A Glimpse at AE's GM Candidates
How might these Californians take on Austin's challenges?
Austin Energy's new general manager will be facing no shortage of challenges in coming years, among them rate hikes, the transition to more renewable energy, and a new business model that can encourage conservation while protecting the bottom line. Both candidates for the position – Larry Weis and David Wright – come from California, a state that has led the way in tackling just such challenges. (A third finalist, Ronald Davis of Burbank, Calif., has dropped out of the running.) On Wednesday, Weis and Wright were in town to meet with city officials and were expected to speak at a public forum in the evening. For those who missed the visit, here are some of the candidates' thoughts on how their experiences might shape AE's future.
Larry WeisTurlock Irrigation District, Turlock, Calif.
Weis began his career almost 30 years ago as a "preacher of energy efficiency" in commercial and industrial buildings, he says. Today, he is general manager and CEO of Turlock Irrigation District, a publicly owned water and electric utility that draws 28% of its power from renewable resources, the highest percentage in the state, says Weis. With the exception of a contract with Oregon's Boardman coal plant, Weis says, TID owns and operates all of its generating resources: "Strategically, what I've tried to do with renewables is not get into purchase power agreements where a few years down the road we've got to do it all over again."
TID has taken on four rate increases during Weis' decadelong tenure. "What I've tried to do ... is get us to 28 percent without having huge rate shocks, and I've been very successful at it," he says, warning that it's best not to get "too ambitious too quickly." Smaller, more gradual rate adjustments have eased the transition, he says, as has TID's decision to leave its contract with the coal plant in 2018 to avoid the costs of investing in emissions-reducing technologies.
"As you move forward into distributed energy and other programs," says Weis, "you also need to be very careful about how your rates are designed. It's very difficult to sort of lead the customer down this path unless they know there's something in it for them, and incentive-based programs that offer a carrot instead of a stick is the philosophy that I tend to follow." Rather than tiered rates that punish customers for using energy at peak hours, Weis says he prefers incentive-based programs that say, "If you reduce your peak [usage], I'm going to pay for it."
David WrightRiverside Public Utilities, Riverside, Calif.
Before becoming general manager of Riverside Public Utilities five years ago, Wright began his career as a certified public accountant, followed by a stint as city controller, after which he entered the utility as a chief financial officer. "Because I came up from the financial side," says Wright, "I'm really into: What are our goals? How can we do it? How can customers afford it?" Wright says that as long as AE conducts a cost-of-service study that accurately reflects its true goals, the rates will be set appropriately and "the revenue will naturally follow." However, he says, "if you put those goals into your cost of service study and it throws your rates beyond what your customers are willing to pay, then you have to go back and revisit your goals."
Right now, says Wright, Riverside is getting 19.8% of its power from renewables, putting it right on target for its goal of 20% by the end of the year. Wright has overseen two cost-of-service studies and tackled rate restructuring. Such initiatives work best when "you talk to every community group you can and get them educated on why you need it," he says.
Wright supports time-of-use rates that send "a much stronger price signal so customers adjust their usage patterns ... to lower-cost time frames." However, he says, "you have to be careful" to maintain affordability for low-income customers, especially the elderly, who are often stuck at home during the hottest – most expensive – part of the day. "It actually has health impacts," he says. Riverside's solution has been to ensure "that the peak price in the summer isn't quite as high as [the cost of] our resources," while the winter prices aren't quite as low. Wright also supports programs to provide services such as free insulation to low-income customers: "It lowers their bills, rather than create this low rate that doesn't have any benefit of encouraging conservation."