Energy in the News: Audit of Customer Assistance Program

Auditors to look at Austin Energy’s customer assistance program

Wealthy home in Old West Austin receiving low-income assistance money in 2020
Wealthy home in Old West Austin receiving low-income assistance money in 2020

Friday, August 20, 2021 by Jo CliftonThe Austin Monitor

Three members of the City Council Audit & Finance Committee want City Auditor Corrie Stokes to look into whether an Austin Energy program that offers bill relief to utility customers is helping the right people. According to a spokesperson for the utility, 34,008 customers are currently enrolled in the program. There were 35,540 last July, and 30,819 in July 2019. Austin Energy discounts bills for those customers by 10 to 15 percent.

Council members Alison Alter and Kathie Tovo and Mayor Steve Adler asked Stokes during Wednesday’s committee meeting to look into questions raised by consumer advocate Paul Robbins and members of the Water and Wastewater Commission.

Robbins, who appeared before the committee Wednesday, has consistently pointed out that some utility customers who receive reduced bills under the program live in large homes, with some owning additional real estate. One reason for this likely relates to the fact that people who enroll in Medicaid, the nutritional program known as SNAP, Supplemental Security Income, and several other federal programs are automatically enrolled in the utility’s CAP.

William Moriarty, who chairs the city’s Water and Wastewater Commission, told the committee his panel was concerned that people who are not really eligible are getting benefits. Moriarty told the Austin Monitor that the commission had questioned Austin Energy staff about Robbins’ findings. Their response, he said, was that “it’s a very minimal problem. Paul suggested it could be 10 to 20 percent.”

In the past, Moriarty said, there were only 7,000 recipients, but over the years, the number of customers using the program has increased by a factor of five. He noted that the Water and Wastewater Commission was accustomed to looking at what other cities have done and learning from their successes and mistakes. He suggested that Austin Energy should follow their example and consider how other utilities handle customer assistance when making changes to its program.

Robbins and Moriarty say that customers who are able to pay their bills without help are taking advantage of the program and taking money away from others who truly need the assistance.

According to Moriarty, no one on the commission is questioning the purpose of the program, but they believe that if the program is not working properly, “that kind of damages the whole thing.” He said if even one person is benefiting from the program who should not be, “I thought one was too many.”

Stokes will work with the three Council sponsors to come up with a scope of work for auditors to start looking at the program. After the report, Council as a whole may request a full audit be done next year.

Energy in the News: No, the Texas Power Grid is Not Fixed

Opinion: No, the Texas power grid is not fixed

By Paul Robbins, Austin American Statesman

August 7, 2021

Gov. Greg Abbott signed two laws on June 2 to fortify the Texas power system. He proclaimed then that “everything that needed to be done was done to fix the power grid in Texas.” On what planet?

In the land of laws and sausage (two things you never want to see made), the Legislature was tasked to find solutions to the Texas-size electric system collapse that occurred in February. Lawmakers passed some measures but left too much unfinished for anyone to feel comfortable.

Power Plant Resilience: The largest reason for grid failure was that many power plants were not properly weatherized to withstand severe low temperatures. One of the laws Abbott signed now requires this, but there is no official date for when the weatherization must be done. The rules implementing these weatherization requirements will not even be finalized until November.

It will also take time and money — by one estimate, $430 million — for weatherization to be completed. The Texas Competitive Power Advocates, which represents power plant owners, is currently haggling with the Public Utility Commission over who should pay for the weatherization, consumers or power plant owners. The group has even stated some power plants may not stay online unless they receive consumer funding.

The only upside is that it is unlikely that a winter storm of the magnitude that occurred in February will reoccur again next year. But if a similar disaster strikes, there is no assurance that Texas will be ready.

Apparently, many Austinites feel the same way. There has been a run on emergency natural gas generators. A public record search revealed that there have been permits for 164 such installations pulled in the first half of 2021, compared to 44 in all of 2020.  Almost all of these permits were in wealthy areas of the city.

Building Efficiency: Another thing that Texas sorely needs to reform is its laggard programs for energy efficiency.  A friend of mine survived the winter storm in a newly-built, energy-efficient home without a fireplace. Despite three days without heat, the temperature never went below 47 degrees. While uncomfortable, it was survivable, at least compared to Texans who had icicles on their ceilings.

