Austin Energy - General Fund Transfers

[Michael Searle]

Council Members & Staff,

As CM Troxclair discussed during the work session, there is a Resolution (very similar to the Austin Water General Fund Transfer Resolution) posted for the Austin Energy Oversight Committee agenda tomorrow. It should be sent to you all as late backup but we thought we would post it here as well. It asks for the same report with financial information regarding a reduction in the General Fund Transfer. That report should provide the Council with information and data to consider going into both the rate case and the Budget discussions.

Thanks

MS


Troxclair Resolution # _______________

Whereas, Austin Energy is a municipally-owned utility and is the largest enterprise department in the City of Austin; and

Whereas, Austin Energy’s total projected revenue for FY 2105/16 is $1,404,011,591; and

Whereas, in Fiscal Year 2015/16, despite an almost $80,000,000 reduction in fuel costs due primarily to the cost of natural gas, non-fuel revenue requirements increased $60,000,000; and

Whereas, included in those non-fuel revenue requirements in FY 2015/16, Austin Energy will transfer $114,090,429 (8.1%) to the General Fund and Economic Development Department; and

Whereas, in an article in the Austin-American Statesman, General Manager of Austin Energy Larry Weis noted that “it is ‘well-known’ that the amount the utility pays for shared services is ‘inappropriate;” and

Whereas, those transfers cost the average Austin Energy customer $254 per year; and

Whereas, because low-income residents both pay a higher percentage of their income to utility bills and use more energy per square foot than high-income residents, these transfers impact the affordability of Austin for those customers the most; and

Whereas, a nation-wide study by the American Public Power Association found that municipally-owned utilities that make general fund transfers, the median transfer, as a percentage of operating revenue, is 4%; and

Whereas, in FY 2015/16, 4.0% of Austin Energy utility total revenues is $56,160,464; and

Whereas, the total General Fund and Economic Development transfers from Austin Energy are 103% more ($57,929,965) than the national median for municipally-owned utilities; and

Whereas, determining utility rates that include transfers to the General Fund and Economic Development department compromises transparency in the cost of government and the services it provides; and

Whereas, lower utility costs would attract businesses to Austin, help existing businesses and residents, and positively impact the affordability of Austin; NOW, THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF AUSTIN:

The City Manager is directed to develop a report with options for both reducing and eliminating the General Fund and Economic Development transfers from Austin Energy.

The report should include options for reducing the transfer to 4% and 6% of total revenues as well as options for eliminating it completely, both over a period time and immediately in the FY2016/17 budget.

The report shall be presented to the Austin City Council no later than May 31th, 2016.