[Watchdogs] A Lesson from Austin? "Electric utility proposes majorrate increase" [Austin American-Statesman]
Paul Langston
langston at zeecon.com
Fri Nov 6 23:42:15 CST 2009
Good friends and neighbors:
Milton Hawkins has some good points. He suggests two questions: What does it cost?, and Can we afford it?
I would like to add a third question; Do we need it?
Here-to-fore, PEC has been run as a private fief by three strong Kingfish, Fuelberg, Burnet and Morisund. The Board of Directors just went along for the merry ride.
Then the famous lawsuit broke up the playhouse.
Elected, reform minded Directors came on the scene. I believe that all of us expected them to start working to cut costs, stop frivolous spending and demand that Management give a true accounting of the company finances. WELL, not so far.
When can we expect the Directors to instruct their employees to stop the waste of money and start reasonable accounting practices? If the Directors cannot get PEC to do basic, rudimentary, reasonable business practices, how will they ever get to more complicated matters: like reducing the mass of employees, like reducing the number of relatives employed. Matters like eliminating sections of PEC that are big money-losses, Matters like insuring respectable purchasing and contracting practices .
Paul Langston 830-598-1322
----- Original Message -----
From: Milton Hawkins
To: watchdogs at pec4u.org
Sent: Friday, November 06, 2009 8:42 AM
Subject: [Watchdogs] A Lesson from Austin? "Electric utility proposes majorrate increase" [Austin American-Statesman]
[From the article:
The utility plans to add a new fee next year and implement a major rate increase in 2012, which still hasn't been determined. And because the utility could begin losing money before then, "We have got to cut expenses just to get to 2012," Duncan said.
Is there a lesson here for PEC? YES. Two questions we need to be asking: What does it cost? Can we afford it?
Milton]
Electric utility proposes major rate increase
Austin Energy manager presents stark financial picture.
By Marty Toohey
AMERICAN-STATESMAN STAFF
Thursday, November 05, 2009
Austin must significantly raise electric rates or the city's energy utility could start losing millions by 2011, according to a report released Wednesday.
The utility could face deficits of $9.1 million in less than two years and $177 million by 2013, largely because of rising operations costs and increased state fees, Austin Energy General Manager Roger Duncan told his City Council member bosses during a presentation.
The utility plans to add a new fee next year and implement a major rate increase in 2012, which still hasn't been determined. And because the utility could begin losing money before then, "We have got to cut expenses just to get to 2012," Duncan said.
Austin Energy has warned since 2007 of the need for a major rate increase by early next decade. Utility costs have risen partly because it's become more expensive to expand the grid to meet Austin's growing energy demand.
But the stark financial figures are nonetheless surprising because Austin Energy did not previously raise the alarm and is commonly perceived as the city's cash cow. For most of the past decade, the utility has collected upward of $200 million annually in profit, according to Duncan's presentation.
Austin Energy will pay more than $170 million this year for city services not directly related to the utility's operations. Its profit covers about 20 percent of the city's $613 million spending on parks, firefighters, libraries and other "general government" services, about the same as previous years.
In addition, Duncan said, the city has also added other programs to the utility's budget since 1994, when the utility made its last major rate increase. They include annually: $8 million for the city's 311 call center; $19 million in additional grants to make buildings more energy efficient; $8.5 million for the city's economic development office; and $4.3 million in subsidies that help homeowners pay for installing solar panels.
"You add all of it up and you've got about $50 million a year," Duncan said.
It's not clear yet how a rate increase would affect monthly bills, Duncan said. The restructuring will be a two-year process that requires state approval and significant number crunching.
In addition, Duncan said Austin Energy plans to add an as-yet-determined extra monthly charge next year. It would cover the city's share of $5 billion in state transmission lines that will carry electricity from West Texas wind farms.
Duncan said Austin Energy paid $6 million out of its reserves in 2009 for transmission lines. That amount will grow steadily until 2015, when it will total more than $300 million.
