Austin City Council voted on a substantial price reduction for the GreenChoice electric rate.
This is great news for the people of Austin.
But even if the Austin rate drops as expected, saving a typical green residential customer $38 per month, it will still be higher than the average green electric rate in Texas.
That’s because only half of the problem is getting fixed.
Austin’s GreenChoice customers will continue to subsidize Austin’s fossil fuel users by paying full time for things they are not using full time, including old and new fossil fuel burning power plants, their workers, and multi-hundred-million-dollar power plant upgrades. It even appears that green customers pay a full share for nuclear waste disposal and for the railroad cars Austin owns to lower the cost of burning coal.
This does not seem fair.
Austin Energy has taken a major, positive step on GreenChoice pricing by addressing the congestion overcharge issue. But we remain concerned that if the subsidy of Austin’s fossil fuel usage by local green customers is not rectified, GreenChoice will remain a challenge to sell.
Here’s why:
- Austin Energy’s proposed GreenChoice rate is initially more expensive than average in Texas (If adopted, the new Austin green rate would be tied for #17 on cost compared to 29 green rates offered in the “competitive” electric market in central Texas; the 2 current offerings of GreenChoice are more expensive than all of the competitive market green rates.)
- Austin Energy’s proposed new “Green Premium” will continue to be higher than the national average. Austin’s new Green Premium of approximately 2.05 cents/kWh is higher than the national average of 1.5 cents/kWh.
- Austin Energy’s Green Premium will increase if Fuel Charges are reduced. Last year Austin Energy charged customers $293 million for natural gas fuel. Today, that same quantity of natural gas costs less than $150 million. It is strongly suspected that Austin Energy will soon drop the regular Fuel Charge, leading to a significantly higher relative Green Premium of perhaps 3 cents/kWh or more.
- There appears to be insufficient value to motivate Green Customers to pay extra. Austin led the nation in offering low-cost green power that served as a long-term hedge against fuel price increases. But the proposed GreenChoice rate appears too expensive to attract customers seeking a price hedge. Alternatively, many green customers are willing to pay extra if it results in “additional” renewable energy development. But if the utility proceeds with a pre-determined portfolio through 2020, GreenChoice subscriptions will not be driving any incremental green development, reducing the motivation for Green customers to participate.
Voluntary rates such as GreenChoice can continue to play a helpful role in accelerating renewable energy development in the United States and in Austin, but their design needs to be based on solid fundamentals.
PowerSmack.org applauds Austin for its long leadership on green power, but suggests that the GreenChoice program needs additional modification to ensure Green customers are treated fairly.
