Tag Archives: Austin Energy

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.