Most homeowners have seen monthly fluctuations since the 1994 rate increase, and bills have gradually increased. But the higher bills stem from the rising cost of coal, nuclear power, natural gas and other fuels that produce electricity, according to Austin Energy. The utility does not collect extra profit when fuel prices rise or fall.
Duncan did not propose specific cuts Wednesday, and he has championed some of the new spending at Austin Energy, such as the solar rebate program. He also designed energy-efficiency programs, thinking that homes requiring less electricity can keep the city from building an expensive new power plant.
Earlier this year, Duncan presented an ambitious plan for Austin to get 35 percent of its electricity from wind, solar and other renewable energy sources by 2020. The city now gets 12 percent from these sources. The council is scheduled to vote on it late this year or early next year.
Austin Energy expects that plan to raise monthly bills 22 percent by 2020. Large Austin-area businesses have formed a coalition that is calling for the utility to reconsider the scale of the ambitious renewable plan because of concerns about rising rates.
"I think (Wednesday's presentation) proves the point we've been making all along; there are electricity costs Austin Energy should deal with before we start adding costly renewable generation," said John Sutton, a past president of the Building Owners and Managers Association of Austin.
Duncan said the plan will be the best mix of affordability, reliability and environmental stewardship. But adding more renewable energy will present new challenges, he said Wednesday.
He and other energy experts expect that growing numbers of people will generate at least some of their electricity at their homes. Some of the 900 Austin buildings with solar arrays already sell excess electricity back to the city.
"We will soon have tens of thousands of buildings for whom we (the utility) are the customer," Duncan said.
Those homes don't pay for the poles and wires and substations the city operates. But they still rely on the grid to send or receive electricity.
"My dream is that all of Austin's buildings create their own clean, reliable, affordable energy," said Duncan, a former environmental activist. But until Austin Energy creates a new business plan, "My nightmare is that all of Austin's buildings create their own clean, reliable, affordable energy."
mtoohey at statesman.com; 445-3673
Your Comments
austinrulz wrote:
Great. Something else to look forward to in the future. Everything's going up but our paychecks seem to be getting smaller. What's wrong with this picture?
# Posted on 11/5/2009 5:39:26 PM
RetdPE wrote:
Do the math here...the amount of the pending shortfall is about equal to or greater than the annual transfer from the utility to the general fund. Cut it out, make the general fund pay its own way, eliminate "feel good crap" in the general fund and forget this "green" energy crap until it is competitive. Presto, problem solved and crisis averted. Now back to room and wait for pudding time. Life is good here at the home. I heard the voices, but didn't drink the koolaid.
# Posted on 11/5/2009 3:41:26 PM
larry355 wrote:
RK575957, I would hesitate to call Austin Energy, a real business, anymore than the water department is a real business. They are government entities and they are "controlled" by the city council, which doesn't do a very good job of controlling Austin Energy. Due to their rubber stamping of everything that duncan brings before them has caused me to decide to vote against every sitting city council member and the mayor in any future election.
# Posted on 11/5/2009 1:48:03 PM
CF1 wrote:
It sucks to be poor in Austin. We deal with the "bank of the northern hemisphere" mortgage company, bus service that is going up and now an increase in the utility bill. I wonder what we can cut from the personal budget next since the city is incapable of cutting theirs.
# Posted on 11/5/2009 12:05:45 PM
RK57957 wrote:
Actually Mart why should they. You have to buy electricity and Austin Electric a business.
# Posted on 11/5/2009 11:50:03 AM
Mart wrote:
Let me see if I understand: 1. Austin Energy encourages customers to install solar panels later realizing this will cause a drop in revenue. 2. The proposed solar farm and biomass plant will make energy more expensive per kilowatt hour. 3. Increasing the utilization of renewable power will exacerbate the problem. Maybe the city utility is being irresponsible to the rate payers by this headlong rush to “always choose green without regard to cost.” WE have to live within a budget. Shouldn’t the utility respect that? Just wait till “cap-and-tax” arrives on the scene.
