Home Energy conservation Austin Energy changes original proposal at base rate review conference, but critics say it’s not enough

Austin Energy changes original proposal at base rate review conference, but critics say it’s not enough

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Tuesday July 26th, 2022 by Kali Bramble

As the grid works overtime to absorb record heatthe battle over energy prices continues.

Austin Energy met face to face with stakeholders earlier this month with its proposal to raise and restructure rates, citing widening revenue gaps threatening utility finances. The three-day hearing consisted of hours of cross-examination, with interest groups challenging the case from multiple angles.

“Austin Energy has lost $90 million over the past two years…and just two weeks ago Fitch’s credit rating downgraded Austin Energy from AA to AA minus,” the lawyer said. Thomas Brocato. “Despite customer growth, revenue growth is hampered by outdated rate designs that rely too heavily on energy sales, particularly in the residential category. Accordingly, Austin Energy proposes to approximate these classes to the cost of service. »

Hoping to appease backlash, Austin Energy led the conference by announcing a proposed new revenue requirement of $35.7 million, a decrease of 25% from its original figure of $48.2 million. Still, industrial and residential consumer groups have argued that the drastic increase in utility base loads poses undue risks to Austin’s economy.

Texas Industrial Energy Consumers, NXP Semiconductors, Data Foundry, Sierra Club, Solar United Neighbors and an independent consumer advocacy group quibbled over details but agreed Austin Energy had inflated revenue gaps, ignoring the total impact of winter storm Uri in its test year. From there, opinions are divided, with different approaches both to calculating revenue requirements and to allocating costs between residential and industrial customers.

The utility’s proposal to increase its flat monthly fee from $10 to $25 is particularly controversial, a change that residential consumer advocates say would disproportionately impact low-income users and those with the least energy consumption. ‘energy.

“We see the impact here, especially on the smaller users, is dramatic…so much so that I’m not sure the information Austin Energy provided to the public fully prepared them,” the independent advocate said. consumers John Coffman. “The residential class impact as proposed would be 17.6%, not 7% ​​system-wide…that’s a rate shock.”

Adding fuel to the fire was an argument that emerged between the independent consumer advocacy team and attorneys from Texas Industrial Energy Consumers, a coalition that represents the state’s largest commercial energy users. Experts from both sides argued competing approaches at cost allocationwith industry advocates pushing a peak demand-based method during the summer months, and residential advocates pushing an intermediate base-to-peak method following usage patterns throughout the year.

Of course, under this quarrel of methodology was hidden a battle between classes of consumers and who should pay the price. Both methodologies differ from the 12-month coincident peak method used in Austin Energy’s original proposal.

Another battle has coalesced around efficiency, with the Independent Consumer Advocacy Team and the Sierra Club noting that Austin Energy’s current flattening 5 Tier Pricing Structure into three tiers would undermine efforts to encourage energy conservation. Along with recouping revenue primarily through a fixed monthly fee, stakeholders are concerned that the financial incentives to cut are virtually imperceptible.

Austin Energy’s proposed restructuring of the value of the solar tariff, which provides discounts customers equipped with solar panels. More complex and prone to volatility, some fear the new formula will deter further investment in renewables and betray customers already committed to the program. In light of broken promises to shut down the Fayette plant by the end of 2022, environmental advocates have raised suspicions about Austin Energy’s commitment to meeting the demands of the Resource, Production and Climate Protection Plan 2030.

“I think there is no doubt that Austin Energy is truly a leader in environmental activism, bold progressive policy and excellence in efficiency, distributed generation and solar power,” said said Cyrus Reed, director of conservation for the Sierra Club. “But curiously, in this case, Austin Energy is stepping back from that leadership role…by proposing an outrageous increase in fees charged to customers…that violates affordability policies…sends the message that dollars are more important than the environment…and abandoning the existing solar program…which is one of Austin Energy’s crown jewels.

Participants in the base rate review process will give closing briefs this Thursday, while Austin Energy will have the opportunity to present its final case on Tuesday, August 9. From there, the hearing’s independent reviewer will take a month to review the evidence, returning with recommendations to City Council on September 9, which will prepare to discuss the case in November.

Those interested in following the proceedings can find more information here.

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