Austin Energy proposes rate increases for 2012
Austin Energy proposes rate increases for 2012
By Mary Tuma Thursday, 05 November 2009
AUSTIN — The head of Austin Energy proposed rate increases for businesses and residents starting in October 2012 to offset anticipated budget shortfalls.
“As the steadily growing revenue in the ’90s has leveled off, expenses are now exceeding revenue,” general manager Robert Duncan said during a special Austin City Council meeting Wednesday.
Austin Energy is facing a $9.3 million shortfall in the upcoming year and $177 million deficit in 2013, if proposed changes are not made, he said..
“Financial challenges may sound somewhat dire but I want to start off by saying we are in extremely good financial condition,” Duncan said. “But this doesn’t lessen challenges we and other utilities face around the nation.”
Duncan highlighted four key issues and solutions, including workforce vacancies, policy revision to the general fund transfer, adopting a transmission rider, and rate increases.
Mirroring the industry, Austin Energy has an aging workforce and is finding it difficult to recruit and retain employees. Currently, 35 to 40 percent of the workforce is eligible to retire in the next two years, and senior management positions are becoming increasingly vacant.
A transmission rider for the 2011 budget should be adopted, said Duncan, as those expenses are growing faster than revenue. And while fuel revenue cost passes through to the customer with no profit for the utility, it contributes to declining net income. Currently, the company faces a net loss of $35 million due to rising fuel costs.
The growth in expenses for new programs in the last 15 years, such as conservation, Austin Climate Protection, smart meters and the solar rebate program total $50 million in operating costs that have not been recovered due to less internal funding for capital improvements.
To offset those changes, plus low customer sales, deferred planned expansion and the economic climate, Duncan proposed a rate increase to take effect in October 2012 for the 2013 fiscal year, the first increase since 1994.
“We have been talking about it for some time now,” said Duncan. “But this year we got hit in several ways. We don’t expect to get back to the same level of growth in the next few years.”
An appeal to the proposed increase can be petitioned by the roughly 15 percent of utility customers who live outside the city. Duncan said 14 industrial companies will be excluded until May 2015 from the possible increase, due to contractual agreements, and the new rate will apply to residential and commercial residents.
As more Austinites turn to renewable energy, Duncan stressed a redesign of the traditional utility business model to recover from distribution costs. He recommended unbundling rates, offering new rate options and reevaluation both the methods of energy efficiency delivery and the GreenChoice program.
“The fundamental relationship between an electric company and its customers has changed,” he said. “People are starting to produce more of what they consume.”
Comments
1 Comments 
Site tools
Central Austin Calendar
| « | < | February 2010 | > | » |
| S | M | T | W | T | F | S |
| 31 | 1 | 2 | 3 | 4 | 5 | 6 |
| 7 | 8 | 9 | 10 | 11 | 12 | 13 |
| 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| 21 | 22 | 23 | 24 | 25 | 26 | 27 |
| 28 | 1 | 2 | 3 | 4 | 5 | 6 |
| Feb 9 – FronteraFest |
| Feb 9 – Ajami |
| Feb 9 – "john & jen" |
| Feb 10 – Austin Children's Museum Community Night |
| Feb 18 – AARP North Austin Chapter Meeting |
| Feb 20 – Young Athlete Heart Screening Program |
November 05, 2009
Votes: +1