By Cyrus Reed
As many Austin Sierrans know, Austin Energy has been engaged in a public discussion on the 2016 Austin Energy Rate Case, which would go into effect in October. Sierra Club recently joined forces with Public Citizen and were represented by attorney Carol Birch in the rate hearing, which ended last week. The Hearings Examiner - Freddy Herrera — will make his findings on July 15, followed by a public meeting at the Electric Utility Commission on July 18, and then several hearings with City Council in August.
Below is Sierra Club’s and Public Citizen’s opening statement for the hearing, where we laid out our vision for new tariffs and riders to promote solar, demand response, storage, and maintain our tiered rate system, while preparing for decommissioning of our oldest natural gas plants and the Fayette coal plant. Our statement was read into the record by Lone Star Chapter Conservation Director Cyrus Reed. For a list of all approximately 400 items filed thus far in the rate case click here.
The positions that Public Citizen and Sierra Club have taken in this rate case are designed to help Austin Energy, the utility owned by the People of Austin, chart a course into the future. Our proposals will help Austin Energy get out of our oldest gas and coal plants, reduce emissions, create affordability, spur innovation and new technologies, and reflect the value of our community. Thus, we believe our proposals make economic sense, provide price stability, and will protect the health of Austin’s citizens.
Our proposals are intended to implement the wide policy positions taken by Austin Energy’s Board of Directors, the elected city council, which value moving toward a net-zero carbon utility while maintaining affordable bills and keeping a transparent, responsive utility.
First, we believe that in the new market in which Austin Energy operates, the cost of our generation units must be based upon the energy they produce for different customer classes, and not upon a limited number of hours, be it four summer peaks, as some industrial consumers are arguing, or 12 peaks, as Austin Energy is arguing. Fairness dictates that a cost allocation method must be developed which reflects how these generation resources are actually used in our nodal market.
Second, we believe that a residential rate design that spurs innovation and rewards customers that reduce their energy use must continue. We disagree with the proposal by Austin Energy to “flatten” the five tiers, and eliminate summer and winter base rates, in return for a seasonal Power Supply Adjustment. Instead, we should continue to have steeply tiered rates, consider a lower monthly customer charge for apartment dwellers, and extend the five tiers to the out-of-city residential customers. Any residential rate decrease can be spread evenly among the five rate tiers, while maintaining the incentive to conserve energy.
Third, we support Austin Energy’s original proposal to charge all customer classes that currently pay the Energy Efficiency Service Tariff a similar EES tariff, but believe it should also be charged to high-load primary voltage and transmission customers. This will assure that all customers pay into and benefit from the energy efficiency, demand response and solar programs. Austin Energy should offer programs that can be accessed by all customer classes, both inside and outside the city, and all classes should pay for these programs. We disagree with a more recent proposal by Austin Energy to make residential customers pay for roughly two-thirds of the EES programs by charging them three times the amount that other customer classes would pay. Austin Energy should return to its original proposal and also extend the fee to high-load customers.
Fourth, we are supportive of efforts by Austin Energy to assure that sufficient revenues are recovered and set aside for the decommissioning of Decker, Fayette Power Plant, and eventually Sandhill. We believe City Council has set a course for retirement of these units in the future and it makes far more sense to set aside money now, rather than put these costs on future ratepayers. Similarly, we believe that City Council has set a date for the retirement of Fayette Power Plant, and has also told Austin Energy to create an account to pay off the debt of FPP when the main debt becomes callable. In October 2014, City Council ordered Austin Energy to begin talking with LCRA and produce a memo discussing a possible course for retirement of Fayette. That memo led directly to the idea of defeasing the debt when the majority of it became callable in November 2022, an idea that was directly adopted by City Council on December 11, 2014. While we originally relied upon information that some $189 million was still owed on FPP, we now know the amount is closer to $165 million, and believe that some $24 million per year should be set aside over the next six years for the defeasement of the debt owed on FPP. This is not fantasy but an actual policy direction from City Council and it makes sense to establish this today in the rate case.
Fifth, we believe that Austin Energy should and must be a leader on new technologies and the incorporation of distributed resources as a utility of the future. We believe that Austin Energy has a solar program that is working well in part because of the adoption of a Value of Solar for residential ratepayers. As such, there is no reason to not go ahead as part of this rate case and adopt a commercial Value of Solar as well as a community Value of Solar now. By doing this, Austin Energy will help reduce the need to provide separate incentives for commercial and community solar. Indeed, by adopting a tariff today, Austin Energy will create a market for the development of distributed solar which will be of benefit to our goals and our bottom line.
Similarly, we support Austin Energy’s proposed storage rider -- known as the Load Voltage Rider, though we believe a more transparent name and description of the rider are needed. Furthermore, we should and must adopt a rider for residential storage and also develop new tariffs for residential and commercial demand response programs. Austin Energy should and must be a leader on these new resources, and developing tariffs and riders now will help our community develop dispatchable distributed resources like demand response and storage.
Our utility is unique. publicly-owned, transparent, and a leader in Texas on clean energy issues, our rate design should reflect these community values. Making sure our rates and tariffs support energy efficiency, onsite solar, demand response and storage, while setting aside decommissioning and debt defeasement funds today for the eventual retirement of our dirtiest fossil fuel plants is the right thing to do.