By Paul Robbins
Austin American-Statesman, Sunday, December 30, 2018
On a windy day in late winter of 1984, I arrived home to find my gas cut off without notice. It was one of the many indignities I suffered while living without sufficient income, but one indelibly etched in memory. I scrambled to get service restored, but needed to make a hard choice about which other necessity to do without. (You live by the hour when you’re paid by the week.)
As winter closes in and heating bills spike, many consumers worry that their bills will take away from meals and other necessities. Some may wonder if they can afford their bills at all.
The main regional gas utility, Texas Gas Service, collected about $140 million in Austin in 2017. As a consumer advocate, I have followed its local rates and policies for decades and have reached some conclusions of late. The gas company’s rate structure penalizes low-income customers and conservationists. Its policies do not align with the city of Austin’s municipally-owned electric and water utilities. Our gas bills are higher because of this. And several of its energy conservation programs are not cost effective. I have also found that the company is poorly regulated by the city agency charged to do so. More specifically:
- Texas Gas has steeply regressive rates: The more you use, the less you pay per unit of consumption. In contrast, Austin’s municipal electric and water utilities have progressive rates, where the more you use, the more you pay per unit. Regressive rates hurt lower-income customers, who generally use less energy. These rates also discourage energy conservation.
- Between 2008 and 2018, rates for the average residential customer (without fuel charges) have gone up more than 50 percent after accounting for inflation. While some of this is justified because safer plastic pipe is replacing old metal lines, there is no indication of when these increases will end.
- Austin’s municipal utilities generally charge the full cost to hook up new customers to electricity, water, and wastewater. Because of this, our utilities have experienced rate reductions. Yet full recovery fees do not exist for the gas company, meaning that existing customers pay some of the cost of adding new customers to the system. Austin ratepayers also pay for capital improvements in cities and areas outside Austin’s city limits.
- Some of the company’s energy conservation programs are a waste of money. Having been an environmentalist the whole of my adult life, it pains me to say this. However, $4.5 million from Austin ratepayers will be wasted over the next three years. The cost of tankless water heaters in homes is so high that they will never recoup their savings during the appliance’s lifetime. There is just not enough use. And the high cost of efficient furnaces cannot be recouped in relatively mild Texas winters. These are meant for colder climates like New England and Alaska.
Over the last decade, the city’s Office of Telecommunications and Regulatory Affairs (TARA), which supposedly regulates the gas company, has acted more like a hostage negotiator than a consumer advocate, bargaining from a position of weakness. First, it has allowed rates to become more regressive. TARA has also allowed the gas company to frivolously spend energy conservation money, while allowing the company to hide information that could reveal if these expenditures are imprudent. Finally, it has allowed the company to escape full capital recovery fees and has never challenged Austin ratepayers’ funding of capital improvements outside Austin’s borders.
This company is in business to begin with because the city granted them a franchise to operate. If Texas Gas continues to act more out of self interest than customer interest, Austin can refuse to renew the franchise when it comes up in 2026. In that case, Texas Gas could sell its system to another company or the city could offer to buy it. No one would lose service during such a transition.
As winter fuel bills spike, it is time for a change in attitude on the part of city regulators. If they had been living in my home the day its gas was disconnected, perhaps they would feel more motivated.
Robbins is an environmental activist and consumer advocate living in Austin. He has been current on his gas bill since 1984.