Utility commission ponders letting new developments shoulder rate increase

Austin’s Electric Utility Commission is thinking over some suggestions to offer to City Council about Austin Energy’s rate review, which as currently proposed would increase the utility’s base rate by 7.6 percent to make up for a $48 million deficit.

The commission’s budget and audit work group came to this week’s EUC meeting with some discussion items and the beginnings of a recommendation for Council. The ideas include 1) conducting a deliberative customer poll on the proposed rate changes so Council has a broad cross-section of consumer opinions to consider; 2) creating an alternative development fee for builders and developers – as opposed to a general rate increase – if it concludes that the budget deficit is caused by population growth rather than individual usage; and lastly 3) regularly updating the EUC on the proposed rate increases at its meetings.

The proposed new rate structure would decrease bills for higher amounts of consumption and raise bills for lower amounts of consumption in addition to more than doubling the customer service fee to $25. But Commissioner Randy Chapman, who presented the ideas from the budget work group, pointed out that Austin residents historically conserve energy where they can, and the consumer energy consumption rate is fairly flat. What has changed, contributing to the large deficit that Austin Energy is grappling with, is population growth, which has required massive residential and commercial development projects across the city.

Per the work group’s second idea, which was mostly discussed at the meeting, Chapman argued that “We are building a distribution system that is to take into account people who have moved here. For those of us who have lived here for a bit, we have the same electric meters. We have the same poles. We have outages sometimes.”

“The builders, we know they’re paying for the underground wiring in their subdivision or to run a wire from a pole, but the question is … as part of the rate review, if whether the building fees, the builder fees, the development fees are truly covering the cost of the distribution network, current and future.”

It’s a new concept that has not been used before, Chapman explained. The idea is that people who are responsible for the cost increase – in this case, new developments and homes – should pay their fair share.

In other words, Commissioner Kay Trostle explained, “You create another fee structure and let the developers and the incoming new customers pick up that cost instead of spreading it across all residential customers.”

Commissioners made it clear that this concept needs to be studied, and ultimately, their role as a commission would be to provide this innovative idea to Council to consider alongside Austin Energy’s proposed rate review. The work group’s recommendation is still in its beginning phases and needs to be fleshed out before it’s presented to Council.

“I think it’s a very interesting question and it’d be interesting to be studied. I’m not quite certain what the outcome of that would be,” Trostle said.

The independent residential consumer advocate is in charge of bringing residents’ viewpoints to the table when rate structures are being reviewed, Chair Marty Hopkins reminded the commission, saying she’d like to talk to staff about how to appropriately proceed with the idea. 

But Trostle, who brought a copy of the commission’s bylaws to the meeting, chimed in to explain that “the very first purpose of the board is to ‘review and analyze all policies and procedures of the electric utility … including the electric rate structure.’ And that’s what we’re talking about is the rate structure. So I think that there ought to be a way for us to provide some input into what is going to be developed and considered.”

The work group’s concept will appear as an action item at the commission’s meeting next month. In the meantime, Hopkins is going to work with staff to figure out how to initiate a deliberative customer poll and how to work with the independent consumer advocate in their review of the proposed rate structure.

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