Misunderstanding Austin’s Electricity Planning, pt. 2

These notes are observations compiled from the last several months of involvement regarding Austin Energy's Generation Plan, 2010-2021.

These notes are observations compiled from the last several months of involvement regarding Austin Energy’s Generation Plan, 2010-2021. Austinites are invited to engage in town hall discussion on the subject this Monday, Feb. 22; KLRU is featuring a 30 minute televised round table tonight, Feb. 18. Here’s some insight into "how we got here" —

(Part 2 of a 2 part series.)
(here’s part one)

 Part 2.

  • Moving Parts
  • Un-opposed Forces?
  • Eyes on the Ball

 

Moving Parts
Costs are Constantly Changing: One thing our local press seems yet to have voiced accurately is costs in relation to these various electricity generation scenarios. Granted, there are literally thousands of data points and potential interpretations, but more to the point: Austin Energy’s total costs are always changing, and —

a) Austin Energy is in $$ trouble
The business itself is currently losing money and will likely go belly-up within the next 10 years if AE doesn’t start recouping for its transmission costs. How they got into arears here I don’t know, but energy bills are going up no matter what. Sorry folks, sorry local press — it’s not the green stuff that’s raising our bills — the utility is spending more money than it makes. (3)

b) More Squishy #’s: Proxy Data causes confusion
As mentioned in Part 1, all of the modeling AE has been doing regarding its electricity plan, 2010-2021, has been based off of proxy info. Two types, basically: how much our electricity has cost in the past and how much it’ll cost in the future. This allows AE to say, "We just don’t know" what things will cost in the future and say "Bills will increase by 25% if we do nothing, 20% if we follow the greener, Staff Recommended Plan" and say "Bills may increase anywhere from 0% to 50%" over the next 10 years regardless of which plan we take. It stinks, and makes me wonder why AE spent so much money (4) on the damn modeling…

Either way, the Staff Recommended Plan does an admirable job of incorporating all of the specs it was assigned, i.e.: minimal bill increase to all rate payer classes, consistently reliable electricity for a growing local economy, at least 30% renewable generation by 2020 (not my favorite spec, believe it or not – 5), and strategic positioning of the utility’s generation mix so that it avoids having to take on additional expenses after 2020 caused by new/likely greenhouse gas regulation. Take Away: bills are going up no matter what. Green generation, if properly timed and integrated, can cost (a lot) less and help stave off future expenses. (Times have changed.) AE’s current generation plan is focused, somewhat conservatively, around all of those realities. Unfortunately Austin Energy and City Hall have done a very poor job of communicating those strengths in relation to AE’s plan and the big picture. Friends in the press, please help untangle some of that confusion.

 

Un-opposed Forces?

The Factions May Not be Fighting: Generally speaking, there are two concerns regarding Austin’s generation plan, 2010-2021: some activists believe Austin Energy has not been rigorous enough with their financial management and want better guarantees that their interests will be protected, some activists believe that before a new General Manager is brought in at our utility Ausitinites need concrete guarantees regarding the utility’s next 11 years commitment to environmental protection.

This has been portrayed as a battle — but is it?

Austin Energy’s business model is in serious trouble, both now and long-term. (6) Now is the time for the whole community to educate itself as best it can, and get involved in building the community-owned electric utility 2.0 it wants. Austin needs its community-owned utility to continue to provide affordable, reliable electricity and a significant general fund transfer to the City, so that we have parks, police, traffic lights, and all the rest. We’ve also made a commitment to leading the nation in climate protection. We’ve got to work together to find ways to implement greenhouse gas reduction that make sense for each of our community’s stakeholders. (7)

I don’t hear anyone involved in this process debating any of these ideas: that low income folks need to be cared for with respect to electricity costs, that the environment is in crisis largely because of unintended consequences related to electricity generation’s impacts, that Austin should help lead the world out of that crisis, that AE’s big investments should be made carefully and in the open, that AE’s business model needs to begin evolving now, that large employers should have confidence in AE’s financial management and be able to expect reasonable bill increases as the economy changes, that AE itself needs to become solvent — priority one, that our City needs its general fund transfer to continue in order to provide a high quality of life to Austinites, that electricity generation is in many ways an ethical issue connected to global personal religous and spiritual convictions, that we accept these challenges and integrate them into the ways we work from now on.

