Austin Energy 14% Price Hike

Monahorns

Monahorns

10,000+ Posts
I don't have a link but a read an article in my neighborhood newsletter that said Austin Energy is going to increase rates 14% across the board.

The reason they give is to pay for all the wind energy they are purchasing. At first it was a choice to buy wind energy but nobody did, so now they are making everyone pay the added cost.

Hopefully in the future the price will come down, but this a real data point that shows wind energy is still significantly higher than fossil fuel energy.

At the same time, Austin Energy is looking to close another power plant so that they can buy even more wind energy. I think these decisions are foolish really. You have power plants which run perfectly well, but they will be shut down because of ideology. The cost of living is going to continue to rise in Austin, TX.
 
I can understand and want us to keep moving forward on sustainable energy
but not at the expense of poor people. we read everyday how many more people at at the poverty line.

Who will pay for the poor people's heating/ cooling bills?

It seems like now when things are so dire is not the time to close cheaper plants that produce such a high % of our energy.
 
Before anyone jumps on this- it'd be good to see real data.

Wind energy is not one homogenic project across the globe- it is much like a restaurant or real estate. In some places it works and is great and cheap- in others- it doesn't. Location, location etc.

But, you can't group projects that are economic with those that aren't and blame the entire industry. One thing I know is that transmission is finally catching up in Texas with so much wind generation- meaning, the wind power from West Texas will arrive where it needs to in the cities at a lower cost starting in 2012, 2013.

As for closing plants- this happens all the time. A life expectancy is typically 50 years for most gas or coal plants. Sometimes they can live longer if they are upgraded- sometimes the cost to upgrade isn't worth it. Try not to bring Al Gore into a discussion for something that happens all the time regardless.
 
Like I said, I get a neighborhood newsletter in the mail every other month. It discussed the effect that wind and solar had on the Austin Energy rates.

It also said that Austin Energy is wisely not renewing the contracts they had with solar power companies. It also talked about closing coal plants which are very inexpensive energy, not because they are too old to operate but due to going "green". I am all for cleaner air, just passing on information.

They are also going away from West Texas wind and to Gulf Coast wind because they are trying to decrease the cost of wind energy. So at least they are trying to minimize the cost. I appreciate that. The article I read did link the cost increase to the wind energy though, even though the article did paint the change in a positive light.
 
Let me add that I sat in a presentation given by Austin Energy 2-3 years ago and they openly discussed incentivizing using less electrical power. They are not investing anything in increasing power output. They are charging more on the base now and they have been increasing revenue through price tiers for quite a while now. While at the same time adding more expensive power sources and decomissioning existing power plants. Yes, some of those may have been closed anyway. No argument. But the latest closing isn't being done because of the age of the plant. It is to switch to more "green" sources. I don't disagree 100% with their direction. Maybe 80%.
 
Ok Mona- I won't question this newsletter and trust it said what it said. Let's say they are buying more expensive wind power. First- the cool thing about wind is that the turbines last about 20-25 years. So, if 10% comes from wind of the AE portfiolio, they now have a 20 year price hedge on commodities like gas and coal.

Second, the city of Austin, and all of its residents are breathing less mercury, sulfur, NOx and other chemicals- that is worth real money in health expenses. Some people get upset when you connect the cost with the source- but, it is real nonetheless.

My view is- as long as it is managed well, renewables are great as a PORTION of the portfolio- up to 30-40% max, mixed with nuclear, gas, hydro and miscellaneous other than coal. As transmission improves- and the projects are undergoing right now- the costs of wind should stay flat or go down, accounting for inflation.
 
Nat gas is so low right now. It is absurd Austin Energy would choose this time to raise rates. So, nat gas is very cheap and absolutely in plentiful supply, yet, AE feels it a good, prudent business decision to use more expensive wind instead, and you guys are okay with the resulting rate hike? People amaze me.
 
Uhh- AE uses plenty of gas- it's the biggest portion of their portfolio.

And, if someone told me my bill would go up by $16/month, and that AE matched their performance of going another 17 years without a rate hike- I'll take that all day. Spread sheets are amazing analytical tools.

AE has over 2,500 MW of gas, coal and nuclear. And 439 MW of wind. Austin Energy Power Plants
 
1. No one is saying AE is guaranteeing you 17 additional years of no price hikes.

2. Everyone uses nat gas. Wind is a joke, and i guarantee you it will not produce in many years, yet you will stil pay for it.
 
Austin residents need another energy supplier or two to be given access to AE customers like other cities in Texas have. Until there is direct competition for AE, it will be operated like the monopoly it is.
 
Wind production varies wildly from year to year. I was a lead on several wind projects....disaster. I'll read up on commodities here on the trade floor and get back to you. Maybe even trade some nat gas if I'm not too busy.

According to the link below, many customers will see huge increases, with the "average" customer going up $20/month, or $240/year.

