Item #5 - Independent Consumer Advocate Residential Rates Presentation — original pdf

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Independent Consumer Advocate (ICA)- John B. Coffman The City of Austin utility rate-making procedure for Austin Energy rate cases provides for an ICA to represent residential and small business interests. ICA Technical Team: Clarence Johnson, David Effron Utility Rate-making Steps The ICA Examined the following Rate Case Issues: 1. Revenue Requirement (Overall Increase) 2. Allocation of Cost to Customer Classes 3. Spreading Increase to Customer Classes 4. Residential Rate Design 1. Overall Rate Increase • Independent Hearing Examiner (IHE) Proposal • AE Revised Revenue Increase Proposal is currently $35.7 Million Overall • $43 Million to Residential Class $31 Million $6.5 Million • ICA Recommended Revenue Increase 2 & 3: Allocation of Costs and Distribution of Cost to Various Customer Classes • AE and the IHE recommend a rate design that puts more cost onto residential and small business consumers • ICA Proposed Class Allocation More Favorable to Residential Customers • Large Commercial Customers proposes a much worse allocation for Residential Customers 4. Residential Rate Design Current: $10 fixed customer charge with 5 Tier inclining usage Rates AE Proposed: $25 fixed customer charge (150% increase) with 3 Tiers and stated intent to flatten inclining usage rates. ICA Proposed: Keep charge at $10, or increase it no more than the overall increase percentage, with 4 tiers. Fixed Customer Charge • ICA Opposes AE’s 150% increase in customer charge as excessive and regressive. AE’s current $10.00 customer charge is not unreasonable compared to Texas PUC average allowed customer charge of $7.44. • AE’s current $10.00 customer charge is approximately the same as the other two large municipal electric utilities in Texas (San Antonio and Lubbock). • High customer charges are detrimental to low usage customers and reduce the ability of customers to control their bills. • High customer charges inhibit energy efficiency because charges are incurred without regard to usage. Comparison of AE v. ICA rate design impacts for Residential customers at varying usage levels kWh Increase Percent Increase Percent ICA-Proposed Rate Design 375 $ 0.59 625 $ 1.24 875 $ 2.30 1,625 $ 0.88 3,250 $ 4.34 Average Usage AE Rate Design IHE Rev 1.56% 17.71 2.07% 16.73 2.67% $ 11.95 0.49% (14.4) 1.04% (105.1) 46.9% 27.9% 18.9% -8.1% -25.3%