# Posted on 11/5/2009 11:41:25 AM
hotrod51 wrote:
...and other "general services"... Like to the tune of $250,000 per year to Austin Revitalization Authority since 1996. Gee, wonder if there are other "general services" that are so essential to Austin.
# Posted on 11/5/2009 10:45:33 AM
RK57957 wrote:
IMO there is no revolt coming people are lazy, mildly afraid, and to stupid to revolt. The problem as I see it is, Austin Electric is a company, Austin Electric turns a profit, the owners of Austin Electric don't re-invest enough of the profits back into the company, and so Austin Electric raises rates. You know what the funny thing is people will pay, because they have no choice solar power is expensive and people are to lazy to take the steps to live off the grid.
# Posted on 11/5/2009 10:44:27 AM
IMO wrote:
Just an indirect tax the local pols have put on us without having to really tell people what they're up to. One of these days, the people will wake up enough to all the hidden charges they're paying for government-run services and ask themselves if the value is there. I may be wrong, but I predict a major revolt coming to a local, state and particular federal government if they continue to spend the way they are.
# Posted on 11/5/2009 10:26:48 AM
RK57957 wrote:
MovinBackAtLast out of curiosity does your PEC bill also cover water, waste water, and such? And I think Austin Elecitric charges a "privilege" charge but it's ohh I think $6.00.
# Posted on 11/5/2009 10:20:58 AM
MovinBackAtLast wrote:
LOL at all you people griping about your rates (and anyone thinking they pay less in 'competitive' Round Rock needs to get a grip). There was a table in the A-AS showing what 1000 kWh cost in Austin - $99. San Antonio was the only cheaper place - $90. Here in wonderful PEC country, 1000 kWh cost $125 as we get $22.50 tacked on each month for the privilege of being PEC customers.
# Posted on 11/5/2009 10:17:29 AM
RK57957 wrote:
sing I'll take your comparison.
What is your average monthly bill, what is the square footage of your house, what is the age of your house, and what do you keep the thermostat at all day?
My house is 1700 sq ft. It was built in 1946. I keep the thermostat at a consistent 74 degrees year round and my average bill is $200 -ish which includes sewer, street fees for you lousy commuters, and that feel good energy surcharge for subscribing to the green energy plan.
# Posted on 11/5/2009 9:40:27 AM
half pint wrote:
Duncan did NOT, "championed - - -", Duncan "presented an ambitious plan" ~ ~ Duncan did NOT do squat! His grunts did the research & all the dirty work, then he signed his name! The COA has allowed MARC OTT & all the other six (6) figure PLUS to "run" the city AND budgets. When are YOU, the taxpayers, going to say enough is enough? When you are sitting in the frigid cold not being able to pay your bill? I can tell you the white collar guys @ COA will be toasty. Deregulation? You are paying your dues for the COA.
# Posted on 11/5/2009 9:33:49 AM
OldBlowhard wrote:
This is horrible. Been in the same modest home 35 years. Property taxes are already ruining us. Now this. I need to sell out and move away to some place cheaper. Good citizenship only means good chumpship at the hands of the greedy so-and-so's who rule our lives and pick our pockets.
# Posted on 11/5/2009 9:23:35 AM
jm2 wrote:
This rate increase is necessary because of all the subsidized "feel good" projects --- green energy, solar energy, a/c rebates, wind energy --- undertaken by the utility company. They are spending the better part of $100MM a year while admitting to $50MM a year. This has been going on for years. They simultaneously pass on adding capacity at their best pricing point --- S TX Nuke --- and instead subsidize and commit $1B to a solar energy project which isn't even operable. Wind, solar, rebates --- all cost far more on a KWH basis than plain old fasioned electricity generation. And, now, after decades of abuse paid for by your electrical bills, they want to simply increase your bills to pay for their flights of fancy. It ain't rocket science, it's common senses. Unfortunately, common sense is a bit uncommon in Austin and in particular at the utility and with Roger Duncan.
