With emerging energy technologies, electric utilities face disruption to their long-established business model of selling kilowatt-hours to customers. This case study is one in a 5-part series that shows how public power utilities across the country are innovating in the face of this disruption and responding to the desires of their communities. Learn how they are becoming nimble, customer-focused and respected 21st Century utilities.
Austin Energy was established in 1895 and serves more than 490,000 customer accounts and more than one million residents. Its annual revenues for 2018 were $1.4 billion. This public power utility employs 1,780 people and contributes more than $100 million annually to the city of Austin’s general fund.
Austin Energy, like the community it serves, prides itself on innovation and technology. Electric utilities are experiencing significant change as new technologies become more accessible and customer expectations evolve. There is also increased awareness of the impact of energy production and use on the environment and customer demand to mitigate those impacts.
As a utility that is highly responsive to the technological and energy portfolio changes its customers seek, Austin Energy is positioned to be competitive and ready for a disruptive future. The utility is focused on safely delivering reliable energy in a manner that is clean, innovative, efficient, and affordable while putting community first.
Clean: 65% of Austin Energy’s customer energy needs will be met by renewable energy by 2027, and 88% of the utility’s power portfolio will be carbon free.
Innovative: Austin Energy plans to incorporate 200 megawatts of local solar PVs and 10 MW of battery storage by 2025. The utility is supporting transportation electrification by establishing public charging infrastructure, integrating electric vehicles with the grid, offering lower rates to customers to charge at off-peak hours, and electrifying fleet vehicles.
Efficient: Austin Energy’s customers use 20% less electricity than the average in Texas, and the utility has a goal to reach 900 MW of cumulative savings by 2025. The utility offers residential and commercial customers a variety of programs that help them reduce energy consumption and save money on electric bills. In 2018, more than 34,000 participants in efficiency programs contributed to over 70 MW of energy demand reduction. Between 2007 and 2018, over 730 MW of energy demand and 1.4 million MWh of cumulative energy savings were achieved.
Affordable: Austin Energy has had rate increases of less than 2 percent per year. Its average residential customer utility bill is nearly 30% lower than the state average. Energy efficiency and demand response allow the utility to buy less wholesale energy when the market is most expensive, leading to more than $1 billion in cumulative bill savings since 2003, compared to average electricity costs in Texas.
Community-focused: The public power business model enables Austin Energy to connect directly to customers, better understand what they want, and design and deliver a comprehensive suite of innovative products.
Austin Energy is achieving its goals through many innovative programs and services. A few recent examples are:
- Renewable energy: Austin Energy provides financial incentives to customers that install rooftop solar on their homes or businesses. Customers also have options to subscribe to 100 percent renewable energy through the GreenChoice® (Texas wind) and Community Solar programs. In FY 2018, customer enrollment in GreenChoice® topped 16,000. More than 7,500 residential customers have taken advantage of solar incentives and installed over 35 MW of solar PV.
- Transportation electrification: The utility offers incentives for electric vehicle charging stations at homes, workplaces, multifamily housing, commercial fleet garages, and retail locations. The utility also offers an EV time-of-use rate, $4.17 per month for unlimited public charging fill-ups, and EV educational programs for teachers and students in local schools.
- Austin SHINES: The utility is leading an effort — supported by a grant from the U.S. Department of Energy and the State of Texas — to deploy and better understand the value streams associated with the integration of battery storage and solar resources. This includes optimizing multiple emerging technologies — including a vehicle–to–grid bidirectional charging demonstration — to maximize value to the electric grid, the utility, and customers.
- Green Building certification: The utility provides consultation, technical assistance, and green building rating services for new construction and major renovation projects. In FY 2018, about 900 homes, 2,650 multifamily units, and 5 million gross square feet of commercial property were rated. Austin Energy’s program was instrumental in the development of the popular LEED green building certification used nationally.
- District cooling program: Austin Energy helps condominiums, hotels, high–tech companies, and retail businesses in downtown Austin save on air conditioning costs and avoid contributing to the utility’s system peak by connecting their systems to a chilled water network.
Austin Energy has been able to achieve significant customer savings and environmental benefits because of the advantages it has as a public power utility. It enjoys low borrowing costs and no requirement to generate excess revenue for dividends to distant shareholders. The utility makes an annual transfer to the city’s general fund, which is allocated to police, fire, parks, and other vital community services.
Austin Energy’s financial indicators are strong. Fitch Ratings, a leading independent provider of credit ratings, recently upgraded Austin Energy’s bond rating to AA. Fitch noted the utility’s commitment to diversified assets, affordable rates, and stable operating costs as contributors to the high rating, stating that “Austin Energy’s operating costs have remained low despite significant strides made toward the City’s renewable and clean energy goals…the upgrade also reflects Austin Energy’s strong financial performance and service area growth.” Standard and Poors and Moody’s also rate Austin Energy highly, at AA and Aa3, respectively.