The Rich, the Poor, and the AE Generation Plan

December 25, 2009

By Nora Ankrum
Austin Chronicle

As 2010 draws near, so does the passage of the Austin Energy Generation Plan, expected to go before City Council for a vote early next year. The new plan will attempt to establish the right mix of traditional and renewable energy resources to power most of Austin’s homes and businesses through 2020. Announced in August, the plan recommended by Austin Energy staff succeeds in fulfilling the expectations of the Austin Climate Protection Plan, even surpassing them on many counts. But in these harsh economic times, that good news has been somewhat overshadowed by concerns over the plan’s financial implications, especially for AE’s most vulnerable customers – low-income ratepayers.

Regardless of the plan council ultimately approves, electricity bills are expected to rise over the next decade. In fact, according to data from Pace Consulting – hired by AE to analyze more than a dozen potential generation plan scenarios – the cost of doing nothing actually could be higher than the costs associated with AE’s recommended plan. But no one knows the volatile energy industry’s future for certain, a fact AE General Manager Roger Duncan repeated steadily this fall during public discussions of the available choices.

Those discussions left social service groups such as Meals on Wheels and More wondering not only how to protect the low-income community they serve but how to keep themselves afloat while doing it. "We’re very mindful of being green … but we do a whole lotta cookin’," says MOWAM President Dan Pruett. "Our utility bills are going to go up significantly. … Does that mean we can provide fewer meals for people that need assistance? Maybe."

The Coalition for Clean, Affordable, Reliable Energy, which formed in response to the generation plan, has also weighed in. While composed primarily of commercial and industrial interests such as Freescale and AMD – as well as more unusual players, including the Seton and St. David’s hospitals and the Lake Travis Independent School District (as an "affiliate") – CCARE has found common ground with some social service organizations. It’s even enlisted the Catholic Diocese of Austin – the group most vocal on the plan’s potential impact on poor people – as its "social justice conscience."

CCARE and the Diocese have recommended postponing the plan until other upcoming factors shake out, including a rider that will show up on bills next fall to cover fees owed to the Electric Reliability Council of Texas. Next fall also marks the beginning of a yearlong cost-of-service study to precede a 2012 "rate case" during which, among other things, City Council can adjust the rates assigned to different customer "classes." According to AE spokesman Ed Clark, City Council could establish a rate specifically for low-income customers, a possibility cited by Diocese Chancellor Ron Walker as a particularly good reason to wait.*

But not all who work with the disadvantaged agree. Bee Moorhead, executive director of faith-based advocacy group Texas Impact, says she hopes AE will "act swiftly" both to implement a generation plan and to "incorporate a proactive plan" addressing low-income consumers. "If we don’t do them both, we’re not really fixing either issue," she says. "The most vicious thing that can happen in this debate is to end up saying, ‘So it’s poor people’s fault that we can’t fix the climate.’ Now … they can feel guilty for having ruined the whole creation. Great. That’s a great theology."

"Delaying this until 2012 mostly hurts low-income people," says Solar Austin’s Cary Ferchill, who served on the council-appointed Austin Generation Resource Planning Task Force, one of three citizen bodies to make independent recommendations on the plan. The task force voted 5-4 in November to support AE’s proposal (with the caveat that the utility revisit in two years the option of quitting coal completely). Ferchill was in that majority; the three task force members in CCARE voted for a different scenario. However, the task force agreed unanimously on a set of additional recommendations to go to council. Many address disparity issues by setting guidelines for energy efficiency and distributed generation programs and by expanding AE programs already targeting low-income customers (see the full list of these recommendations with this story online at "Those components don’t stand alone," says Ferchill. Suspending the plan would mean suspending those, too, he says.

According to Mark Zion, executive director of the Texas Public Power Association, AE’s policies regarding discounts, weatherization, deferred payment programs, and assistance through community-based organizations (see "AE Programs for Those in Need," left) "are among the most respectful for customers and among the most extensive in the state of Texas." The utility’s disconnection policy is also among the most generous: AE cuts service for nonpayment 45 to 50 days from the bill issuance date, while a TPPA survey of municipal utilities across Texas puts the average at just 29 days.

"In all fairness, they are touching some of the low-income," says Walker, but he hopes to see a policy shift – with appliance rebates, for example – toward more aggressively targeting those most in need. While Walker still supports postponing the plan, Pruett says he does support the plan with the task force’s recommendations. "My only reservation is we need to make sure – and they do address this in their recommendations – that organizations representing low-income folks, and lower-middle-income folks, really have input into the process."

* [Editor’s note: Following publication, we were informed by AE Manager Roger Duncan that according to Texas state law, electricity rates in fact cannot be set based on income level.]

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