $25.00  As an accountant, I couldn’t resist doing some math. That’s $15.00 per month more for every residential customer in their service area. How much new revenue would that bring Austin Energy in one year? Here’s the calculation:

$15.00 X 467,291 customers X 12 = $84,112,380

And that’s based on customers in Fiscal Year 2021, which ends on August 31. What does Austin Energy plan to do with that huge windfall? The extra $84 million paid in customer charges, before a single light switch is flipped on?

What?? Did I hear somebody say that the City might transfer it to the General Fund? To try to get around the Legislature’s 3.5% revenue cap on increased property taxes? The City Council should strap themselves in, and get ready for an angry backlash. Whatever Austin Energy has up its sleeve needs to be delved into and explained with full transparency. Perhaps they were told to tack on those extra charges. Or, maybe they just woke up from a weird dream and proposed this on their own.

Whatever the case, there are consumer activists lurking in the shadows. We are coming out now, and looking over their shoulders, with calculators and spreadsheets in hand. Finally, here’s just one simple little question for Austin Energy and the City Council:

How Much Extra Profit Will the Utility Make During This Historic Summer Heat Wave?

The number of triple digit daily highs and higher than normal overnight lows has broken all records. And we still have almost two and a half months to go until the end of September. So, Austin Energy will record record profits for the 5 months covering May through September. I am asking the City Council to request that revenue estimate as soon as possible. The need for a hefty rate increase at this time should wither considerably. Just like our grass, trees, flowers and plants. It’s time for a major City Hall reckoning on this entire situation!

How Austin Can Lead The Way On Climate Change

 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

City Council Needs To Throttle Austin Energy’s Huge Fuel Charge Increases

By Bill Oakey – July 25, 2014

When Austin gets embroiled in a formal Austin Energy rate case, it brings on tons of media attention and large crowds of customers at public meetings.  The rate hearings can last for several months.  What you may not realize though is that about 35% of your electric bill comes from the fuel charge.  The bureaucratic name for it on your bill is the “power supply adjustment charge.”

Well, that charge is set to go up in a few months by 4.4%, which is on top of the 4.6% increase that we got last year.  So, we’re talking about a 9% increase over a two-year period.  Like so many City regulations and policies these days, the Austin Energy fuel charge needs a good thorough public review and much better transparency.  It’s like one of those Facebook relationship status deals, where somebody says “It’s complicated.”

Supposedly, the fuel charges are passed through to the customer at no more than what it costs the utility.  But when we hear that natural gas prices have fallen like a rock over the last several years, why would Austin Energy be jacking up the cost?  And why would the increases compound themselves instead of leveling off?  This is where I think Austin Energy has a lot of explaining to do.

Part of the problem is a contracting procedure called “hedging.”  The utility can purchase fuel contracts at the current rate and lock them in for long periods, hedging their bets that price will go up instead of down.  Apparently Austin Energy bet the wrong way and lost awhile back.  And then there’s a situation during periods of high demand, like our unusually cold winter, where they have to purchase fuel at very high prices from the statewide grid.

Here Are the Questions That the City Council Needs to Ask Austin Energy:

1. What exactly are the specific factors that add up to a two-year cumulative fuel increase of 9%?

2. What options does Austin Energy have to bring down the cost of fuel in their planning processes?  Do they have a fuel cost management strategy, and is it plugged into a forecast with goals and targets?  If not, let’s insist that they get that done.

3. What is the complete, detailed breakdown of the various categories of costs that get dumped into the “power supply adjustment charge?”  I have spoken with members of the Electric Utility Commission, and they have not been given the keys to this cryptic puzzle?  It’s time to crack it open and shine a light on it!

4. Where can Austin Energy cut their budget to help offset these high costs, at a time when Austinites are getting taxed, charged, and fee’d out of their socks?  Most of us don’t make the six-figure salaries that the Austin Energy executives make.

