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City plan could increase utility bills, clean energy

"Affordability is the elephant in the room. Clean, reliable and affordable energy-we have to [consider] all those three values," Mayor Lee Leffingwell said. "We have to be able to address cost as we go forward. We want clean energy, but it cannot come at any cost. We imperil our energy company to survive if we don't honor those values."

AUSTIN - Austin leaders have pushed for cleaner energy and have taken proactive steps to help protect the climate since the early '80s, but the decision to introduce higher renewable energy goals has some citizens concerned with how residents will foot the bill.

In April City Council approved Austin Energy's Resource, Generation and Climate Protection Plan, which sets five main goals for the electric utility, including reducing carbon emissions and increasing the use of renewable energy sources to 35 percent by 2020.

During the two years the plan was being put together, Austin Energy Interim General Manager Robert Goode said the city held 10 townhall meetings that drew about 50 people each. There were also approximately 50 stakeholder meetings. Despite the number of meetings, opponents of the plan came to the decisive council meeting April 22 en masse to protest the potential spike in costs.

"Affordability is the elephant in the room. Clean, reliable and affordable energy-we have to [consider] all those three values," Mayor Lee Leffingwell said. "We have to be able to address cost as we go forward. We want clean energy, but it cannot come at... more [truncated due to possible copyright]  

AUSTIN - Austin leaders have pushed for cleaner energy and have taken proactive steps to help protect the climate since the early '80s, but the decision to introduce higher renewable energy goals has some citizens concerned with how residents will foot the bill.

In April City Council approved Austin Energy's Resource, Generation and Climate Protection Plan, which sets five main goals for the electric utility, including reducing carbon emissions and increasing the use of renewable energy sources to 35 percent by 2020.

During the two years the plan was being put together, Austin Energy Interim General Manager Robert Goode said the city held 10 townhall meetings that drew about 50 people each. There were also approximately 50 stakeholder meetings. Despite the number of meetings, opponents of the plan came to the decisive council meeting April 22 en masse to protest the potential spike in costs.

"Affordability is the elephant in the room. Clean, reliable and affordable energy-we have to [consider] all those three values," Mayor Lee Leffingwell said. "We have to be able to address cost as we go forward. We want clean energy, but it cannot come at any cost. We imperil our energy company to survive if we don't honor those values."

Goode said the electric utility generally has the ability to provide energy for its customers until 2020 with the resource mix it has now, but changes in peak demand could affect that ability.

"The issue-as you start shifting into renewables-[is,] can we afford it as a community? Here is one of the ultimate questions that I think the community is going to have to struggle with: Is it worth the investment for us as a community to continue to protect the climate in these ways?"

The plan updates the climate protection plan approved by council in 2007 that set a renewable energy goal of 30 percent by 2020. The city currently uses about 10 percent renewable sources.

"The pursuit of alternative energy and a diversified electric portfolio makes sense on a number of levels. However, setting draconian goals under reckless timelines is irresponsible," said Dominic Chavez, member of the Castlewood-Oak Valley Neighborhood Association. "Austin Energy must shore up its fiscal house first."

Chavez said once those issues have been addressed it would then be appropriate for Austin Energy to move forward with diversifying its energy sources to prevent changes in utility rates and keep the utility competitive.

Affordability

"The key point is that it is only a plan, and the plan can certainly change as information develops to support alterations," Councilwoman Sheryl Cole said. "We are doing our best to balance climate protection, which is a very important community value, against many changes in the industry that may or may not impact costs."

The plan is not set to take effect until an affordability matrix, which will benchmark Austin Energy's rates with other public utilities like San Antonio's CPS Energy, is in place. The matrix would be used to determine how future acquisitions of power would affect rates and could be completed by the end of the year.

"The affordability matrix was an empty promise and a cynical attempt to deflect criticism about the financial impact on families," Chavez said. "No less than one week after promising to consider affordability, the city announced plans to raise utility bills-unrelated to the passage of this plan."

Chavez referred to the utility's announcement of an $83 million shortfall for fiscal year 2011. The deficit is expected to grow each following year without a rate increase and is separate from the plan's adoption, Goode said.

"We are spending more money than we make every year," he said. "That's not sustainable. We will need a base rate increase. ... We've got to keep our wires going so I can give you electricity. I can be generating the greenest energy in the world, but if I can't get it to you, that's a big deal. So we have to continue to build and invest in our network, and all the operation and maintenance is in our base rate."

Although the utility annually analyzes its fuel charge, which pays for the fuel that creates the electricity, the base rate has remained the same since 1994.

"Since we didn't do a base rate increase for so many years, it led us to that bigger gap," Goode said. "If we would have done some [smaller rate increases] in here more frequently, then we wouldn't be facing this big gap. That's just on a go-forward basis. We will have to evaluate if a rate plan is the better way or just one rate increase. I would guess we will have some sort of rate plan."

Austin Energy customers can also expect an additional fee to appear on their bills by October. The utility accounts for approximately 4 percent of the state's electric grid load, which is being updated for increased capacity for energy produced on West Texas wind farms. The cost of that new transmission work is being passed directly to electric customers.