A 2017 benchmark study by the Electric Power Research Institute estimated that in 2020, Texans would only achieve 11% of their total potential savings from energy efficiency, while 38 states and Washington, DC had higher rates of achievement.

Sadly, building efficiency has become a partisan issue because it is advocated by people who want to lower carbon emissions. But I am having a hard time accepting that freezing to death is part of the Republican platform.

Maximum Charges: The Electric Reliability Council of Texas, which operates the state’s power grid, allows huge electric charges during periods of extreme demand in order to incentivize the building of costly new power plants. These charges can be as high as $2 to $9 per kilowatt-hour, compared to 2 cents to 3 cents per kilowatt-hour during average times.

Unfortunately, neither the Public Utility Commission nor the Legislature has eliminated or decoupled these extreme charges from emergencies such as disastrous weather events. If another severe winter storm were to happen next year, price gouging could happenagain.

Repricing: The record-breaking cold spell last February is only surpassed by the record-breaking price gouging that occurred in the energy markets. Estimates of this pillage range widely, but easily approached $16 billion and may be over $46 billion. The Legislature could have ordered a repricing of the market for some or all of these costs, but ultimately did nothing.

Texans who froze last winter deserve more than sound bites to address one of the worst emergencies in the state’s history, and the record-shocking economic fallout that followed. Fixing these problems should be the main priority of the next specially called legislative session.

Robbins is an Austin-based environmental activist and consumer advocate who has worked on energy issues for over four decades.

Energy in the News: Austin Gas Companies Seek Rate Hikes

Is imagining a “progressive” natural gas utility even possible?

Or are these fossil-fuel marketing companies locked into a fossilized business model?

Below is a recent news story about huge gas utility rate hikes in Austin, but it is followed by a summary articulating a better way.

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Gas companies seek interim rate hikes

The Austin Monitor, Friday, April 23, 2021 by Jo Clifton

The three companies that supply natural gas to Austin residential and commercial customers are each seeking a rate increase under the Gas Reliability Infrastructure Program, or GRIP. City Council acted on April 8 and again on Thursday to temporarily suspend implementation of those increases. However, the increases are likely to take effect after a short period of review because of the way the utility law is written.

Texas Gas Service, which serves the majority of Austin customers, is seeking an interim rate increase of about $10.7 million from customers in the sprawling area between Bayou Vista and Beaumont to Austin.

CenterPoint Energy is seeking an additional $44.7 million in its South Texas Division, and Atmos Energy Corporation is seeking an interim rate increase of more than $111 million, according to documentation filed with the city. All three companies are requesting rate increases under the GRIP statute to reimburse themselves for money spent in 2020, mostly to replace old pipe, according to Larry Graham, manager of regulatory affairs for Texas Gas Service.

Each company has filed documentation to show why they should be allowed to charge more within 45 days of their filing. The amounts are based on their 2020 expenditures and are technically subject to City Council approval.

However, as Rondella Hawkins, the city’s telecommunications and regulatory affairs officer, explains, GRIP is not a typical rate increase. She told the Austin Monitor via email that a Texas Supreme Court ruling concluded that the GRIP statute provides only for “a ministerial review of the utility’s findings to ensure compliance” with state law and Railroad Commission rules. She pointed out that the rate increases allowed under GRIP will be subject to review during their next comprehensive rate review.

Consumer advocate Paul Robbins protested at both the April 8 Council meeting and Thursday’s meeting, telling Council if the increase for Texas Gas Service is approved, the amount received by the company will have increased 25 percent since 2019.

Graham said Robbins “makes conjectures that are unfounded, and his math is wrong and his conclusions are wrong.”

According to its filing, TGS proposes to increase the customer charge from the current $16 a month to $18.38 a month. Commercial customers, who now pay $53.33 a month, will see an increase of $10.06 to $63.39.

Graham said his company has the vast majority of customers in the Austin area, while Atmos has around 10,000 and CenterPoint fewer than 1,000.

Documentation provided by Atmos Energy shows the current residential customer charge is $26.45 per month. With a rate increase of $4.55, that monthly charge goes to $31.