In this economy, I bet many "average" customers don't have an additional $240 to hand over to AE.
$16,000 increase?
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Yes, it was my fault the company I worked for built the turbines at 100 meters, too low to caputure the proper amounts of wind.

I bet you don't know the first thing about wind economics.

You just made my point for me...the increase in price is even more hilarious given how little wind is used.

Meanwhile, nat gas remains at $3.15/MMBtu.
 
314- It just sounds like whatever company you work for doesn't know how to develop wind power- because it certainly works and is economic in thousands of other locations. When a restaurant fails we generally blame the management, not the entire restaurant industry.

Rex-
1) The rationale was a newsletter that Mona saw that the rest of us hadn't- blaming wind as the culprit. The AAS article never mentions wind- and does mention a lack of earlier rate hikes and increased operating expenses.

2) I don't think they want to raise rates either- they get hammered for it. I think paying debt is their principle reason to do so.

3) It doesn't state it anywhere- you miss the part where I said "IF" they could match their earlier performance and go another 17 years.

4) I'm pretty chill- enjoy talks about stuff I know. You chill out bro too k dawg?
 
Rex, about your question 1), the article I read linked the two but the news articles today don't seem to explicitly. Still, I don't think it is a coincidence that they are closing existing power plants and bringing on additional wind energy while at the same time increasing the base rate.

Let's also be clear, AE maybe hadn't raised the base rate for 17 years but they had found many other ways to increase the rates over the years. Other rates in the tier have been raised for sure. The goal is to decrease power consumption. I have heard that statement from AE reps themselves.
 
Slightly different topic- this doesn't matter wherever you live- but there are hundreds of contractors that go to residential and commercial buildings- perform energy audits, remodel or refit the insulation, lighting, water heater, HVAC/ AC work and remove parasitic energy waste.

The costs depend on the site and its individual needs, and of course its size- but can go anywhere from $2,000 to $100,000 if it is a large commercial building. The costs are recouped from reduced energy expenses on the building anywhere in 6 months to 3 years.

It is a pure financial play- an investment that returns in 6 months to 3 years or so, and after that pays a dividend in cash savings. I'm renting right now- but plan to have this audit done as soon as the wife and I find a good fixer upper to buy in the next year or so.
 
mcbrett, I like the idea of making buildings more efficient users of energy. I have always had a bent toward conservation. As long as the payback is within a few years and you plan on using the building longer than that, I think it is a great idea.

I also like the idea of wind energy. I am glad that power companies are investing in it. I am curious to know how much wind energy will cost once construction more or less stops and the capital is fully depreciated. I would think the cost would dramatically drop. I just think onversion needs to be done in a way that does not significantly raise price. I sure don't think power plants should be closed in order to replace with it. Not at today's economics.

As a comparison, you say that SOME wind energy gets as LOW as $0.07/kwh. In the article you cite, the base line rate is $0.028/kwh. That's more than 2 time the cost best case.
 
Yeah energy retrofits are very cool- but a completely different topic.

A wind turbine's expense is strange because I think it's about 90% of the cost is upfront- in installation and capital costs. 10% is maintenance- whereas with a Gas CCGT turbine- 30% might be up front, 30% maintenance, and the balance for fuel and parts.

They are apples and oranges- so, when someone says a wind project puts out at 7 cents /kwh for example, they have to make assumptions like- how long the turbine will last, which the industry always says is 20 years, but practice is 25 years. And of course- some years the wind is better or worse- so one year it might be putting out a rate of 5 cents, another it might be 11 cents- the long term average is what we care about of course.

One cool thing about wind is- in 25 years when a turbine is old- it may be possible to keep the same tower, the same foundation- and just swap the blades and turbine. E.g. the next versions will have much less lower up front costs.

The average retail price in the entire US is around 12 cents/kwh. In Hawaii, NYC it might be 20 cents, in Iowa it might be 8 cents. Any turbine in the ground today producing at 10 cents/kwh or better is an amazing asset to own- especially if you know 100% that the costs won't ever rise for 20 years because it uses no fuel.
 
Just another idiotic move in a long long line of idiotic ideas by the city of austin. Yeah let's invest a ton of money into something that doesn't return us as much per KW/hr and then screw the users cause they won't buy the more expensive power.
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Just like their idea to tax plastic bags at stores....
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These people must have just empty space between their ears. All in the crap name of being "green"
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People don't want "green" they want cheap power, cheap fuel, cheaper goods & services.
 
They are purchasing more renewable energy instead of building another powerplant. If they build another powerplant then that would also cause them to increase rates. It is just simply long overdue.

The other big change they are looking at that hasn't been mentioned is they will be charging more for peak energy usage now that they can measure that with the new meters. If you have your A/C cranked on a triple digit day at 2 in the afternoon then you are going to pay more for that energy than you will if you crank it up at 9pm at night after the sun has set.
 
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