 

Eyes on The Ball
My view: I’m supporting my friends and colleagues who believe the current AE Plan needs to be voted-in by Council, but I believe there’s a better scenario out there; one that does a better job of reducing costs, keeping bills stable, and implementing carbon reduction. I hope we continue to engage. Uncovering that scenario would require paradigm shift, but in many ways Austin can either lead or follow on that front. More to the point, note that Cary Ferchill, chair of Solar Austin, spearheaded the creation of a generation scenario which shut down Austin’s coal plant — our dirtiest, most toxic, most destructive, and most affordable form of reliable electricity, in the year 2020. The scenario was first run at UT’s LBJ School of Public Affairs before being added to Austin Energy citizen review process last year. The results of this scenario are ground changing: Cary’s "quit coal" generation plan costs less than the current Austin Energy Plan (which keeps the coal plant open). Why? Cary’s plan exchanges variable (and highly volatile) fossil fuel generation costs for a portfolio of cleaner capital costs, i.e. well-timed purchases of solar and energy efficiency equipment. (8) Cary’s plan also assumes geothermal base-load generation comes online in a few years, Austin Energy’s plan assumes biomass becomes more viable as baseload. Both are unknown.

The net result? According to Austin Energy’s analysis: Cary’s plan provides a 62% reduction in CO2, tremendously greater local economic investment, and a lower annual cost during each of the next 11 years compared to AE’s plan.

 

Can we do better?

 

###

 

Notes
> go to Part one of this blog.
> (3) AE currently does not charge for "transmission" costs required by the state of Texas to operate and help build our portion of Texas’s new grid infrastructure. AE is also suffering financial stress due to the amount of debt it has tied up in "poles and wires" locally. Note that for the last couple of years the utility has been going into the red even as its general fund transfer to the City has increased. Add to those  financial issues the aggrevator that AE is currently needing to replace 30+% of its managerial staff and 30+% of its workforce (2010), including General Manager and CFO. During the next 4 years, 60%+ of AE’s managerial staff is up for retirement, and still more of its staffers. Add to those burdens the fact that the electricity-utility business model of the nearfuture looks to be all about eliminating the electricity utility by reducing consumers’ dependence on it. How? More implementation of energy efficiency and more availability of affordable self power generation (as in solar panels). These two movements will reduce consumer dependence on last century’s "centralized generation" (as in coal and nuke plants) model. . . Today: In the immediate future, we consumers should soon learn the value of investing in highly-recoupable energy reduction, aka "negawatts." Tomorrow: 5 to 15 years from now technology should make it financially feasible for us to make our own kilowatts through small scale solar, geothermal, and more.
> (4) Rumor has it AE spent well over $200,000 on the whole modeling and town hall process. I have no idea if that’s even remotely correct, please share info on that if possible.
> (5) The Austin Climate Protection Plan’s calling for a renewable generation goal may be the most expensive way to make Austin "the leading city in the nation in the fight against climate change" (stated in the City’s Climate Protection Plan mandate 2007). Perhaps that goal was idealistic for its time and should have refocus itself firmly on carbon reduction goals. I personally believe it’s time to revisit and update the fundamentals of the climate protection plan in order to make them more feasible.
> (6) see #3.
> (7) Dear Respected Climate Skeptic friends – You’re absolutely right to question consensus and yes the IPCC has made some terrible mistakes over the last 20 years. I admire your independent intelligence and understand most of the wholesale questions regarding the climate change industry’s motives, but when it comes to the science surrounding global warming — we’ve either got an enormous global crisis on our hands or no problem at all. Your choice, but please keep in mind — that’s a heckuva gamble.
> (8) Note that when compared to nukes/coal/natural gas/oil, energy efficiency and solar panels have zero fuel costs and potentially far fewer operations and maintenance costs.

Thanks.

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These notes are observations compiled from the last several months of involvement regarding Austin Energy's Generation Plan, 2010-2021." />