CenterPoint currently charges $22.59 per month and proposes an increase of $2.33, for a new rate of $24.92.

Contrary to what Hawkins said, Robbins says Council should “give the Resource Management Commission or another city commission the ability to review all aspects of the gas utility. The increased oversight will over time create a better chance for fairer rates.” In addition, Robbins suggests that Council adopt a resolution indicating that it wants to ask for bids from competing utilities “when the gas company’s franchise begins renegotiation two years from now.”

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A Gas Company That Cares About Consumers and the Environment

Progressive Gas Rates: Currently, Texas Gas Service (TGS) has a regressive rate structure, where the more you pay, the less you pay per unit.  A progressive gas company should use progressive rate structures, where the more you use, the more you pay per unit.  These new rates can be accomplished with low monthly service charges and tiered rates for consumption.

The lower a monthly service charge is, the more money that will be charged from actual consumption.  This encourages conservation, while at the same time helping the poor, who generally use less energy.

In 2020, I reviewed the rates of the largest gas companies in the U.S.; 26 out of 32 regional or state tariffs reviewed had a monthly service charge lower than TGS-Austin.  Some were only lower by a small amount, but 7 were less than half of the TGS-Austin charge.

In 2020, the TGS monthly charge was twice as high as CPS Energy in San Antonio.  Given the similarity in climate, this seems a good benchmark for Austin to follow.

Another thing that a progressive gas company would do is charge a higher price for higher blocks of use, or tiers.  Both Austin Energy and Austin Water have 5 tiers, where each block of higher consumption is charged more per unit than the last.  TGS, by contrast, has flat rates, where each unit of energy costs the same.

Large gas companies that have progressive tier charges include: SoCalGas, Pacific Gas & Electric, and Southwest Gas in California; Southwest Gas in Arizona (for low-income ratepayers); and Spire Energy in Missouri (in summer months).

Low-Income Bill Assistance: It is common for gas utilities in the states of California, New York, and Massachusetts to have monthly discounts or lower gas rates for low-income customers.  Our neighbors at CPS Energy in San Antonio also have low-income discounts for gas service.  Austin utilities (electric, water, drainage) have discounts and emergency assistance amounting to about $30 million a year.  However, TGS-Austin will only be spending about $100,000 this year.

Capital Recovery Fees: Connecting new customers in a growing city costs a considerable amount of money.  Who pays for it, the new customer, or existing customers?  At Austin Energy and Austin Water, new customers are charged full hook-up costs.  At TGS, it may be as low as 10%.  After Austin’s electric and water utilities began collecting full costs, both of them lowered their rates.

Clean Energy Research: While electric utilities are using wind and solar cells and retiring coal plants to lower their carbon emissions, natural gas utilities currently have little chance to reduce carbon emissions other than energy efficiency and more efficient gas mains.

Currently, most renewable gas sources are profoundly expensive.  However, some gas progressive companies are investing in research and development for a cleaner, safer utility.

SoCalGas, which serves much of Southern California, spent over $16 million in 2020 on Research and Development.  About 80% of this money was related to clean energy and energy efficiency.  The remainder was related to efficient operations that lower bills, including better prevention of gas leaks common in everyday operation.  In 2020, there were 386 active projects.

Most R&D funds are leveraged with other partners at about a 7 to 1 ratio.  These partners include the National Renewable Energy Laboratory, the California Energy Commission, and the Gas Technology Institute.

Good Management of Energy-Efficiency Programs: Energy conservation is usually a good thing for ratepayers and the environment.  However, a considerable amount of TGS-Austin conservation funds are spent for equipment that will cost more than the gas it is saving.  To some extent, these conservation funds are being used as a glorified marketing program.

A BETTER DIRECTION: Negotiations on the TGS-Austin franchise – its license to operate – will begin in the near future.  Austin should seek bids from competing gas utilities that will better reflect our community values.

Energy in the News: Consumer advocate seeks audit of Austin Energy program

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.”

Click here to see Complaint

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Energy in the News: Council Rejects Gas Rate Hike

With all the confusion surrounding the pandemic, most Austinites are not aware that the regional gas utility has asked for a record 22% increase in Residential rates.  This outrageous increase is even more onerous in the recession we have entered.
 
