Come This Winter: Part 5

Johann Jaritz, Wiki Commons

Part 5: We Could Have Done Something

Local Action for Global Energy Problems

This is the fifth and final article in a series detailing energy utility bill hikes that affect everything from household budgets to the world economy.

In This Story…

Citizen Opposition to Austin Rate Increases
Onsite Conservation and Renewable Energy
Utility Opposition to Further Gas Exports
Repurpose GreenChoice Program for Energy Storage Research
Competitively Bidding Texas Gas Service Franchise
The Price of Mercy

Most Austin utility customers feel powerless to challenge or adjust to the global forces that are driving their utility bills. They do not meet regularly with international heads of state. They do not lunch with high-powered oil and gas industry executives.

However, ratepayers can take action on an individual level, and by influencing the local government that governs the electric utility and is primary regulator of the privately-owned gas utility.

Austin Energy was actually created in the 1890s to better determine the City’s destiny. Many people in the City’s history have sacrificed to build what we can now claim as a birthright. What better vehicle for action than engage in the governing of a utility owned by its citizens?

Citizen Opposition to Austin Rate Increases

Most Residential customers will be alarmed that their bills will be rising by an average of 31%, and that due to the radical rate restructuring proposed by Austin Energy, they will be paying more money per kwh if they conserve electricity. This contrasts to the current progressive rate structure that charges less if they conserve electricity.

Get engaged. Unfair rates that have been levied can be overturned. Contact City Council. Citizens own this municipal utility, not the (current) utility executives.

Onsite Conservation and Renewable Energy

John Dolley

In the 1970s, Austin entered into a partnership to build the South Texas Nuclear Project. The power plant experienced a 540% construction overrun, and was about 8 years late in completion. Critics of the plant challenged that if funding for completion of “the Nuke” was repurposed to fund conservation, it would save the same amount of energy the power plant would provide at less cost, while creating local jobs.

Austin’s award-winning conservation programs grew out of this idea. Since 1982, Austin has operated efficiency programs for all building classes.

They have been a resounding success. In 2021, Austin had the lowest average Residential consumption of any major utility in the Electric Reliability Council of Texas (ERCOT) system. It was 26% below the ERCOT average. Only 2% of ERCOT’s customers had average consumption that was lower.

The chart below shows that in 2021, Austin Energy had the lowest average Residential consumption of the top 10 utilities in ERCOT.

In 2021, Austin had the lowest average Residential consumption of the top 10 utilities in ERCOT. It was 26% lower than the ERCOT average.

Partially because of this, Austin had one of the lowest average Residential bills in ERCOT. In 2021, they were 34% lower than average. Only 3% of ERCOT’s customers had lower bills.

Austin has made it easy to conserve. It offers incentives and technical advice for energy retrofits such as increased insulation and efficient air conditioners.

These measures, combined with careful consumption, will better allow customers to avoid some of the high energy costs coming our way, as well as lower pollution by limiting the use of fossil and fissile fuels.

Austin Energy also provides solar cell rebates. These might be an option if you have the upfront capital and own a single-family/duplex residence with minimal roof shading. (While theoretically rental houses and apartments are eligible, it is a rare landlord that will make such a substantial investment to lower a tenant’s bill.)

Austin Energy has a special “Value of Solar” rate. It allows excess solar generation to be compensated at a higher rate than average because solar energy has added tangible value, including no pollution and no/low line losses. (Power plants typically lose 5 to 7% of their gross output from inefficiencies in the transmission and distribution system.) Value of solar compensation will actually be higher because of the recent rate and fuel-cost increases being implemented.

Information on Austin Energy’s conservation and solar programs can be found at this Web site.

Texas Gas Service also has conservation programs. While some of them are not cost effective (such as rebates for Northern-climate furnaces that will rarely pay for themselves in the South), the insulation and duct ceiling rebates can be valuable investments. Conservation programs for this utility can be found at this Web site.

At the utility level, the utilities can also retain (Austin Energy) or implement (Texas Gas Service) progressive rates that will incentivize low consumption.

Utility Opposition to Further Gas Exports

© Glenn Travis

Liquefied Natural Gas exports are currently, without question, the largest driver for utility rate shock in the U.S.

Austin Energy and Texas Gas Service are both large enough to influence national policy. Both utilities are capable of lobbying Congress and administrative federal agencies like the Department of Energy. Both are also capable of influencing their peer utilities to add their own voices and efforts to this issue.

Electric and gas utilities have historically viewed fuel as a pass-through cost, and irrelevant to their profits. However, while they do not like high fuel costs, the utilities do not generally intervene in the market itself.

But LNG exports have necessitated the utility industry’s adaptation to a new reality.

The federal law that authorizes LNG exports requires that they be in the public interest. On February 2, 2022, a group of 10 Senators including Jack Reed (D-Rhode Island) and Angus King (I-Maine) sent a letter to Energy Secretary Jennifer Granholm asking her to limit LNG exports and examine their impacts on household energy prices.

The Industrial Energy Consumers of America, which represents over 11,700 manufacturing facilities in the U.S., has taken a position of limiting LNG exports when they harm the country’s industrial competitiveness. It has asked the U.S. Department of Energy to intervene to: 1) prohibit new export facilities from being licensed; 2) prioritize that exports be sent to Europe (as opposed to Asia); and 3) prohibit exports during periods of high domestic prices or supply shortages, a policy known as “ratable takes.”

