Austin Energy is seeking its first base rate increase since 2016. The City Council will hold a public hearing on the matter at some point today and the Council may vote on the matter afterward.
Before discussing that, I want to first acknowledge that I once worked for Austin Energy. I worked as a temporary employee, helping run a national effort to organize a coalition of utilities, national security advocates, and others to urge carmakers to manufacture plug-in hybrid electric vehicles. Also, as a Council Member, I helped guide policy from 1996 to 2005, during the time when Austin Energy became the national leader in the use of renewable energy. The points I’m making here, however, are consistent with points I made, and beliefs I had, well before I got either of those gigs.
The proposed rate increase has caused quite an uproar. A broad range of activists is opposing the rate increase. A group of activists even staged a protest in front of Austin Energy’s headquarters, with a wide array of demands. One protestor, shown in the Austin Chronicle, even brandished a sign reading, “Stop Predatory Energy Rate Increases.”
Some of the activist demands are contradictory, like not raising rates while increasing expenses. Others are more serious, like concerns that reducing the number of tiers in the rate structure, as Austin Energy proposes to do, could possibly damage the utility’s longtime successful efforts on conservation.
One of the most controversial parts of Austin Energy’s proposal is an increase in the fixed residential service fee from $10 to $25. There are concerns that the rise in the fixed fee will hit low-income people the hardest. Austin Energy officials counter that low-income customers enrolled in the utility’s generous and ever expanding Customer Assistance Program, or CAP, do not pay the fixed charge. Also, flat fees are a way of guaranteeing a base income for the utility i.e. helping it remain financially healthy — and to help prevent swings in revenue due to weather or other circumstances.
It’s quite a sound and fury that the Council faces. Over the decades the back and forth between activists and the utility, and between activists and the City Council, has been crucially important in making Austin Energy into a progressive utility and a long-time national leader in renewable energy and conservation. Here, however, I want to make a larger and more fundamental point about what makes all this possible.
Austin Energy is a public utility, owned by the citizens of Austin. Thus, it is important to have a healthy public utility, including financially healthy.
Public utilities are critically important. They are one of the foundations of both the New Deal and of progressivism in the United States. Based on conversations and observations, it seems to me that some of our progressive Council Members — current and recently past — do not fully understand this.
The financial health of Austin’s public utility is something that should be paramount to Council Members as they undertake their deliberations. For one thing, Austin Energy provides roughly ten percent of the City’s General Fund, through its General Fund Transfer. (Austin Water, the City’s publicly owned water utility, provides roughly another four percent.) The General Fund Transfer thus helps finance police, fire, EMS, parks, libraries, and much more. The General Fund Transfer also helps make it possible to fund a lot of other initiatives that activists have persuaded Council to add to the budget. Also, the General Fund Transfer keeps property taxes from being even higher than they are.
When a city owns a public utility, it means that the utility can have policies that go beyond the bottom line; like having strong programs for low-income customers, like conservation programs, and like being in the vanguard of renewable energy — all of which Austin Energy has done for many years now.
All of this rests, however, on the utility being financially healthy.
So, in conclusion, I am not saying that the Council should just pass the rate hike without question or deliberation. I am saying, however, that they should find a way to get Austin Energy the full amount of money that the utility is requesting.
I’m not saying that the Council should ignore the concerns of activists. I’m saying that the Council should take the concerns of activists under advisement and give them serious consideration. But, the Mayor and Council Members should not be playing to activists for political points and applause in making such a crucially important decision.
I’m saying that, in sorting through it all, the guiding light of the Mayor and Council Members should be determining what is the best decision for the health of the utility; and what is, in balance, the best decision for the owners of the utility — that being all the citizens of Austin.
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