Austin Energy (AE) is one of the nation’s largest municipal utility serving over 400,000 customers in and around the City of Austin, Texas. NewGen team members have worked with AE since 2010, starting with the first in-depth cost of service and rate design study for AE in over 17 years. Since that start, NewGen has been engaged a total of three times, as summarized below:
Revenue Requirement and Cost of Service - NewGen team members worked closely with AE staff to develop a Test Year revenue requirement and cost of service analysis. Once the revenue requirement was established, an unbundled embedded cost of service analysis was developed.
Rate Design - Rate design took into consideration fixed cost recovery strategies in support of AE’s aggressive energy efficiency and distributed solar goals. Additionally, rates were unbundled and various pass-through mechanisms were employed to manage the risk of volatile and unpredictable costs associated with ERCOT regulatory requirements.
Public Involvement - The public review process was extensive and included a series of public meetings before the Public Involvement Committee (PIC) over a six-month period, Electric Utility Commission (EUC) in 2011, and City Council resulting in approval of rates in 2012.
Rate Case before PUCT - Because AE serves customers outside the city limits, AE is subject to appeal to the Public Utility Commission of Texas (PUCT). NewGen team members created a rate filing package and supporting testimony (PUC Docket No. 40627). The case was successfully settled in the spring of 2013.
2015 Rate Update - Beginning in 2015, NewGen began assisting AE in the development of updated rates. This included various studies to support the rate review, including:
- A small commercial customer demand study to better understand the cause of significant bill impacts resulting from the prior rate effective October 1, 2012 and assess the appropriateness of the current rate design.
- A secondary voltage customer class study to review the delineation of the secondary voltage classes and recommend defensible breakpoints to define the size of each of the three commercial secondary voltage customer classes.
- A reserve fund study to assess the adequacy of AE’s cash reserves in recognition of AE’s financial risks, policies and goals.
- A non-nuclear decommissioning reserve fund study to identify the appropriate funding needed to pay for the eventual decommissioning of AE’s various non-nuclear generation units.
The studies, analyses, and resulting rate design were vetted through a public process constructed to mimic a regulated rate case. The key intervening parties to the rate review ultimately reached a settlement, which was unanimously approved by Austin City Council in August 2016.
2020 Rate Update - Beginning in 2020, NewGen began assisting AE in assessing the need for base rate adjustments. The analysis concluded that the then-existing base rates were sufficient to recover AE’s costs and AE did not need to adjust base rates at the time. Additional areas of investigation included:
- A review of the current residential rate structure to determine if changes would better reflect AE’s current goals and be more financially sustainable.
- An evaluation of the relevant costs that would be added, removed, or shifted in AE’s revenue requirement, and the resulting rate impacts to customer classes, as a result of various possible near-term events, such as the closure of the Decker Creek Generating Station steam units or the exit from the Fayette Power Project.