LNG exporters will be quick to defend their industry by saying that it is keeping Western Europe from freezing to death this winter. Russia cut off almost 40% of the region’s supply due to a trade war brought about by the invasion of the Ukraine. And while U.S. LNG exports will never make up enough volume to substitute for this huge shortfall, the industry’s defense is partially true.

However, it should be remembered that the LNG export industry is not motivated by humanitarian missions or national defense.

International LNG cargoes going for about $6 per Million BTUs at the beginning of 2020 were being sold for as high as $100 in August of 2022.

Repurpose GreenChoice Program for Energy Storage Research

To respond to the existential threat of global warming, we need to reduce and eventually eliminate fossil-fuel carbon emissions from our utility system. As a side benefit to mitigating the destructive effects of climate change, this would stabilize fuel costs by eliminating or greatly reducing the need for natural gas as the main form of dispatchable energy in Texas when intermittent sun and wind are not producing electricity.

Austin Energy has operated its GreenChoice renewable energy program since 2001. It allowed customers who wanted to spend their money on renewable energy to do so by dedicating the fuel charge to wind power that Austin Energy had purchased instead of the conventional fuel mix of nuclear, coal, and gas. The program allowed the utility to buy a larger percentage of wind-powered electricity than it otherwise would have.

While Austin Energy won national awards for its voluntary green power program, our utility will never achieve a carbon-free grid in the real world without dispatchable renewables or energy storage (or both).

Since wind and solar cells are less expensive than they were 10 or 20 years ago. Austin government policy now dictates that increasing percentages of renewable energy supply be purchased and shared by all customers. So the original purpose of GreenChoice is largely obsolete.

Currently, the program collects about $6 million in excess funds a year. This money should be redirected to fund Research & Development of dispatchable renewable energy. Technologies such as heat-battery storage for use in conventional steam turbines and electric storage technologies such as flow batteries can partially solve the dispatchability problems inherent in wind and solar cells.

From “Molten Salt Storage for Power Generation,” Bauer, et al., Chemie Ingenieur Technik

Thermal energy storage can use either direct solar energy or resistance heating from PVs and wind power to create heat that can drive generators at a dependable, “dispatchable” rate. This strategy can be used to hybridize or completely repower existing fossil steam power plants.

There are many ways this R&D could be conducted, but as one idea, a bid could be offered to private sector companies and academic institutions for various types of storage. Austin Energy would accept the best bid (not necessarily the lowest cost bid) and fund part of the cost.

Administration of these bids, as well as follow-up research, would probably best be conducted by a non-profit or academic institution designated by Austin Energy.

While $6 million is not a grand sum for research of advanced energy concepts, this seed money will allow leveraging of larger sums of money from the bidders, federal and state grants, non-profits, private investors, and other utilities.

It will also leverage inspiration. If other “Climate Cities” (dedicated to fighting climate change) see Austin involved in this innovation, they may adopt or partner with similar programs.

Depending on the stage of advancement of specific technologies, revenue from electric sales may actually be generated to lower the cost of research or, in some cases, even profit from the investment.

The concept could also offer a chance for economic development. Some companies pursuing R&D in Austin or Central Texas will be more likely to stay here if the project is successful, and hire more employees.

Competitively Bid the Texas Gas Service Franchise

Rendering of auction, 1830, Wiki Commons

Private utility companies are licensed to operate by the cities that they serve. Austin’s 20-year agreement with Texas Gas Service (TGS) ends in 2026, and negotiations will probably begin in 2023.

The company has a record of being insensitive to Austin customers and out of sync with our community values.

• Its rates have soared way past inflation.

• It only collects a small amount of its costs for growth from new hook-ups, meaning higher rates for existing customers. (Existing customers subsidize new customers.)

• It has a regressive Residential rate structure that discourages conservation and hurts low-income custo• Some of its energy conservation programs save so little energy that they are no more than glorified marketing.

• Its program to assist the poor is so scantly funded that it could be confused for satire.

• It will not invest in Research & Development of new technologies for clean energy and energy efficiency.

• It has no policy to challenge LNG exports at the national level, which, if successful, would lower customers’ bills.

Austin should open the franchise up for competitive bidding with other gas utilities, which could result in finding a partner more sensitive to customers’ bills and more accommodating of the City’s values. Or TGS might decide to compete by offering the City more to keep its franchise.

The franchise will be the best way that Austin can leverage more control, and planning needs to begin now.

The Price of Mercy

Dietmar Rabich, Wiki Commons

Turning crisis into opportunity has always been a difficult puzzle. Success has as much to do with luck as skill – as much to do with endurance as planning.

Austin has a history of activism in its utility systems that goes back to the early 1970s.

• The first comprehensive electric conservation program in Texas.

• The lowest average Residential electric consumption of any major utility in the region.

• The highest percentage of renewable electricity consumption in the region.

We can choose to build on this foundation, or do nothing, and cast our fate to the mercy of the market.

And as you may have noticed, mercy is at a premium lately.

* * * * * * * *

This is the fifth and final article in a series on how utility bills are dramatically rising locally, nationally, and around the world.

Robbins is an environmental activist and consumer advocate who has lived in Austin for almost five decades. He is editor of the Austin Environmental Directory, a sourcebook of environmental issues, products, services, and organizations in Central Texas. The publication has been offered free to the public since 1995, and can be accessed free online.

Thanks to Tony Switzer and Gail Vittori for reviewing this story.