# Posted on 11/5/2009 9:07:58 AM
larry355 wrote:
One has to wonder what Duncan will be doing in retirement. Anyone want to bet he will be buddy buddy with good ol' brewester mccrackpot in the Pecan Street Project, still sucking up taxpayer dollars for a salary?
# Posted on 11/5/2009 8:47:15 AM
Nell786 wrote:
Could we distill Toohey's 600 word story down to some key words? Words "increase", "fee", "raise" used a total of ten times. Plus "extra monthly charge". Code words / phrases: "challenges", "stewardship", "dream.. nightmare". How 'bout ..."tens of thousands of buildings"? From Nuke to puke.. in only 40 years. I love sirdoug's idea!
# Posted on 11/5/2009 8:35:10 AM
Wood-Butcher wrote:
What? All that green techno stuff along with the lawsuits demanding free power and stuff has to be paid for by US? What's with that? Isn't everything free now that Mr. BO Man has taken power?
# Posted on 11/5/2009 8:30:39 AM
el stone wrote:
I would like to know the salaries of top executives at Austin Energy. If we're going to suffer a "major rate increase," maybe they could take a "major" salary cut.
# Posted on 11/5/2009 8:14:42 AM
Ronnie wrote:
It seems like when we do things to save the enviroment, it costs more and we seem to destroy our economic enviroment. We need to balance things out, so we can stay out of ther dark ages
# Posted on 11/5/2009 7:56:54 AM
allen2030 wrote:
Something is amiss in the Austin Energy assertion. My understanding is that the utility is making profit which is transfered to general funds since a long time ago. What has happened? Statesman, please investigate and let us know. Without independent journalists investigation, governments become highway robbers....
# Posted on 11/5/2009 7:54:49 AM
Oatwilly wrote:
Maybe some of the genius critics commenting on this story could get off their keyboards and share their brilliant insights with the "liberal control freaks" who are actually trying to manage the explosive growth that has destroyed this city. Or, you could help re-elect a fellow conservative genius like Carole Keeton McClellan Rylander Strayhorn and build another nuke.
# Posted on 11/5/2009 7:52:39 AM
MT wrote:
Roger Duncan does not seem to be the problem to me. He is just trying to balance energy projects with the city taking $170 million from Austin Energy to paid for non-energy projects. My experience with Austin Energy has been fine. Street lights are replace usually within a day of going out. Power outages are usually less than half and hour in my North Austin neighborhood. Meter readers, before the switch to electronic metering, were always courteous. The using Austin Energy as it's piggy bank is the root of the problem here.
# Posted on 11/5/2009 7:52:34 AM
MT wrote:
If the city stopped giving property tax abatement to shopping center developers (Domain, Arbor Walk, Mueller) so businesses could move from one location to another, proving there was no need for new retail in the area, we would need less from rate payers to cover city services. If ACL paid a fair rate for making Zilker lawn unavailable to taxpayers for several months a year, we would need less from rate payers to cover city services. If the city forced the SXSW promoter to pay for his own extra security when he freezes out local bands yearly, we would need less from rate payers to cover city services. It is not Austin Energy that is running short, it is the city piling everything on and call it Austin Energy's budget deficit.
# Posted on 11/5/2009 7:46:59 AM
Dean123 wrote:
Maybe the city of Austin can start charging for clean air to make up for their ineptitude instead. Deregulate and have open competition like in Round Rock.
# Posted on 11/5/2009 7:46:34 AM
neilbert wrote:
TexBob- The electric utility is city owned as has always been a major contributor to the revenue stream. It is- or has been- a cash cow that has had its income diverted to many different city enterprises. It could be argued that utility income has helped to moderate city property taxes. Look at the numbers.
