Austin Energy, planning major changes to its rate structure, has taken the unusual step of hiring a consumer advocate, Bill Marcus of Sacramento-based JBS Associates, to represent customers through the process.
But Marcus will not have it easy; many think the municipal utility’s rate plan will hurt low-income customers, and a leading mayoral candidate says a consumer advocate hired by the muni represents “a built-in conflict of interest.”
Austin Energy over the past several years has earned a reputation as one of the nation’s most forward-thinking utilities, with a voluntary, 35%-by-2020 renewables goal and program that provides aggressive support for making buildings more energy efficient. But the utility has faced a growing problem: the flat charges in its rates cover less and less of the fixed costs it incurs to provide service.
Last December, the muni proposed a 12.5% rate increase and new rate structure under which the monthly “customer charge” for the residential class would double to $12 from $6 to enable Austin Energy recover more of what it said is the $19.70 in fixed costs it spends per customer for billing, meters, call center and other account management.
The muni also proposed a new $10/month “electric delivery charge” to pay more of the $14.42 fixed cost to serve each customer for the construction, maintenance and operation of the electric system. Further, it proposed expanding the current two-tier inclining rate structure for energy to a five-tier structure; customers who use less power would pay the lowest rates per kWh.
Responding to customer input, Austin Energy in February revised its proposal, this time calling for an 8.7% rate increase this year, followed by a 3.8% hike in 2015. To reduce the effect of rate increase on low-income and fixed-income customers–and to encourage energy efficiency and conservation–the muni also tweaked the customer charge portion of its original plan to include the first 200 kWh/month of energy use in the charge.
Further, Austin Energy proposed increasing to $7.2 million (from $3.1 million) annual funding to provide utility bill discounts to low-income customers; the funding would be paid for in part through a $1/month charge on residential bills.
Despite Austin Energy’s efforts to educate customers about what the muni said is a real need for high rates and a new rate structure, the utility’s initial and updated proposals have faced strong and vocal opposition from a long list of consumer and environment groups, including the Texas office of Public Citizen, the Sierra Club, Texas Ratepayers Organization to Save Energy, and the Texas Legal Service Center.
The muni’s rates have also emerged as an issue in Austin’s 2012 campaign for mayor. Brigid Shea, who is challenging Mayor Lee Leffingwell, said in a recent statement, “We need to hire an independent consumer advocate to look out for ratepayers, not the current arrangement where the consumer consultant works for the utility–that’s a built-in conflict of interest.”
She also said criticized Austin City Council, which oversees Austin Energy, for what she said has been its “failure to say no to unaffordable power, such as a $2.3 billion wood-burning plant” from which the muni has committed to buy power.
–Housley Carr