Consumer advocates warn Austin Energy rate hike could have devastating impact on residents

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Tuesday, June 28, 2022 by Kali Bramble

As they prepare for next month’s public hearing, participants in the Austin Energy rate review case oppose a proposal to dramatically change the pricing of the city’s electricity supply .

Utility proposes to revamp five-tier structure used to calculate residential service rates in three levels, eliminating existing premiums for higher consumption bands and implementing a uniform monthly subscription fee change from $10 to $25 for all residential consumers. Factoring in small and large business rate adjustments, Austin Energy says these changes will equate to an average base rate increase of 7.6%, but others argue that the figure for residential consumers is closer to 17.6%.

“It’s a complicated set of decisions, and it’s a lot of money,” said John Coffman of the city-appointed Independent Consumer Advocacy Team. austin monitor. “The cost of living in Austin is a big deal on its own…and it could represent a significant amount of money that residents lose in discretionary income. All of these decisions have economic impacts, and that alone could affect Austin’s economy.

In his deposit file released in April, Austin Energy claimed the utility had suffered “financial deterioration” as revenues failed to meet the infrastructure demands of its rapidly growing customer base. This claim is supported by its 2021 “test year” analysis, which identified a base rate revenue gap of $46.8 million.

Yet participants in the deliberation process from a wide range of consumer groups, including the Sierra Club, Texas Industrial Energy Consumers, environmental activist Paul Robbins, NXP Semiconductors and an independent consumer advocacy team, all dispute the analysis by Austin Energy. Reviewers argue that the highly unusual winter storm Uri outages are skewing the data, causing the utility to significantly overestimate its revenue shortfalls.

The participants also take issue with the proposed allocation of premium tariffs, which they say eliminates incentives to save energy and disproportionately impacts customers with smaller energy footprints. The 150% increase in fixed charges for customers is particularly controversial, which critics say would be asymmetrically burdensome for low-income users and outweigh the financial benefits of energy conservation.

“Under Austin Energy’s proposal, the highest marginal cost of energy would be 4.8 cents per (kilowatt-hour), up from 10.81 cents per kWh today,” Ezra Hausman wrote in A declaration on behalf of Sierra Club, Public Citizen and Solar United Neighbors. “This means that the payback time for an energy saving investment (or on-site production) would be more than twice as long as today. Many of these investments may no longer be economically advantageous for the customer. Moreover, customers who made such investments knowing in good faith that their contribution to clean energy and system resiliency would be rewarded, would suddenly experience bait and switch as their ability to control their energy costs would be removed. in favor of fixed fees for customers.

On the issue of low-income households, Austin Energy pushed back on claims that the new rate structure would have a disproportionate impact, citing findings that lower income is not correlated with lower energy consumption. But many have noted that this argument is questionable given that larger-scale research has concluded otherwise, and Austin Energy’s use of customers enrolled in its customer care program as a watermark for energy consumption. low income does not accurately reflect demographics.

While there is a range of professional opinions, Coffman thinks moderate changes to the base rate system could provide Austin Energy with some financial relief while maintaining a fair outcome for residents and small businesses. Among consumer advocates statement, Coffman writes that AE’s base revenue requirement is significantly lower than forecast, in the $6.5 million range, which would reduce the average rate increase from 7.6% to 1%. Additionally, proponents recommend a four-tier structure that retains energy conservation incentives, as well as a significant reduction in the proposed $25 fee.

“AE’s proposed residential customer charges would be more than 2.7 times higher than the average customer charge for investor-owned electric utilities in Texas,” Coffman said. “In no event shall residential customer charges exceed $13 in this instance.”

Austin Energy will file a rebuttal of the critics on July 7, followed by a final conference July 13-15. From there, an impartial hearing reviewer will make a recommendation to City Council, which will hold a public hearing at City Hall in November. Those interested in further investigation can find all documents related to the case on the city ​​clerk website.

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