Austin Energy to Lower Rates while Advancing Environmental Initiatives

Mayor Adler speaking about the Austin Energy rate case settlement on Aug 25, 2016. Council Members Casar and Pool also spoke at the press conference focused on environmental aspects of the rate case. Photo by Dave Cortez.

As of yesterday afternoon, Austin Energy’s rate case officially concluded with a unanimous vote of the City Council.  The result – lower bills for everyone and commitments to address two key environmental objectives.  The utility agreed to develop a financial, legal and technical plan that will allow its portion of the coal-fired Fayette Power Project to retire at the end of 2022.  And the utility agreed to address the need for compensating commercial customers with solar installations for the energy they produce.  These commitments provide a path forward to transition away from burning coal and toward renewable energy.

The 2022 retirement date for Austin Energy’s portion of Fayette was established in the Austin Energy Resource, Generation and Climate Protection Plan to 2025, but a detailed implementation plan is still lacking.  The agreement that Public Citizen and Sierra Club struck with Austin Energy as part of the rate case gives the utility until June 2017 to present a plan to the City Council.  And in the meantime, $5 million will be earmarked in Austin Energy Contingency Reserve as part of the fiscal year (FY) 2017 budget to be used for repaying debt associated with Fayette.  What to do about the debt is expected to be a significant focus of the research Austin Energy will conduct between now and next June.  Austin Energy’s portion of Fayette is responsible for about 25% of Austin’s community-wide greenhouse gas emissions and about 80% of Austin Energy’s greenhouse gas emissions, making retiring the plant a top priority for meeting Austin’s climate goals.  Additionally, the economics of producing power from coal are looking worse all the time, so retiring the plant will ultimately benefit ratepayers, as well as the environment.

The exact details of how to compensate commercial customers with solar will also be decided in the coming months, but a commitment to address this current policy shortfall was part of the rate case agreement.  We will continue to advocate for expansion of the Value of Solar (VoS) tariff to commercial customers.  The VoS, which was pioneered by Austin Energy and first implemented in 2012, is used to calculate bill credits for residential customers with solar.  This formula-based method allows for a transparent examination of the benefits that local solar provides and is structured to be cost-neutral to the utility.  Currently, the VoS doesn’t apply to commercial customers, nor are most commercial customers eligible for net metering (a method of one for one crediting energy produced for energy used).  As incentives continue to be phased out, it becomes even more critical that Austin Energy have good long-term policies in place to fairly compensate customers.  The rate case agreement ensures that the issue of compensating commercial customers for energy produced will be addressed as part of the FY 2018 budget.

We are pleased that the Austin City Council also chose to make adjustments to the residential rates that weren’t detailed in the agreement between Austin Energy and the other parties in the rate case.  Austin Energy had proposed changes that would have raised rates for those who use the least electricity, while reducing them for those who use the most.  We advised the Council that such a change would be contrary to established goals for reducing energy use and would unfairly burden those who had invested in energy efficiency.  In the end, Council agreed and new rates were adopted that will result in reduced bills for all residential customers (rate reductions for commercial customers were already ensured).  The new rate go into effect at the start of January 2017.

Public Citizen’s Texas office worked in partnership with the Sierra Club’s Lone Star chapter for the past seven months to ensure that environmental priorities were reflected in Austin Energy’s rates and financial planning.  Thanks to the many Austinites, including city council members who supported our efforts.