Below is a recent news story about this.  Following the story is a press release sent out on behalf of environmental and consumer groups opposing the rate increase. 
 
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Rate Story.png
 
Friday, May 8, 2020 by Jo Clifton
The Austin Monitor

Council rejects Texas Gas Service rate hike

City Council voted unanimously Thursday to reject new rates proposed by Texas Gas Service. The vote came as no surprise. The decision had strong support from a group of environmental and consumer advocates who wrote a letter to Council last week urging them to reject the new rates, which would have brought in more than $15.6 million in additional revenue for the company.

Paul Robbins, one of the signees of the letter, told Council Thursday that his group proposed that the gas company lower rates, provide more assistance to low-income customers and encourage conservation and renewable energy.

The case will now be appealed to the Texas Railroad Commission, which has final say over the rates. Current rates will remain in effect until the commission makes a decision.

Even though it seems an especially difficult time to be asking for a rate increase, Larry Graham, who represents TGS, has pointed out that no one in the U.S. knew about Covid-19 when the new rates were proposed in December.

Rondella Hawkins, telecommunications and regulatory affairs officer for the city of Austin, told Council at Thursday’s hearing that TGS is seeking not only to raise rates for Austinites but to consolidate the Central Texas region with the Gulf Coast region before the Railroad Commission. That would result in fewer trips before regulatory authorities. Graham told the Austin Monitor that Texas is the only state that allows cities to set rates.

Austin was part of the coalition of cities looking at the rate request and hiring experts to advise them. Those experts concluded that the rate request was unreasonable. In their ordinance rejecting the gas company’s request, the city is asking for compensation for paying those experts. Thomas Brocato of Lloyd Gosselink Rochelle & Townsend is advising the city.

Brocato noted that the commission will have until Aug. 4 to make a final decision on the rates. Graham is expecting considerably more negotiation with the cities before the Railroad Commission. He should also expect to see more of Robbins. Robbins tried to intervene in the case before the Railroad Commission, but the administrative law judge handling the case denied that request, Robbins told the Monitor. However, he said Thursday now that the case is going back to the commission, he will likely try to intervene again.

Robbins and other environmentalists have pointed out that while TGS charges a monthly fee of $18.81, CPS Energy in San Antonio charges only $9.55. Robbins has also proposed a higher rate for customers who use the most gas. He and other advocates have also proposed that TGS set up a surcharge on customer bills, similar to what Austin Energy has, to lower bills for low-income customers.

Council Member Kathie Tovo added a direction to Brocato and city staff to emphasize the fact that Council supports the recommendations Robbins and the other advocates made in their letter to Council.

Photo made available through a Creative Commons license.

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FOR IMMEDIATE RELEASE                                                                

May 6, 2020

Environmental and Consumer Groups Oppose Gas Rate Increase

AUSTIN, TX- Nine local or state environmental and consumer groups have called in unison for the Austin City Council to reject a record 22% rate increase for Texas Gas Service set to be voted on at this Thursday’s Council meeting. This increase will cause economic stress while the region and country are in a tailspin recession. These groups are collectively asking for long-term reforms that will create lower rates, assist low-income ratepayers, and encourage energy conservation and renewable energy.

The signers included representatives of:

  • The Austin Tenants Council;
  • Clean Water Action;
  • Public Citizen of Texas;
  • Local and state chapters of the Sierra Club;
  • Solar Austin;
  • Texas Campaign for the Environment;
  • Climate Action Now;
  • 350-Austin

“The Sierra Club is opposed to this proposed gas rate hike,” said Cyrus Reed, Conservation Director of Sierra Club’s Lone Star Chapter. “The proposal would impact Austin ratepayers without encouraging them to conserve their gas use, would not protect limited-income Austinites and would not work toward a day when we could look at alternatives to fracked gas.” 

In a letter sent to the Austin Council, advocates asked for more than a rejection of unjustified rate increases during a time of high unemployment. They requested the following actions.

