Energy in the News: Will Austin Pay Taxes on Biomass Plant?

Photo by Warren Getz, NREL

Austin Energy’s purchase of power plant threatens Nacogdoches County

By Philip Jankowski, Austin American Statesman

May 4, 2019 at 6:29 PM

When Austin Energy announced it would purchase an East Texas biomass power plant, executives at the utility projected the $460 million purchase would save the city hundreds of millions.

What Austin Energy didn’t mention was the collateral damage the acquisition could have on the poverty stricken rural East Texas school district, the small emergency services district and the county that have come to rely on the property tax revenue the facility generates.

Paul Robbins, an environmental activist and sometimes critic of Austin Energy, said …

“The humane part of me wants to say, ‘Well, sure.’ But the business part of me says, ‘We bit this bullet in order to get out of an onerous contract. When will this ever end?’”

Energy in the News: Austin Buys Biomass Plant

Austin Energy: Safeguards in place after paying $460M for plant that lost value over the years

KXAN, April 23, 2019

Austin Energy is paying hundreds of millions of dollars to get out of a $2 billion energy contract it entered into back in 2012.  City leaders say they are saving customers money.  But critics say it was a bad deal in the first place.

The City now owns this wood-burning plant in Nacogdoches rather than leasing energy from it like it did before.

Environmental activist Paul Robbins tells me the purchase is the end of a more than $2 billion, long-term mistake.

Paul Robbins: I compared benchmark costs of what a biomass plant should have cost compared to what we were being charged.  The cost difference was stark. It made no sense.

 

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

Energy in the News: Austin Energy to reform its discounts to low-income customers

How one man got Austin Energy to reform its discounts to low-income customers

Jack Craver, Reporter, Energy Industry, Energy Central            March 21, 2018

Paul Robbins has been a thorn in the side of Austin Energy for decades. The longtime environmentalist and consumer advocate comes to City Council meetings regularly to bemoan bad decisions by the municipally-owned utility.

One of his most prominent crusades has been against wasted money in the utility’s Consumer Assistance Program, which is supposed to offer discounts to low-income ratepayers. Robbins, however, has long contended that many of the program’s beneficiaries aren’t low-income at all. He has done this by highlighting expensive homes –– some exceeding $1 million –– that are enlisted in the program.

In presentations to City Council, Robbins displayed photos of the magnificent homes that some of the program beneficiaries live in.

Energy in the News: Council rejects appeal of gas conservation fees    

This story is about misspending of public funds meant for energy efficiency.  If environmentalists do not advocate spending this money wisely, the public will lose trust in us.

Council rejects appeal of gas conservation fees                Wednesday, February 7, 2018 by Jo Clifton, The Austin Monitor

 City Council on Thursday rejected an appeal from environmental and consumer activist Paul Robbins to overturn a staff decision to accept Texas Gas Service’s 2018 conservation adjustment clause rate. The conservation adjustment clause rate is the extra money consumers pay for the utility to fund its conservation programs, such as rebates for appliances and attic insulation.

In addition to Troxclair, Council members Jimmy Flannigan and Ann Kitchen and Mayor Pro Tem Kathie Tovo seemed interested in following up on the questions Robbins raised in his appeal.

Flannigan thanked Robbins. “You know, sometimes – I’m going to say this with love because I’ve been described this way too. Sometimes a passionate nutjob is what you need. And I’ve been that guy from time to time myself, and so thank you for sticking with it and hopefully we’ll have a more substantive conversation next year.”

Photo by Lisafern (Own work) [CC0], via Wikimedia Commons

Energy in the News: Utility Fixing Customer Assistance Program

Monday, September 25, 2017 by Jo Clifton, The Austin Monitor 

Last week, after City Council adopted the Fiscal Year 2017-18 budget, longtime Austin environmental advocate and Austin Energy critic Paul Robbins had something to celebrate. Robbins had been asking Council to reform Austin Energy’s Customer Assistance Program since 2014 and the new budget includes direction to do just that.

…Robbins discovered that several hundred customers on the program, called CAP, had pricey real estate holdings and were not necessarily the low-income people the program was intended to serve.

…Under the new rules adopted by Council, customers will be removed from the program if their home is valued at $250,000 or more and the household income is greater than 200 percent of the federal poverty level guidelines. In addition, CAP customers who own two or more properties within Austin Energy’s service territory and whose income is greater than 200 percent of the federal poverty guidelines will be considered ineligible.

Energy in the News: Other People’s Money?

Public Notice: Other People’s Money                                            Actually, it’s yours. Do you know where it’s going?                       NICK BARBARO, FRI., AUG. 4, 2017, The Austin Chronicle

Last week I wrote about The Austin Environmental Directory 2017-18, a ninth-edition resource recently released by utility and consumer watchdog Paul Robbins. This week Robbins is at it again, releasing another long-awaited follow-up report, titled Misguided Charity, charging that money from Austin Energy’s Customer Assist­ance Program (CAP) – those voluntary contributions that utility customers can make to defray costs for the needy, (*but also a percentage of every utility bill you pay) – is in some cases going instead to wealthy property owners, and to subsidize wasteful consumption.

In this new report, Robbins makes two major policy recommendations: First, that the program should “verify that customers who live in properties with high improvement values really do have low incomes. Council unanimously budgeted money for this in August of 2016 … This could be enacted in a matter of weeks.” Second, and perhaps even easier, would be for AE to eliminate the CAP discount for high-volume electricity users – specifically the fourth and fifth tiers of consumption. “This is just wrong!” Robbins said in a separate email. “The practice encourages waste, while at the same time depriving the average CAP participant of additional discount money.” He estimates this move alone could save the utility some $2 million a year, enough to “increase the average electric discount of $250 a year by about $60.”

Appendices include a “Parade of Homes” – photos and stats on luxury homes that were receiving the CAP discounts as of this January – plus a list of some 56 “CAP Customers With More Than $1 Million in Real Estate Assets.” The report is being distributed to Council and others today, Aug. 3, and will soon be available for download at www.environmentaldirectory.info.

Energy in the News: High-dollar homes still benefiting from utility discount    

Some high-dollar homes still benefiting from Austin Energy utility discount                                                                               Updated: Aug 03, 2017 02:30 PM CDT, Kylie McGivern, KXAN News

AUSTIN (KXAN) — As Austin Energy customers rack up those high energy costs this hot summer, they’re helping foot the bill for the city’s low-income utility discount. But KXAN discovered that the $16 million fund is also benefiting million-dollar homes.

It’s a problem KXAN first revealed back in 2014, after which, Austin Energy promised to fix the system meant for the people who need it most. KXAN asked what’s taking the utility so long to right this wrong.

For the past three years, KXAN has followed Paul Robbins’ work. In that time, the consumer advocate has spent countless hours trying to fix the Customer Assistance Program (CAP), what he calls a “broken program.”