Consumer advocate seeks audit of Austin Energy program

The Austin Monitor, January 20, 2021, by Jo Clifton

Consumer advocate Paul Robbins, who has argued for years that Austin Energy is wasting money and inadequately screening participants in its Customer Assistance Program, is asking City Auditor Corrie Stokes to audit the program for wasted expenditures.

The program, which serves low-income customers of Austin’s electric, water and drainage utilities, provided more than $15.3 million in discounts for electricity, water, wastewater and drainage in Fiscal Year 2020. Approximately 35,000 customers per month receive these discounts and the average discount is about $437 a year, according to Austin Energy spokeswoman Jennifer Herber.

Herber told the Austin Monitor via email that “CAP enrollment fluctuates monthly. The discount is a percentage off the total bill and/or monthly charges; it’s not just about which services a customer has, but also about consumption.”

Robbins has prepared a lengthy document demonstrating that a number of customers enrolled in CAP either lived in expensive homes or owned more than one property. In his complaint, Robbins provides photographs of expensive properties belonging to Austin utility customers participating in the program.

He says, “The program is intended to assist customers at or below 200 percent of the poverty level, but most CAP customers who are automatically enrolled are not screened for income.” The automatic enrollment is a result of the utility enrolling households with a member who receives benefits through one of seven social service programs, such as food stamps.

According to Robbins’ research, Austin has the loosest restrictions for enrollment in CAP among the top 10 public utilities in the U.S. Eight of those utilities, from the Jacksonville Electric Authority to Seattle City Light, require income verification, he says.

After Robbins complained about some customers who may have been ineligible, Austin Energy enacted some reforms requiring customers with a certain level of real estate assets to be income qualified. However, Robbins says the utility is ignoring customers who do not live in expensive homes or own more than one property.

In order to find out whether the utility was doing a good job in its efforts to qualify applicants by income, Robbins studied records of CAP enrollment for Austin Water discount participants in October 2020. He said he discovered the following:

• 123 participants who were receiving the discount owned homes worth more than $250,000 or owned two or more properties, or both. In one case, he said, the customer was receiving discounts at two different properties.
• 28 of those customers owned two or more properties and 50 customers had properties with values of more than $500,000
• Five of the customers lived in homes larger than 5,000 square feet, while 28 lived in homes larger than 3,000 square feet
• 18 of the customers had expensive additions to their homes, such as pools, large decks and terraces

Jerry Galvan, an Austin Energy VP, said via email, “We are proud of our Customer Assistance Program and we continue to assess our programs to maintain integrity while removing barriers to entry, all with the goal of making utilities more affordable to those who qualify for assistance.”

Robbins also complains that the utility is “spending some of its funding on discounts to customers consuming lavish quantities of energy, and on funding on a program that is much less effective at saving money than direct discount programs.” He says while he has tried to work with Austin Energy in the past, he now finds the staff “complacent and unwilling to make further changes. I am reluctantly forced to turn to your (Stokes’) office to investigate this continued misallocation of limited funds meant to assist the poor.”

Robbins said the total CAP funding for all three utilities would be more than $18 million in the current fiscal year. “If even 10 percent of CAP funds are being given to the wrong people, it could amount to almost $2 million in wasted funds that could be rerouted to customers with legitimate needs if income qualification were to completely replace automatic enrollment,” he said.

Austin Energy’s residential electric rate structure is intentionally designed to charge more for greater amounts of consumption, in an effort to encourage energy conservation. However, as Robbins pointed out, CAP customers receive a 10 percent discount on consumption regardless of how much energy they consume. As he noted, the discount was raised to 15 percent in the last year because of the pandemic. That will continue through at least the end of September 2021, according to Herber.

Of the top 10 public utilities in the United States, Austin is one of only two utilities that offer discounts for unlimited consumption, Robbins said. Five of the programs offer a flat discount and three offer no utility-funded program. He noted that there has been an argument defending discounts for high consumption on the assumption that households with larger numbers of people use a lot more energy. But Robbins points to a residential energy consumption survey showing that “a three-person household in the southern U.S. used only 17 percent less than a household with six or more people.”

He concludes that “CAP discounts are structured in a way that discourages energy conservation, while at the same time depriving customers with lower consumption from receiving larger discounts.”

In addition, Robbins also complains that Austin Energy is using CAP funds on the utility’s free weatherization program without adequately determining whether the recipients are qualified under the rules of the Customer Assistance Program.

Finally, Robbins reports that during his six-year-long effort to monitor CAP, Austin Energy has exhibited “a lack of transparency and responsiveness,” that has made it more difficult for “a responsible consumer advocate to get accurate information.”

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Council rejects Texas Gas Service rate hike

TO: Rondella Hawkins, Officer, Telecommunications & Regulatory Affairs, City of Austin

Thomas Brocato, Lloyd Gosselink Rochelle & Townsend, P.C.