  1. Increase Low-Income Assistance –  This year, City of Austin will provide about $62 million in low-income assistance and rate relief. In 2019, Texas Gas Service provided only $78,000 to indigent ratepayers, and 40% of this came from charity. Advocates are asking Council for $500,000, in addition to charitable contributions.

  2. Restructure Residential Rates – Texas Gas Service has regressive Residential rates: the more you use the less you pay per unit. Austin electric and water utilities do the opposite.  Their progressive rates charge less to customers who use less.  This encourages conservation, and helps lower-income customers who generally use less because they have less disposable income.

  3. Fund Renewable Energy Research – Austin Energy plans to be carbon-free by 2035.  Texas Gas Service has no plans at all to adopt renewable energy. Advocates ask that a surcharge be levied to fund research of technologies that replace fossil fuels.

  4. Charge Full Capital Recovery Fees – Austin Energy and Austin Water both require full compensation from developers and builders for new hook-ups.  Existing customers do not subsidize new customers. This has led to rate decreases. The gas company, however, spent almost $90 million on new customers in the last 4 years, and most of it is being paid by existing ratepayers.

“This jaw-dropping 22% rate increase is being made at a time when other Austin utilities are lowering their rates to help customers survive the pandemic recession,” complained Paul Robbins, an advocate working on energy issues for decades.  “Austin electric and water utilities will provide about $26 million in low-income customer assistance this year, and another $35 million in general rate relief. Texas Gas Service wants to raise Residential rates almost $18 million, yet the company has no substantial assistance program to help the poor.”

“The Texas Gas rate structure needs to be changed to encourage and reward energy conservation,” said Kaiba White of Public Citizen. “Austin is making great progress in transitioning to renewable energy for electricity production, but there’s no real strategy to reduce the use of methane gas use in buildings. Given the devastating impact of methane on the climate, this needs to be a priority.”

photo

Lone Star Chapter
Sierra Club
AUSTIN, TX

 

Testimony in Texas Gas Service Rate Case

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.

  1. 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%.

  1. 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.

Energy in the News: Gas Rate Case Issues

No hearing on gas rates this week

The Austin Monitor
Tuesday, April 7, 2020 by Jo Clifton

Negotiators for the city of Austin and Texas Gas Service, which provides residential and commercial services to Austin and the surrounding communities, have not been able to reach agreement on new rates for residential customers, Larry Graham, a spokesperson for the gas company, told the Austin Monitor Monday.

Rondella Hawkins, the city’s officer for telecommunications and regulatory affairs, confirmed for the Monitor that the hearing would be postponed to May 7, with any rate increase delayed until June 5.

Graham said under normal circumstances Council would have to decide either this week or on April 23 whether to accept or reject the gas company’s proposal. The proposal would typically be worked out between a consultant for Austin, representatives from smaller cities within the county and a representative of the Texas Railroad Commission, which represents customers in the unincorporated parts of Travis County.

Under state law, the Council had until sometime in early May to accept the proposal or reject it, allowing Texas Gas Service to appeal to the Railroad Commission, Graham said.

However, because of difficulties posed by precautions taken against the spread of Covid-19, the company has decided to request a postponement to give the parties more time to reach an agreement.

There are several issues preventing an agreement, as outlined in written testimony from consumer advocate Paul Robbins. Robbins shared his concerns about the gas company’s request with Rondella Hawkins and attorney Thomas Brocato, a city consultant with Lloyd Gosselink Rochelle & Townsend.

Texas Gas Service proposes a monthly service charge of $18.81, although Graham said he does not expect a rate that high when negotiations conclude. However, it is unlikely he would agree to what Robbins proposes – a monthly service charge of $9.55. That would match the amount charged by CPS Energy of San Antonio, a city-owned utility. Robbins believes that’s a fair amount, especially given the monthly fees charged by Austin Energy and Austin Water, which charge about $3 and $5 per month respectively, he said.

According to Robbins, the bigger problem is that while Austin Energy and Austin Water have deeply tiered progressive rates, Texas Gas Service does not. That means customers who use the most pay more per unit of energy or water used, while those who use less pay less per unit. Graham says the gas company fundamentally disagrees with that approach, wishing to charge each customer the same amount for each CCF of gas used.