"You have a potential base rate increase that will hit probably in 2013, you've got a transmission rider, you've got a current generation plan and now you are adding some more costs," Goode said. "That layering is getting everybody, I think rightfully, saying, ‘Well, let's talk about this. As a community let's talk about how this is going to impact us, and how we want to be engaged in future decisions.' I think that is healthy."

The plan, using the current market prices for renewable energy, is expected to raise rates by 20 percent by 2020, or about $20 a month for the average user, not accounting for inflation. Opponents to the plan point out it could increase rates as much as 57 percent when factoring in inflation.

Cleaner is better?

While Goode is not aware of any other public utility making the same targets for carbon emission reduction or renewable energy usage, he said he is glad the city is taking a proactive approach to providing cleaner energy and climate protection.

"We've been leading edge in the utility for years," Goode said. "Generally utilities since 1984 haven't been looking at energy conservation; we have. [They haven't been looking at] energy efficiency; we have. If you think about it, it's kind of a disconnect-you sell electricity, but you are going to help people not spend electricity. Most utilities are not going to do that."

He said the city is anticipating federal legislation that would put additional regulations on carbon dioxide emissions, which is a leading source of energy today, that could make it more expensive or more difficult to obtain or use.

"If federal legislation comes about where it makes it really expensive to run the coal plant, things are going to change then," Goode said, adding that it might be good for the environment and be a sound economic decision.

Austin utility bill breakdown

Billing rate (residential service winter/summer): This designation is set to identify which energy rate will be used on the bill. The winter billing months are November through April, and summer billing months are May through October.

Customer charge: Every Austin Energy residential customer is charged a monthly $6 fee for service of at least 10 days for bill preparation.
Energy charge: Also known as the base rate, the energy charge is collected per kilowatt hour and helps the utility pay operation and maintenance costs. The fee is 3.55 cents per kilowatt hour for the first 500 kilowatt hours and then increases to 6.02 cents per kilowatt hour in the winter cycle and 7.82 cents per kilowatt hour in the summer months for more than 500 kilowatt hours. This fee has not changed since 1994. A rate review could be done and an increase could become effective Oct. 1, 2012.

Fuel charge: This rate is also charged on a per kilowatt-hour scale. The rate is currently set at 3.653 cents per kilowatt-hour. Fuel fees are a direct pass-through fee from the utility and are used to purchase the materials that create energy, including coal and natural gas. The rate is adjusted each year based on projections of how much those fuels cost the utility. If the utility's projects are too high or too low, the rate is adjusted. The rate has remained the same since 2008.

Transmission rider: In 2011 Austin Energy customers can expect a new charge to appear on their bills. The city owns approximately 4 percent of the state's power grid and must pay for new transmission projects that will help the delivery of energy. The rate is expected to be 85 cents a month for the average user, but will increase by 2015 to $5.14 a month.

Average electric utility bills
As of March 2010, average electric utility bills for residential users of 1,000 kilowatt hours
• Austin: 90.38
• San Antonio: $97.08
• San Marcos: $95.88

Note: Dallas and Houston markets are deregulated and costs vary depending on electric retail providers and different programs offered.

Dallas and Houston markets are deregulated and costs vary depending on electric retail providers and different programs offered.

Energy sources - definitions, advantages and disadvantages

Coal
Coal is a fossil fuel formed from carbon-filled organic matter decomposed and compressed under the earth's surface.

Pros
Large domestic fuel supply available
High-energy output

Cons
Burning coal creates large amounts of greenhouse gases and particulate emissions
High capital and transportation costs associated with coal

Nuclear power
Nuclear power creates electricity from controlled, nonexplosive nuclear reactions.

Pros
Low fuel costs
No emissions

Cons
High capital cost
Potential risk of nuclear explosions
Nuclear waste products must be stored in special cooling pools or underground

Natural gas
Natural gas is a highly combustible odorless and colorless gas largely composed of methane.

Pros
Low capital costs
Minimal emissions other than carbon dioxide

Cons
Carbon dioxide emissions
Expensive with potentially limited domestic fuel supplies
Leakages are potentially dangerous

Wind power
Wind energy is converted into energy by using wind turbines to make electricity.

Pros
Does not produce any pollution
Construction costs are moderate and can be completed within one year

Cons
Production is intermittent
Contributes very little to peak demand

Solar
Solar power is the generation of electricity from sunlight. It can be obtained directly from photovoltaics (PV), or indirectly as with concentrating solar power (CSP) where the sun's energy is focused to boil water, which is then used to provide power.

Pros
Low operating costs
Zero emissions

Cons
Capital costs are high
Production is intermittent and impacted by cloud cover

Market PPA
A Power Purchase Agreement (PPA) is a legal contract between an electricity generator which provides equipment, installation and financing, and a power purchaser that pays for the electrical output. An example of this is the Biomass plant in East Texas that is producing electricity that Austin Energy may purchase.

Pros
Defrays the upfront costs of purchasing energy

Cons
Purchaser does not own the
power source

Biomass
Biomass uses living material, including plant matter, trash, manure and other items, to generate electricity.

Pros
Renewable
High capital cost, requiring fuel to transport materials

Cons
More materials, preparation and handling is needed


Source: http://impactnews.com/north...

MAY 28 2010
http://www.windaction.org/posts/26525-city-plan-could-increase-utility-bills-clean-energy
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