Austin Energy has proposed lowering the price of its latest batch of GreenChoice wind power. The GreenChoice program traditionally offers a slightly higher rate for wind than for nonrenewable sources, then locks in that rate for several years; over time, regular customers’ rates have eventually surpassed GreenChoice prices for most batches, and all past batches have sold out. The current batch, however – priced at 8 and 9.5 cents per kilowatt hour for 5- and 10-year contracts (while regular customers are paying 3.65) – has only sold 1% in seven months.
In a July 24 memo to City Council, AE General Manager Roger Duncan explained that when setting the latest pricing, AE had overestimated the potential transmission congestion costs of bringing electricity to town. AE “assumed that the Hackberry wind plant, which supplies Batch 6, would be assigned to ERCOT’s ‘West Zone’ … and would therefore have higher congestion costs,” he wrote. “However, Hackberry was ultimately assigned to the ‘North Zone,’ thereby reducing its exposure to transmission congestion costs.”
According to Electric Reliability Council of Texas spokeswoman Dottie Roark, ERCOT’s boundaries actually went into effect in January, the same month Batch 6 went on sale. Asked why the utility waited until now to adjust its pricing, AE spokesman Carlos Cordova said, “Even though we knew assigning it to the North was going to have some positive changes, we didn’t know exactly what the impact was going to be.” He also said recent ERCOT “protocol changes” further eased AE’s worries, stoked by 2008’s skyrocketing congestion costs, which have since eased.
AE plans to formally propose the price change, reducing it to 5.7 cents/kWh for all current and future Batch 6 customers, at the Aug. 20 City Council meeting. It will also propose covering future congestion costs with the “fuel charge” – the part of a traditional utility bill intended to pay for fuel, be it coal, natural gas, or nuclear – rather than the GreenChoice charge (which substitutes directly for the fuel charge on a GreenChoice utility bill). That means non-GreenChoice customers would foot the bill for congestion costs previously covered only by green customers – a welcome change for GreenChoicers, who only use brown power intermittently but pay for all the administrative, operation and maintenance, and other costs associated with producing it while also paying, through the GreenChoice charge, for all the costs of producing wind power. Regardless, says AE spokesman Ed Clark, the change is unlikely to make a dent in the fuel charge. “We don’t expect there to be a level of congestion that would require us to increase the fuel charge for Batch 6,” he said.
This article appears in July 31 • 2009.