The gas company incurs its greatest costs in owning, operating and maintaining its pipeline system. If it lowered its monthly fees but raised gas prices with the amount used, Graham argues that would be particularly hard on the economically disadvantaged during cold winter months when they would see much higher gas bills.

Texas Gas Service has a low-income assistance program but spent only $78,000 on it during Fiscal Year 2018-19, according to Robbins. Half of that comes from the company and half from voluntary contributions. Austin Energy spent $9.6 million and Austin Water spent $5.4 million on their customer assistance programs during the same time period. If the gas company put a small surcharge on each bill, it could create a $500,000-a-year program to help economically disadvantaged customers, he argues.

Of course, the city owns Austin Energy and Austin Water. Any dividends from the sale of electricity and water go into the city budget, not into the pockets of investors. Texas Gas Service is a subsidiary of ONE Gas Inc.

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Energy in the News: Austin needs to look out for Texas Gas customers

Courtesy Pixabay
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.

Austin Leads in Residential Efficiency in 2017

Art: John Dolley/© Paul Robbins 1998

Every year, the U.S. Energy Information Administration posts an annual benchmark report of all electric utilities in the U.S. The Final data from the 2017 EIA-861 is now posted. It has mostly good news for Austin Energy (AE).

Average Residential consumption continues to be profoundly low for AE. This is in all likelihood because of its conservation programs, building codes, green building program, and progressive rate structure.

Austin Energy is part of the Electric Reliability Council of Texas (ERCOT) grid, which supplies about 90% of the state’s electric load. Only 1% of ERCOT Residential customers have consumption lower than AE customers, and AE customers are 25% below the ERCOT average. Only 3% have average bills lower than AE customers.  Only 34% of ERCOT Residential customers have rates lower than Austin.

The Commercial class does not look as good. This is because all you can compare with EIA data here is the rate. It is not proper to compare average Commercial and Industrial class bills or consumption. Unlike Residential, which has one main type of building stock, Commercial and Industrial contain a myriad of building types, and various utilities have different definitions of what these rate classes are anyway.

In Commercial, 54% of ERCOT customers have rates lower than AE. So it is on the high side, though not egregiously.

For Industrial rates, 51% of ERCOT customers have rates lower than AE. So Austin is very close to its goal of being no higher than the average for utilities in the state.

If a benchmark study could be done across ERCOT, it would probably find that Austin’s commercial buildings have lower usage compared to buildings in other major Texas cities because of our conservation programs and building codes.

Note: Austin Energy will eventually conduct its own analysis. AE will likely compare Austin with Texas, not ERCOT. El Paso Electric is not in ERCOT, and is in a different climate zone. The analysis will likely show that El Paso has lower Residential consumption than AE. However, I do not think this is a fair comparison. Comparing ERCOT customers is apples-to-apples.

June 2018 Customer Assistance Program Update

June 18, 2018

To Austin Energy:

I have been waiting since October of last year for data to show how well the repairs for the automatic enrollment system of the Customer Assistance Program have worked.  I have now analyzed the information from May of this year, and there is some good news.

It would appear that about 91% of the 554 CAP homes that I found to have exceeded an improvement value of $250,000 in January of 2017 have been removed from the CAP roles.   This was the threshold for determining if customers in these homes needed to be income qualified.

Another 1% had decreased property improvement values from the appraisal districts in the last year, so they were also justified in being allowed to continue participation.

However, about 2% of participants live in homes that exceed $250,000 in improvement values and cannot be justified unless they were income qualified.  I have asked for the list of income-qualified individuals under Open Records to see if their participation is indeed valid.

The larger problem, though, is those customers who owned two or more properties.  About 35, or 6%, were in this category.  One of these customers had almost $15 million in property assets in 2016.  If all of these 35 homes received discounts for electricity, water, and drainage, it would amount to about $23,000 in misspent money.

What is most frustrating is that I gave Austin Energy my dataset that identified these homes, so it would have been a simple matter to check the current participation roles against them.  This part of the repair is obviously not working and needs to be attended to immediately.

It should not be up to one skinny activist to continue to do this kind of quality control inspection as a volunteer, and AE staff needs to develop the in-house trouble-shooting ability to prevent this from reoccurring.

