Point Austin: Electric Shock

AE's 'regressive' rate proposal brings out little guys and their advocates

Point Austin
In the ongoing debate over the cost and necessity of Water Treatment Plant No. 4, opponents often criticize the city's water utility by holding up its counterpart, Austin Energy, as an example of a well-run utility with cutting-edge conservation programs. Now, to hear environmentalists and consumer advocates tell it, Austin Energy – at least its business side – is tarnishing its progressive credentials with a proposed rate increase that threatens to stiff the little guy and discourage conservation.

It's been 17 years since AE has sought a rate increase, so at first blush, asking customers to pay more for electricity sounds entirely reasonable. But under the current proposal, residential ratepayers who use the lowest amount of electricity would end up paying the largest rate increase. At a Sept. 1 public hearing – the first of four scheduled before the Electric Utility Com­mis­sion – testimony from consumer advocates, including several with professional expertise in rate cases, asserted that the spike would have a devastating impact on two groups of people: older citizens on fixed incomes and the working poor.

Several AE customers attended the second hearing on Sept. 16 to back up those claims with personal stories about how they make ends meet from day to day. Shirley Johnson, who described herself as elderly and "well past senior citizen," told the commission she does everything possible to keep her household costs down. "I believe that everybody should conserve," she said. "I use my air conditioner only after 7 o'clock and take three-minute showers and don't run the water while I'm brushing my teeth." Her last electric bill, she added, showed she only used 314 kilowatt-hours. "And that's keeping it pretty warm" – so warm, in fact, that her cat has taken to sleeping on the tile floor in the bathroom where it's cooler. A young mother and Austin Community Col­lege student told the commission that she and her husband and children were priced out of their apartment and had to move in with her parents, where the extended family goes to great lengths to save electricity and water. "My dad has installed ceiling fans in every room, all the appliances are unplugged, I bathe my two daughters together to save water," she said, her voice trembling as she spoke. Her goal, she added, was to complete her education so she can work and help her family make ends meet.

We can expect to hear more stories like these over the next few months, and they could serve as a reality check for the city as it paves the way for more growth and its associated costs. A third hearing before the EUC is scheduled for Monday, Oct. 3, 6pm, at Austin Ener­gy, 721 Barton Springs Rd. The fourth and final hearing is Oct. 17; the case then goes to City Council for additional hearings in November and December. New rates are expected to take effect early next year, but the proposed package is not off to a good start at the commission level. The way things are going with public testimony, counter-presentations, and very pointed questions from the newest EUC member, Barbara Day (a Kathie Tovo appointee and a former attorney with the Office of Public Utility Counsel), it's likely the rate design will look somewhat different than what's currently on the table.

Chunk of Change

According to AE, the increase would cost most residential customers less than $20 more per month. That's the short-form presentation that appears in the mail along with your utility bill. But critics charge that the utility is using the wrong method to impose the increase. "The proposed rate design is too regressive – it's as regressive as a sales tax," said Lanetta Cooper, an attorney with the Texas Legal Services Center who in 1994 helped craft AE's existing rate structure. "We want to continue to have a rate design that promotes conservation, and we're concerned that a high customer charge doesn't do that."

By Cooper's summertime calculations, a resident who uses less than 500 kWh per month would see an increase of about $17 a month. "If someone is living on a Social Security income of $700 a month, that's a huge chunk of change for them," she said, noting that a resident using more electricity, say 1,000 kWh per month, would pay less of an increase – about $9 a month. Even under the existing structure, says Cooper, lower residential users are subsidizing large residential users, and residential users overall are subsidizing industrial users. "It costs us more to serve the energy hogs because we have to invest in more generation plants," she says.

Environmental activist Paul Robbins countered the assertion that poor people use more electricity, a suggestion made by AE staff. He obtained residential consumption information from the utility and matched it according to ZIP codes and household incomes from the latest census data. "Households with incomes over $88,000 consume about twice as much electricity [as] people making less than $37,000," Robbins told the commission. "Since about 70% of customers use the lowest amount [of electricity], they'll get the brunt of the increase."

Several of the customers who spoke at the Sept. 16 hearing were there because of nonprofit organizations and community advocates who helped spread the word about the proposed increase and the public meeting. One of them, Johnny Limon, testified about his 97-year-old mother who still lives in her own home. She has $700 a month in income, but roughly $350 of that goes to her electric bill, driven up by the fact that she lives in a drafty old house and relies on oxygen. He says his mother is "blessed" to have family members who can help care for her, but many of the people to whom he delivers meals as part of the Meals on Wheels program aren't so blessed. "I am here to say these people are going to have a very hard time being able to pay anything else out of their fixed incomes. The sad thing," he added, "is that the majority of people who are going to be affected negatively aren't going to know it until they get their first bill."

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Austin Energy, electric rates, Lanetta Cooper, Texas Legal Services Center, Paul Robbins

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