Today, I am sending this blog posting to all seven members of the Austin City Council.  And I have one other recommendation for them to consider.  They did something right when they appointed a Joint Committee on the Water Utility’s Financial Plan.  They met with the staff and identified a total of $29.5 million in budget cuts between now and next year.  (See it here in Recommendation #5).

What I will ask for is a similar committee to meet with Austin Energy and give their budget a good little haircut.  It’s time for the City to come down to earth and recognize that most of us are having to cut out things that we would like to have but can’t afford.  They need to learn to do the same thing, especially since it is our money that they are spending!

Can We Stop Austin Energy From Wasting Over $40 Million?

By Bill Oakey – June 5, 2014

Update: Response From Austin Energy Is Now Included

If you owned a business that needed more space, what choice would you make on this deal. Would you build a brand new building for $67 million, or would you buy a bigger building with plenty of parking right next door for less than half the price?

Well, guess what…Austin Energy not only wants to spend $67 million for the new building, but on June 12th they will ask the City Council for an additional $9 million to develop the PLANS for it!   The bureaucracy is alive and well, but this time we can’t let them get away with it.

Brian Rodgers, who is well-known for exposing the commercial tax appraisal inequities several years ago, sent out an alert this morning on the Austin Energy building boondoggle.  A broker friend of his advised him that the huge 48 acre campus formerly owned by AMD is available for sale for $25 million.  The address is 5900 East Ben White.  It is located just a few feet away from the spot where Austin Energy wants to build their boondoggle.  The price tag for AE’s dream building comes in at $375 per square foot, which is higher than the going rate for many downtown buildings.  There is also another building nearby that should be evaluated for cost.

Right now, we need to do two things:

1. Contact all seven City Council members, using this link, to ask them to cancel the $9 million planning contract for the new building.  This is Item #13 on the Council Agenda for June 12th. Ask them to evaluate purchasing the former AMD campus at 5900 East Ben White, as well as Building 312 at 6800 Burleson Road.

2. Work with the new candidates running in November to establish a reform.  All proposed City building projects should be evaluated on a matrix against specific alternatives, using strict cost-conscious guidelines.

Austin Energy Responds – What Part of “Affordability” Do They Not Understand?

Late this morning, the Austin American-Statesman posted an online story on the criticism of Austin Energy’s expensive new building plans.  The response from Austin Energy will probably not surprise you.  Vince McGlone, a facilities manager, made this comment regarding the former AMD facility that is bigger and half the cost:

“I’m very familiar with that building, I used to work there,” McGlone said. “It does not suit our needs, it is 1986 vintage equipment. What we’re trying to do with our new suite is create a building that does not draw upon natural resources as much.”

Sandra Strauss-Jones, an Austin Energy project manager, offered this description of the new building that they want.  “The new East Austin building would highlight the green-building practices the utility preaches. It will have solar panels in the parking lot, rainwater harvesting and pedestrian walking and biking trails.”

My Comments:  It would be great if they could provide some type of solar panels for whatever building they get.  There are lots of green building options out there.  They need to go back to the drawing board and find a way to do it cost effectively with an existing, cheaper building.  As for the bicycle and pedestrian hiking trails, I’m sorry.  But we just want you to keep our lights on, guys!  Do your hiking on your own time at your own expense.  Or else, uh, take a hike!  What part of “affordability” do you not understand?

A Look Back At Austin Energy’s Current Headquarters

For a bit of nostalgic history, here is how Austin Energy wound up in their current headquarters on Barton Springs Road.  In the late 1980’s that building was called the Sumiken Building.  A hack “consultant” who had worked in the mayor’s campaign lobbied for the contract to construct that building.  Even though this guy had no real estate license, and often wore no shoes, he received a fat commission for speaking on behalf of the project at City Hall.  Citizens were so outraged by this and other insider deals, that they elected several new council members who were far worse than what we had.  It wasn’t until a few years later that Brigid Shea, Daryl Slusher, and Jackie Goodman were elected on a neighborhood and environmental platform.