# Posted on 11/5/2009 7:44:49 AM
Bill Bunch wrote:
Roger Duncan is recognized globally as a leader in energy innovation. Austin has been blessed by his leadership. There's plenty to argue over, with so much change facing our city and the planet. At least Roger and his top staff are willing to engage the community on these issues while challenging us to shift toward sustainability. Meanwhile, our Water Utility is stuck in the Dark Ages, captured by contractors eager to stuff over a half billion dollars of our money in their pockets to build a water plant that we don't need and that won't give us a single drop of extra water. Planning for efficiency and renewables saves money and saves us from ourselves; planning for waste is a financial and environmental dead end.
# Posted on 11/5/2009 7:39:41 AM
TexBob wrote:
Why are they using energy dollars to pay for non energy related expenses. Stop the spending! The electric bill is becoming nothing more than another tax.
# Posted on 11/5/2009 7:03:45 AM
Jon7 wrote:
Roger Duncan is an absolute FOOL!. This is the same idiot who authorized trashing $250 MILLION DOLLARS on a useless solar panel farm back in May. No wonder he want's a rate increase! How about cutting salaries by 20%? Plus eliminating all health insurance cost's? If employee's complain,fire-em! Just where are they going to go in this sorry economy?
# Posted on 11/5/2009 6:18:52 AM
Bevo31 wrote:
Bottom line here is you give a bunch of liberal control freaks control of a utility and they will pad it with all of their social engineering flaky idea. Duncan has spent this cash cow into a real mess with all his "alternative energy" quacky ideas. When willpeople learn that liberals dont care about costs just playing with peoples money for their nutty ideas. Austin is going to run companies and josb out of Austin with this kind of nutty leadership on the council. next election these folks need to be sent packing and most of their kooky ideas stopped. Natural gas is plentiful and cheap today. If they had just gotten more gas none of this would be necessary. 20% higher electric bills is an economic disaster for Austin.
# Posted on 11/5/2009 6:05:00 AM
sirdoug wrote:
I think I will end up investing in a super efficient 220v. window AC unit for the bedroom. Of course when the semi permanent unemployment rate is set at ten percent and underemployment is at 15-17% having three generations living in the same house will help deflect this major change in the cost of living.
# Posted on 11/5/2009 6:03:34 AM
sirdoug wrote:
No we are not paying more than most cities but the utility subsidizes the COA budget and that budget needs to be trimmed of superfluous cultural, and unrealistic "green" initiatives.
# Posted on 11/5/2009 5:58:52 AM
sirdoug wrote:
Growth does not pay for itself and we do not need any of this "$8 million for the city's 311 call center; $19 million in additional grants to make buildings more energy efficient; $8.5 million for the city's economic development office; and $4.3 million in subsidies that help homeowners pay for installing solar panels."
# Posted on 11/5/2009 5:56:23 AM
NBryan wrote:
We need an alternative! I'm thinking of installing some solar panels to offset some of this increase. Anyone know of a good installer?
# Posted on 11/5/2009 1:42:24 AM
ShutYourPieHole wrote:
Rodger Duncan: Former flower salesman like Mac Noffzinger and now our utility manager. Thanks Toby Futtrell and Mark Ott. As I get older I get to pay for these nincompoops and their ineffeciencies as managers.
# Posted on 11/5/2009 1:20:40 AM
zsmitr wrote:
Higher property taxes? Higher electricity? Higher Salary - NOT! It is getting to where one can't afford to live here I'm telling you.
# Posted on 11/5/2009 12:01:40 AM
donnalee wrote:
Aren't we already paying more than most cities?
# Posted on 11/4/2009 11:50:58 PM
http://www.statesman.com/news/content/news/stories/local/2009/11/05/1105energy.html?cxtype=rss&cxsvc=7&cxcat=52
--
Milton Hawkins
P.O. Box 1502
Johnson City, Texas 78636-1502
830-868-9075
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