Op-Ed: Austin’s Energy Purchases Are Headed In Wrong Direction

Monday, November 23rd, 2015 @ 2:38PM

Originally published in the Austin American-Statesman:
The Austin City Council has taken action to approve the purchase of a large amount of solar power, running contrary to their stated goals on affordability. City energy policies should be driven by affordability, economic realities and the need to deliver reliable electricity to customers. Instead, these policy decisions are being driven by social engineering.

City leaders have tried to make the argument that their recent solar purchases carry the cheapest cost per kilowatt hour (kWh) of solar power in the nation — and perhaps they are. However, the spot market prices for traditional sources of energy are much less than the long-term KWh cost of solar power. The city also attempted to justify the purchase by saying that when natural gas prices increase, the purchase of the solar power at 3.8 cents/KWh will turn out to be a better deal for the Austin ratepayer. The problem is, there is no anticipation of natural gas prices increasing any time soon. Solar prices will continue to fall and, perhaps, someday will be as competitive as traditional sources of energy. If we need to purchase power now, we should be purchasing it at the lowest possible cost to the ratepayers.

+Workman: Austin’s energy purchases are headed in wrong direction photo
Paul Workman represents District 47 in the Texas House of Representatives, which includes most of western Travis County and portions of … Read More
Furthermore, the city’s outrageous cost per kWh (about 15 cents/KWh) for its Webberville solar plant and the nearly-never-used biomass plant — which costs around $54 million per year — have increased cost burdens paid by ratepayers. Both of these purchases, by previous councils, were based purely on the desire to be “green” without regard to the cost to the ratepayers of Austin Energy. They are unnecessarily increasing rates for Austin Energy customers both inside and outside the city limits when power could be purchased for as little as 2.5 cents per kWh.

My concerns remain deep, even after meeting with the Austin mayor, his staff and Austin Energy leadership. The meeting, which was requested by the mayor to help me understand, failed to persuade me that the decision was about affordability.

Austin Energy ratepayers know current costs are unaffordable. The City Council has made matters worse with their recent decisions, adding to the already-high costs shouldered by captive ratepayers. The city needed to, at a minimum, establish a plan to move Austin Energy rates into at least the lower 50 percent of Texas electric rates.

I believe the increasing cost burden to the Austin Energy ratepayer will result in the loss of jobs and decisions by job-providing companies to decline to expand or locate in Austin.

Why are the actions of a city-owned utility the concern of the state legislature? Austin Energy is a division of the Austin city government and its ratepayers are captive customers to a state-law approved monopoly.

During this past legislative session, I advanced a measure that would have helped alleviate the cost burden to Austin Energy ratepayers. This bill and a companion Senate bill were not pursued further after the mayor committed to “moving to end the practice of charging rate payers for expense[s] that might be hard to defend as being ones appropriately paid by ratepayers.” The city council’s recently adopted budget and dramatically increasing solar purchases are arguably in conflict with this commitment.

Austin Energy’s own presentation to the City Council’s Austin Energy Utility Oversight Committee makes it clear the mayor and council know the risks of increasing the costs to Austin Energy ratepayers: “Any cost additions on AE’s part risks further erosion of our competitive position and could invite legislative intervention.”

I will continue to closely watch these and other actions to assess what adjustments will be needed to state law to help Austin Energy customers to purchase reliable, affordable electricity.

 

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