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Then There's This: Another Swipe at Austin Energy

State report calls for slashing low-income assistance program

By Amy Smith, Fri., Feb. 22, 2013

Crossed wires over rates
Crossed wires over rates
Courtesy of Austin Energy

An Austin Energy assistance program that helps keep the lights on in 25,000 low-income households would suffer a devastating blow if a state commission heeds the recommendations of its staff.

In documents filed last week with the Public Utility Commission of Texas – the agency considering an appeal filed by AE customers who live outside the city -- analyst Kristin Cavin stated that the city-owned utility's Customer Assistance Program, or CAP, "is not necessary to provide utility service." Cavin recommended slicing the program's funding from about $9 million to $2.7 million, and said nonresidential customers should be excluded from having to pay for it. As it now stands, all customer classes pay a Community Bene­fit Charge of about $10 a month with their electric bills. In addition to low-income assistance, the monthly charge also helps support street lighting in the utility's service area and energy efficiency services.

A strong rebuttal to Cavin's review was filed Wednesday by two advocacy groups that intervened in the case on behalf of low-income ratepayers.

Cavin's assessment of CAP is just one of many critical dissections of AE's rate increase, which the City Council approved in June 2012, and which took effect in Oct­o­ber. The out-of-city appellants are part of a group called Homeowners United for Rate Fair­ness. One of HURF's chief complaints is that ratepayers outside city limits shouldn't have to pay the same rates as in-city customers because they don't benefit from city services paid for with utility revenues.

Until last week, the low-income assistance program had not been a major bone of contention, but Cavin's recommendations could knock the wind out of AE's ability to assist thousands of working poor families, elderly homeowners, and low-income people with disabilities. (Curiously, Cavin also recommended eliminating a utility discount for Austin ISD, but the school district has not intervened in the rate case.)

Advocacy groups Texas Legal Services Center and Texas ROSE (Ratepay­ers' Org­an­iza­tion to Save Energy) countered Cavin's findings in documents filed Wed­nes­day with the PUC. The groups' expert witness, Barbara Alexander, a consumer affairs consultant based in Maine, challenged Cavin's opinion that the low-income discount and weatherization programs for low-income ratepayers are "non-utility" functions of the utility. "Ms. Cavin's characterization fails to reflect the essential nature of electricity service or the adverse impacts on all customers when a significant percentage of the utility's customers are unable to pay their bills on time," Alexander said.

Moreover, she added, it's common practice at most other U.S. utilities to provide some type of "safety net" for electric customers living at or below the federal poverty level. And it's not just low-income residents within the city who benefit from the program. Advocates point out that several ZIP codes outside the city boundaries reflect "significant poverty" levels. "Under Ms. Cavin's worldview, utilities that refuse to provide any assistance ... should be viewed as reasonable on the grounds that such programs are not associated with poles, wires, rates, rate design, or actual bill collection," Alexander said.

Representatives for the low-income advocacy groups expressed concern for CAP's future in light of Cavin's strong rebuke. The program in its current form was a key dealmaker that led consumer and environmental activists to publicly endorse the overall rate package, which underwent a thorough vetting by Council before its unanimous approval. But as part of the ongoing rate case, the state utility commission seems to be taking the package apart bit by bit, suggesting that the Council-approved $91 million increase wasn't needed, and that the utility is unnecessarily stashing money in its reserves.

"We're severely disappointed," said Lanet­ta Cooper, an attorney with Texas Legal Ser­vices. "We know that the [PUC] has recognized the need for a low-income program, the Texas Legislature has recognized a need for a low-income program, and the Legislature has recognized that it's a business cost that should be shared by all ratepayers." In fact, she said, there's already precedence at the PUC, which approved a low-income program for another utility, with the cost shared among all customer classes.

"The damage is really very substantial," added Texas ROSE's Carol Biedrzycki, in reference to Cavin's recommendations for CAP. "This is not a small hit; it's decimating the program, and that is a major concern."

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