Austin Energy

No. 3 utility has its hands full

Published In: Intelligent Utility March / April 2012

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YOU WILL HAVE TO FORGIVE THE FOLKS AT AUSTIN ENERGY IF they don't notice they dropped a spot in the Intelligent Utility's UtiliQ Top 25 Intelligent Utilities rankings, from second place in 2010 to third in 2011.

They have been such busy campers continuing to transform energy consumption and delivery in the Texas capital-and unveiling Austin Energy's first proposed rate increase in 17 years-that they probably won't even notice their new spot in the top 25.

"We've got our hands full," said Jerry Hernandez, Austin Energy's director of smart grid and system operations, seemingly enjoying the understatement. "We are keeping pretty busy."

Rolling out renewables and efficiencies
The nation's ninth largest community-owned electric utility, Austin Energy has about 430,000 customers and covers a population of almost 1 million. It relies on energy sources such as nuclear, coal, natural gas and renewables, generating almost 3,000 megawatts of power.

And on Jan. 7, Austin Energy unveiled a massive solar panel site east of the city. The privately built Webberville solar project will generate enough electricity to power 5,000 homes annually from 127,000 solar panels on a 380-acre site. The 30-megawatt facility is considered one of the largest in the country.

Among its ongoing efforts, the city-owned utility has been retrofitting all of Austin's streetlights, a job that is about one-third complete. The new "smart lights" will inform Austin Energy when a light no longer shines, a much more proactive situation instead of waiting to hear from a passerby if a streetlight is out, Hernandez said.

The utility also recently rolled out a mobile workforce management system to improve workers' efficiency, and it is looking at migrating its internal management system to a large-screen video setup that is expected to enhance situational awareness.

No-stress smart meter conversion
Austin Energy has completed its conversion to smart meters and is now gathering information from its advanced metering infrastructure (AMI) to improve responses to outages. It is also "looking behind the meter," Hernandez said, to determine how best to work with customers to manage their energy use, especially when it comes to large drags on the system like lighting.

Regarding the implementation of the smart meter program, which has been controversial in some areas of the country, Hernandez believes Austin Energy was "rather successful in our rollout." He credits a concerted advertising and marketing campaign for informing the public about the benefits of the smart meter program and how the utility would go about installing the new meters.

"We really didn't have a lot of customer complaints because we were very transparent with the whole thing," said Hernandez.

Balancing budgets and reserves
When it comes to the public's reaction to the proposed rate increase, however, Hernandez is not expecting a sustained opposition, especially if consumers realize Austin Energy needs the revenue to maintain popular efforts, such as its voluntary green pricing program, GreenChoice, the nation's most successful utility-sponsored, voluntary green pricing program for eight years running.

In fact, Austin Energy has been an ATM for the city, chipping in $77 million to the municipality's general fund in 2006, a source of revenue that rose to $105 million in 2011, helping the city council cover expenses that would otherwise have had to be covered by unpopular hikes in property taxes.

But now Austin Energy needs $126 million more in yearly revenue to cover its budget, deal with rising costs and replenish its reserves, the Austin American-Statesman reported. On its Web site, Austin Energy projects a $75 million deficit for the upcoming fiscal year, which started Oct. 1, 2011.

Two-pronged approach to rate increase proposed
Austin Energy officials met with the city council on Dec. 14, 2011, to discuss its proposed 12.5 percent rate increase, which would have seen residential customers who use 1,500 kWh or less a month pay $10 to $20 more, one of a series of suggested rate hikes that would have targeted small businesses, churches, apartment dwellings and homeowners.

Not surprisingly, some public outcry ensued. Austin Energy went back to the drawing board and on Feb. 2 it suggested a two-pronged approach to the increase: raise rates by 8.7 percent sometime this year and by another 3.8 percent in October 2014. The city council will revisit the issue in March.

As can be imagined, the rate increase has received mixed reviews. One councilor, Bill Spelman, told the American-Statesman that the revamped plan suggests "we're headed in the right direction." However, church groups are still not satisfied by changes proposed by Austin Energy, and an advocate for suburban customers, Roger Borgelt, told the local daily newspaper that the energy provider's new plan "couldn't even be called throwing a bone. I'd call it throwing a fingernail."

Austin Energy has said that it must focus on small businesses and residential areas because they have historically been paying less than what it costs to service those customers. According to the new plan, homeowners would see their monthly electrical bill climb from $114 to $127 in 2012, and then inch up another $3 per month in 2014.

Accurately reflecting true costs
Just like any Austin citizen, Hernandez is bracing himself for his new electricity bill, but the reality is these are financially tight times and the utility is "trying to tighten our belt too." He noted that the current rates reflect the life and times of 17 years ago, when Texans would crank up the air conditioning and leave a window open, an amazingly wasteful exercise by today's standards, but one that also benefited utility providers like Austin Energy: the more energy used, the more revenue it collected.

But Austin Energy has been running a deficit for the past three to four years, Hernandez added, so now it's time to establish a rate structure that accurately reflects the costs of delivering energy to the hip and not-so-hip customers that populate the self-styled "Live Music Capital of the World."

Hernandez doubts he'll see a substantive change among customers in his laid-back hometown, no radical revolt or reaction to the rate increase if it is approved.

If there is, the busy Austin Energy crew is used to being busy.

 

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