FROM: Paul Robbins, Intervener in Texas Gas Service Rate Case GUD 10928

DATE: March 27, 2020

SUBJECT: Testimony for Austin Rate Case

Dear Rondella and Thomas,

You have asked that I submit testimony by 5 PM on March 27.  I am sending what I can.  It is unfortunate the TGS has not fully complied with my information requests, so this testimony may be supplemented later when I have more information.

1. Residential Rate Structure

I propose that the monthly Residential service charge of $18.81 be drastically lowered to what CPS Energy (San Antonio) charges, which is $9.55.

I propose a second-tier be created for the top 7% of customers.  This will be 15% higher than average, with the increased revenue being used to lower rates for the other 93% of customers. 

1.1 Monthly Service Fees

I have contended for many years that the rate structure of TGS is regressive.  The more a customer uses, the less they pay per unit of energy consumed.  This discourages energy efficiency, and adversely affects lower-income customers, who use less energy because they have less discretionary income.

I have conducted a benchmark analysis of the larger gas utilities in the U.S. as measured by the “2018 Ranking of Companies By Residential Sales Customers” from the American Gas Association.  I reviewed the top 10 utilities, which represent over 23 million Residential customers with a gross revenue of over $13 billion.

Some of these utilities operate in multiple states, and regions within states.  The tariffs usually differ.  Still, Texas Gas Service’s Central Texas service charge is on the high end.

26 out of 32 regional or state tariffs for the top 10 national gas utilities that serve Residential customers that I reviewed had a monthly service charge lower than TGS-Austin.  Some were only lower by a small amount, but 7 were less than half the TGS-Austin charge.

Another benchmark is comparing TGS to itself.  TGS-Austin is even higher than the company’s other Texas regions.  The monthly charges of the 5 other TGS-Texas regions range from $12.42 to $18.69.

Still another benchmark is comparing the gas company to Austin’s electric, water, and wastewater utilities, which charge a substantially smaller customer charge in relation to their base revenue requirements.  If TGS-Austin emulated Austin Energy for example, it would only charge a $3.14 monthly fee.

TGS is almost twice as high as CPS Energy, which charges a monthly service charge of $9.55.  Given its similarity in climate, this seems a good benchmark for Austin to follow.

Substantially lowering the monthly fee will substantially flatten the regressive rate structure that is in place.  Revenue from this reduction can be made up by a weather-normalized volume-fee increase.

Some may be curious as to how such a rate affects low-income customers.  During discovery, I requested that TGS send consumption information by zip code.  I took this information and correlated it with 2017 ACS Census (1-Year) estimates of Median Household Income.  Below are the results.  The highest quartile of income uses substantially more (68%) than the lowest quartile.

1.2 Second Tier

Information provided by TGS during this rate case shows the number of customers consuming various volumes of fuel.  There were only 7% of customers that consumed over 587 ccf.  This was 64% above average.  However, these 7% of customers used 15% of total volume.

Austin Energy and Austin Water have steeply tiered progressive rates, where the more customers use, the more they pay per unit.  Even though several Austin City Council Members stated publicly that they were interested in a progressive rate structure for TGS in November of 2018, the gas company has ignored the issue.

Some people have suggested that tiered rates be studied further before they are implemented.  However, since it may be 5 years until the next rate case, I propose a 15% increase on these higher-volume customers, which would be used to lower the bills for the balance of TGS customers.  A more sophisticated tier system can be proposed in the next rate case.

2. Customer Assistance Program

I propose that TGS-Austin implement a surcharge sufficient to establish a low-income assistance program that, combined with gas company contributions, would raise $500,000 revenue.  TGS should match revenue with the funding that comes from ratepayers.  This money should be given to income-qualified customers.

In FY 2019, Austin Energy spent $9.6 million on customer assistance; Austin Water spent about $5.4 million, and the Austin drainage utility spend about $600,000.  Yet last year, the gas company spent only $78,000, and half of this was from charitable contributions of individuals.

Putting a surcharge on the bill of all gas sales to create a $500,000 year program (in addition to charitable contributions) will increase the average residential bill by no more than 1/6 of 1%.

3. Renewable Energy Surcharge Fund

I propose that TGS-Austin implement a surcharge sufficient to establish a fund for research of fuel, hydrocarbons, and process heat derived from renewable energy that can substitute for natural gas. 

Austin Energy’s latest Resource, Generation and Climate Protection Plan has a goal of being 93% carbon free by 2030 and completely carbon free by 2035.

TGS has no plan at all to adopt renewable energy, and few if any currently economic technologies to do so.  A surcharge on all gas sales (similar to the one proposed for Customer Assistance Program for TGS-Austin described above) could collect $300,000 of renewable energy research at credible laboratories will set a precedent for the country.

Decisions on spending would be directed by the City of Austin, quite possibly its Climate Program, with input from TGS if the company desires it.

Though this surcharge should occur with or without gas company matching contributions, it would be in the company’s self interest to ensure its long-term future.

No hearing on gas rates this week

Commentary: Austin needs to look out for Texas Gas customers

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.