We’ve been hearing about “impending electric deregulation” for years, with the clear implication that Austin’s city-owned utility better shape up quickly and be prepared, lest it get swept away in a wave of competition from better-equipped private contenders for our electricity dollars. So you’d think it would come as good news that the city was issued a reprieve (although probably a temporary one) in the last legislative session, when municipally owned utilities were exempted from having to open up their markets. Instead, Austin Energy is facing a reprise of complaints reminiscent of previous years’ budget battles: namely, that the utility’s proposed budget is too costly, focuses too little on conservation, and is being raided by the city manager to make up for budget shortfalls in other city departments.
The latter charge, at least, is hard to dispute: In what City Manager Jesus Garza swears will be a one-time transfer to pay for badly needed intersection improvements, $4.3 million is being taken from Austin Energy’s budget to pay the city’s bill for street lighting and traffic signals, an expense that ordinarily comes out of the General Fund. That transfer — in the context of a budget that is already projected to run $13 million into the red this year, forcing the utility to shift money out of its reserves — raised the hackles of more than one council member during last week’s Thursday morning budget hearing. One of the most important goals for the utility, Council Member Beverly Griffith told Austin Energy general manager Charles Manning, should be “to make sure we don’t go back to one of our former traditions, which was, if you run out of money in the budget cycle, you go to the electric utility and make up at least some of the difference there.”
Griffith also pointed out that AE’s budget for operations and maintenance features numerous cost overruns when compared to the 1998-99 budget, including increases of nearly $7 million for power delivery, $3 million for marketing programs, and almost $4 million for the utility’s customer service center, which is in the process of getting a new computerized billing system. Why, asked Griffith, were the utility’s O&M expenditures increasing at a rate of over 21%, while its total revenues were projected to increase by less than 9% — especially when the utility is ostensibly preparing to move into a competitive position? “One of the principles I hope we will stay with,” Griffith said, “is not letting the increase in expenses go up much faster than the increase in revenues.” Manning assured Griffith that Austin Energy’s expenses are likely to go down next year — given that much of that impressive-sounding increase consists of one-time costs like paying the city’s lighting bill — but expect this issue to surface again before a final version of the budget is hammered out.
Meanwhile, the city’s consumer advocate, Scott McCollough, and activist Paul Robbins — no strangers to the arcana of utility operations — were grousing that this year’s budget allocates precious little for another duty the utility is charged with performing — namely, promoting and implementing energy conservation. Based on the findings of a consultant hired by McCollough’s law firm, McCollough requested that city staff adjust Austin Energy’s budget to include $1.4 million more for conservation programs, including residential and commercial rebates, marketing, and a $200,000 pilot program for small rental buildings to participate in energy conservation. “These funds are historically precedented; we’re not just making this up and saying, ‘We wish you’d do more,'” says Robbins of the budget request. “They’re going to ask us for money from a bond election to build new power plants … without doing what is historically precedented for conservation.”
Thursday’s discussion on other aspects of the budget, including Smart Growth, neighborhood planning, and the city’s probable nonattainment status on clean air regulations next year, proved far less combative than that on Austin Energy’s 2000 blueprint. Next up: budget adoption, scheduled for Sept. 13.
This article appears in September 10 • 1999.