By Mike Sloan for PowerSmack.org
They blinked!
Austin Energy has proposed that its GreenChoice Batch 6 charge be lowered to a much more affordable price point (5.7 cents/kWh down from a current level of 8.0 to 9.5 cents/kWh). This is a positive development for electric consumers in Austin.
But In reading the 7/25/09 Austin American Statesman’s front page story on this development, there remain three outstanding issues for the City Council to consider before potentially voting on August 20th.
First, there appears to be a common perception that wind power is much more expensive that conventional power for Austin. This is not supported by the facts. Varied sources at the federal, state and local level consistently show wind power to be cost competitive. This point is best encapsulated in the Public Utility Commission of Texas 2009 report to the Texas Legislature which states: “Wind generation has had the impact of reducing wholesale and retail prices of electricity.”
Second, the current price of GreenChoice has more to do with how Austin Energy does its bean counting than the wholesale cost of wind energy. Some say that the high cost of GreenChoice reflects high “congestion costs”, which is a fancy way of saying there are not enough transmission lines available to buy power from where it is cheaper. The extra $40 per month that Austin Energy charges a typical GreenChoice Batch 6 residential customer for congestion does not seem justified. Even Austin Energy’s own estimates of congestion for resources in ERCOT’s West zone — which have the lowest average power prices and inversely the highest average congestion cost to move the cheaper power from the constrained area — project long-term congestion equivalent to about $15 per month for residential customers. Further, the Batch 6 Hackberry wind farm, located east of Abilene in ERCOT ’s North zone, has had minimal congestion cost during 2009 and possibly even a small credit. It would be helpful if Austin Energy could better explain to Council and the public the updated range of expected congestion costs for the Hackberry wind farm. Certainly one would expect the cost to be far less than the 4 cents/kWh now being charged.
Third is what else goes into the electric bill of a GreenChoice customer. After the initial Batch 1 the prices of subsequent offerings have been structured with the intent of covering all of the costs associated with Green Power. This has created a situation where Austin’s Green customers subsidize Austin’s fossil fuel users. Green customers pay a 100% share of the base rate — just like every other Austin Energy customer. This means that the retail price of GreenChoice includes significant expenditures to support fossil fuel usage by Austinites. For example, Green customers pay an equal share as fossil fuel users for building brand new natural gas power plants and for paying off the original debt and new multi-hundred-million-dollar improvements on the Fayette coal plant, for workers and maintenance at the fossil-burning plant, and appear to even pay for the purchase of railroad cars used to lower the cost of delivering coal.
On the other hand, Austin’s fossil fuel users have not picked up any share of supporting the City’s most recent Green purchases. This leads to an obvious question of fairness and a pricing structure that significantly favors the use of fossil fuels over renewable energy.
Lowering the price of GreenChoice is a positive development, as is beginning to have all ratepayers provide some support for greening Austin. We at PowerSmack look forward to participating in this dialogue until it is ultimately resolved.
