Rate Case = Full Calendar for Council

March 2, 2012

By Amy Smith
Austin Chronicle

Councilmembers Spelman and Morrision

Giving Austin Energy’s numbers the old scrub-a-dub-dub

City Council today (Thursday, March 1) could adopt a pedal-to-the-metal work schedule to hash over Austin Energy’s requested electric rate increase. The proposed calendar would carve out nearly a dozen work-session dates between March and April, with many sessions scheduled twice a week. (In its spare time, council would also continue its regular meeting routine, taking its spring break March 12-16.) Possible May meeting dates would lead up to the final hours before the May 12 council election, which has four incumbents seeking another term.

Of the three council members proposing the breakneck schedule – Laura Morrison, Kathie Tovo, and Mike Martinez – only Martinez is on the campaign trail in a contested race. Austin Energy had hoped to have its two-part 12.5% rate increase approved by March, but council members tapped the brakes on the utility’s plan to have additional revenue flowing into the utility by summer. It’s uncertain whether the council will approve an interim rate increase while it works its way through the rate case.

The proposed increase also figured tangentially into the Feb. 27 meeting of the Electric Utility Commission, with brief discussions on AE’s recent 16% fuel charge hike, which took effect Jan. 1, and an update on the utility’s disastrous new centralized billing system, which adversely affected the ability of thousands of customers to pay their bills. The utility signed a contract with IBM in 2009 to develop a new system at a cost of $54 million over eight years. AE says it has withheld $3.8 million in payments due to the tech giant’s ill-fated execution of its charge. AE staff put an optimistic spin on the situation when questioned by City Council last week and the EUC this week. However, a Feb. 23 story in InformationWeek, a technology publication, laid bare AE’s frustrations in a thread of emails between AE executives and IBM, with the last email dated as recently as Feb. 10. In that email, InformationWeek quoted from AE Chief Information Officer Alan Claypool‘s note to an IBM executive: "We are extremely disappointed and continue to have serious concerns about the quality of service we have received from IBM to date."

EUC Commissioner Barbara Day had also requested an explanation of why the utility would raise ratepayers’ monthly fuel charge at a time when natural gas prices are at a 10-year low. But staff’s general explanation – last summer’s heat, outages at Fayette Power Plant and South Texas Project, and the inclusion of the Webberville solar project and the East Texas biomass plant, which is expected to go online later this year – left many observers with more questions than answers: What were the costs associated with the outages? How much money was lost on fuel-hedging contracts? How much is the biomass plant really costing taxpayers? And finally, why is there no oversight of the utility’s fuel charge increases?

Clearly, the council has plenty to sort through before it signs off on a rate hike.

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