Other CAP Concerns

While I congratulate your staff for running a better system, on a higher level, I have fundamental concerns about CAP that go way beyond the accuracy of auto-enrollment.

  1. The $250,000 threshold is artificial and allows some wealthy homes to continue to participate in CAP. 

Take, for example, this 2,800 square-foot house in Northwest Austin that receives CAP (3604 Alta Court).  In 2017, it was valued by the Travis County Appraisal District at $861,000.  The improvement value was only $118,500.  Were some tragedy to befall this home, there is no way it could be rebuilt for this paltry amount of money.  The improvement value used by the Appraisal District is not an accurate benchmark for determining the wealth of a household, and there is no way we can justify giving money meant to the poor to this home and others like it.

  1. Income Qualification is a better system and will probably save money that can be used to help the poor.

Auto-enrollment is an expensive system to run.  Income qualifying participants is generally more accurate at screening for need, and there would probably be monetary savings from this system that would allow more money to be spent for low-income customers.

For example, the Sacramento Municipal Utility District (SMUD) has only about 20% more customers than Austin Energy.  However, in 2015, SMUD had 2.6 times the number of participants in its low-income discount program as Austin Energy had in the same year.  Its screening method is income verification of each participant that applies.

SMUD has 3 to 4 staff people responsible for verifying participants on a rotation of once every 2 years.  By inference, this staff cost in Austin would only be about $200-300,000 a year.  Contrast this to the cost of administering Austin Energy’s automatic enrollment process of about $1.3 million annually.

There are a number of ways that SMUD participants can apply, but one effective method is for utility staff to simply ask new customers if they want to receive the discount when they apply for service over the phone.

  1. Limiting CAP discounts on electric consumption is a fairer way to distribute money while encouraging energy conservation.

CAP gives a 10% discount no matter how much electricity is consumed. This works against the conservation-based rate structure that the utility has intentionally implemented.

It also works against fairness to CAP participants who are careful with their bills. Consider: A consumer using 1,000 kwh a month would receive an estimated $174 in electricity discounts in 2017, while a high consumer using 3,500 kwh a month would receive an estimated $720 in the same year.  It is not equitable to give energy-wasting customers more than 4 times the discount as energy-conserving customers.

In 2015, the average Austin Energy customer used 894 kwh a month in the entire year, and 1,171 kwh a month during the 4 summer months.  The average customer never exceeded 1,500 kwh, and so never exceeded the 3rd tier of Austin Energy’s 5-tier system of electric rates.

In 2015, $2.2 million, or 21% of total Austin Energy CAP discounts, went to the 4th and 5th tiers of use.  If the money were redistributed to give higher discounts to customers in the first 3 tiers of use, it would be more equitable, while at the same time encouraging conservation.  Distributing this money equitably among all CAP participants would raise the average discount of about $250 in 2015 by about $60 per year.

Critics of this proposed change will say it discriminates against households with more people in them.  While seeming logical on its surface, more careful investigation shows that energy consumption and cost do not increase proportionately with more people.  The 2015 Residential Energy Consumption Survey conducted by the U.S. Energy Information Administration in the Southern U.S. shows the increase in energy use between a 3-person household and a 6-person household is only 18%.  The energy use per square foot between a 3-person household and a 6-person household is almost identical.

  1. CAP has an enormous surplus and no plans are being made to spend it.

In the last 5 years, CAP has received about $8.5 million in revenues above what it has spent on assistance to the poor.  This money is not even garnering interest that could increase its value to low-income residents.

While some of this money may be needed for an official reserve fund, several million dollars could easily be spent to improve or expand assistance.  A direct installation program for low-cost, high payback items such as LEDs and pipe wraps could be started in low-income neighborhoods, yielding a rate of return greater than the investment.  Another alternative for this surplus would be to increase the CAP discount.

Either idea will help more people than the current policy of accruing money in a non-interest bearing account.

In summation, I urge you not only to make proposed changes that will eliminate owners of multiple properties from receiving CAP funds, but go further and thoroughly repair the program so that millions of more dollars are either available or are more fairly distributed.

Sincerely,

Paul Robbins