Transmission Service Adjustment Rider

Austin Energy’s transmission expense is projected to increase from $66 million to $124 million in the FY 2011-2015 period due to the ongoing Texas electric transmission grid build-out estimated at $8 billion. This includes the build-out of the Competitive Renewable Energy Zones (CREZ), which will add an estimated $5 billion in new transmission infrastructure. Transmission expense is the cost of moving high-voltage electric energy over the regional electric grid operated by the Electric Reliability Council of Texas (ERCOT) from the power supply to the local lower-voltage distribution system.

Decisions about the regional electric grid, its build-out and transmission rates are made by various entities including Transmission Service Providers (TSP), the Texas Legislature, the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT). The allocation of transmission costs among the electric companies in ERCOT is determined by State law and policies. As a result, Austin Energy has no control over its annual transmission expense, nor do other utilities in Texas.

Transmission expenses that Austin Energy must pay are calculated by multiplying a state-wide transmission postage stamp rate by the average of Austin Energy’s electric demand coincident to ERCOT’s four summer peak demands (4CP). The state-wide transmission rate is referred to as a postage stamp rate because all TSPs pay the same rate regardless of usage. This rate is the accumulation of all TSPs’ transmission access fees, which are regulated by the PUCT.

State-wide transmission rates are published in the ERCOT wholesale transmission service charge matrix and are set and approved annually by the PUCT pursuant to PUCT Substantive Rule 25.192. The state-wide transmission rate is expected to increase over time as the regional electric grid build-out continues.

Austin Energy’s FY 2010-11 Budget includes a Transmission Service Adjustment Rider (TSAR), which was postponed in the FY 2009-10 Budget, designed to recover these increased transmission expenses. This rider will appear as a new line item on the customer’s monthly bill. The rider will be a cost recovery or pass-through mechanism (no profit included) with an annual true-up for any changes made to the annual ERCOT wholesale transmission service charge matrix during the year and the Austin Energy 4CP. This rider will apply to each retail electric customer unless this charge would conflict with a written service contract executed prior to the effective date of the rider.

The FY 2010-11 TSAR will recover approximately $7.3 million in FY 2011. The following table includes the FY 2010-11 TSAR Amount, the calculated Average Monthly Consumption and the Impact on Average Monthly Bill for each Customer Class. For example, Austin Energy’s residential customers consume an average of 959 kilowatt hours each month. At this average usage, the FY 2010-11 TSAR amount of $0.00082 would result in an average monthly bill impact of $0.79 for residential customers or an annual impact of $9.48.

FY 2012 Approved Transmission Service Adjustment Rider (TSAR)

Note 1: Currently there are no customers in this class.

kWh = Kilowatt hour or one thousand watthours. Unit of electric energy equal to the work of one kilowatt acting for one hour. Amount of electricity used by ten 100 watt light bulbs left on for one hour.

kW = Kilowatt or one thousand watts. A measure of demand for power during a preset time--minutes, hours, days, months. Ten 100 watt light bulbs use one kW of electric power. A

Application:
The charge set forth in this rider applies to each City of Austin retail electric customer unless the application of this charge would conflict with a written service contract executed before the effective date of this rider.

Monthly Rate:
The customer’s transmission service adjustment charge will be determined by multiplying the customer’s billed kilowatt hours (kWh) or, in the case of a customer subject to a billing demand charge, the customer’s billed kilowatt demand (kW), by the Transmission Service Adjustment Factor (TSAF) applicable to the customer’s rate classification. The TSAF shall be calculated for each rate class using the following formula:

Where:
PSRcym is the transmission postage stamp rate published in the Electric Reliability Council of Texas (ERCOT) wholesale transmission service charge matrix most recently approved by the Public Utility Commission of Texas pursuant to PUCT Substantive Rule 25.192.

PSR08m is the 2008 matrix-year ERCOT postage stamp rate of $22.72772 per kW.

4CPcym is the City electric utility’s average kilowatt share of the ERCOT average coincident peak demand for the months of June through September used in the calculation of the PSRcym.

CLScym is the rate class’s percentage load share of the 4CPcym, determined using the City’s metering data.

B is the total billed kWh for the rate class, or the total billed kW for the rate class if the class is subject to a billing demand charge, for the time period used in the calculation of the PSRcym.

OU is the amount of the City’s over-collection or under-collection of ERCOT transmission service charges with respect to the prior wholesale transmission service charge matrix, calculated as follows:

Where:
TSCpym is the amount of actual ERCOT transmission service charges incurred by the City since the last adjustment to the TSAF.

4CPpym is the City electric utility’s average kilowatt share of the ERCOT average coincident peak demand for the months of June through September used in the calculation of the postage stamp rate for the prior wholesale transmission service charge matrix.

TSRpym is the amount billed by the City to all rate classes under this rider since the last adjustment to the TSAF.

CLSpym is the rate class’s percentage load share of the 4CPpym, determined using the City’s metering data.

Until the first adjustment of the TSAF after the effective date of this rider, OU shall equal zero. The TSAF applicable to each rate class may be administratively adjusted to reflect any change made to the annual ERCOT wholesale transmission service charge matrix.