Item 2- Draft Recommendation Franchise Conservation 1.0 4 of 6 — original pdf

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RESOURCE MANAGEMENT COMMISSION RECOMMENDATION 20260120-XX Recommendation on the Future of Energy Conservation Programs in Texas Gas Service Franchise Agreement WHEREAS, Texas Gas Service (TGS) has been planning and operating Residential energy conservation incentive programs that do not pay for themselves in reduced fuel costs or reduced fuel consumption;1 and WHEREAS, some of these conservation programs are largely targeted at marketing gas appliances rather than energy efficiency;2 and WHEREAS, TGS conservation program incentives are, on average, much higher than those offered by other gas utilities around the country;3 and WHEREAS, Austin Energy already runs similar conservation programs for energy efficiency building improvements and serve most of the same customers as TGS. Austin’s programs have proven much more successful at achieving cost-effective energy savings than TGS' programs; and WHEREAS, there is precedent for the City of Austin to operate a gas utility conservation program, which took place between 1987 and 1997; and WHEREAS, TGS is currently in violation of its franchise, which requires it to implement energy conservation programs as part of its normal operations; THEN BE IT THEREFORE RESOLVED that the City’s Resource Management Commission recommend that the Austin City Council implement the following policies related to the new Texas Gas Service franchise agreement: • Austin should take over planning and management of TGS conservation programs as part of the new franchise agreements, with charges for gas conservation programs paid by TGS. • These funds should be collected with either an increased franchise fee specific to each rate class of customers or a bill rider similar to the Texas Gas Service’s Conservation Adjustment Charge or Austin Energy’s Community Benefits Charges. The funds from an increased franchise fee or bill rider can be allowed to change from year to year, with a not-to-exceed amount or percentage.4 1 Evidence sent to the Texas Railroad Commission, “TGS Conservation Letter to RRC,” on August 8, 2025. 2 Ibid. 3 Evidence sent to the Texas Railroad Commission, “2025 – Gas Utility Rebate Survey 1.0.xlsx,” on August 8, 2025. 4 Using 2025 data as a benchmark, funding the current TGS Residential conservation program would require a franchise fee increase from 5% to about 6.5% on the Residential class. Funding the current TGS commercial program would raise the franchise fee from 5% to about 5.35% to 5.7%. These costs were formerly collected with a bill rider. • Under certain circumstances, increased franchise fee revenue can also be used for Austin Energy’s own energy conservation programs. • All previously collected conservation funds and previously purchased equipment for implementation of the Texas Gas Service program should be transferred to the City of Austin for continued operation of the programs. Previously collected TGS conservation funds should be directed towards low-income weatherization.