A humbling hearing at the Capitol for housing supporters

Yesterday’s meeting of the House Committee on Land & Resource Management seemed to go pretty well for those who oppose more housing in Austin. Most of the members of the committee, Republican and Democrat, either misunderstood what HB 2989 does or couldn’t make sense of the debate over it.

I am far from an expert on the Lege, but it appeared clear that most members of the committee are far from convinced that the bill, which would specify that comprehensive rewrites of city zoning codes cannot be subjected to the same housing filibuster that is used to thwart individual zoning cases, deserves their support.

For some reason the screen shot of the committee hearing is showing up very small.

The hearing kicked off with a handful of opponents testifying against the bill –- all familiar faces in Austin anti-development politics. Fred Lewis alleged that city planners, inspired by the “latest fad of New Urbanism” aimed to eliminate “single-family neighborhoods” –– “they say it’s bad for the environment and needs to be eliminated.”

For the record, the vast majority of single-family zoned lots in Austin would have remained so under every code revision presented by city staff in recent years.

Former Travis County Auditor Susan Spataro rambled incoherently about the wonders of single-family housing and the horrors of apartment living, suggesting that the purpose of the bill was to condemn all of Austin to the latter.

“It is destroying the way humans are allowed to live when you get rid of single-family homes,” she said.

Funny. Houston doesn’t have zoning and yet it has lots of single-family homes. How does that work?

Later on, she contrasted the good old days with the dystopian future planned by New Urbanists:

“You had a backyard and you know and maybe a rabbit in it or a dog or something like that. These big high rise units, these small apartments are not that. They will impact families and how people are raised.”

So just how bad does Spataro believe multifamily housing is? Should parents even be allowed to raise children in apartments?

The hallucinations and histrionics were received quite positively by committee members, who later grilled Dan Keshet, the head of Texans for Housing, on both the perception that the bill would deprive property owners of proper notice and that it would destroy neighborhoods.

Rep. Kyle Biederman, a Fredericksburg Republican who attended the infamous Jan. 6 rally at the Capitol and has proposed a referendum on Texas seceding from the union, repeatedly asked Keshet to explain why so many people were opposing the bill and asked him what was going to happen to the properties in “their area.” Keshet had to explain that he didn’t know where the individual opponents lived and how the properties in their neighborhoods were being rezoned, if at all.

“I believe if these people felt like it was going to be zoned single family, they wouldn’t be so concerned, wouldn’t you?”

It’s about the feelings man!

Later, in response to Austin home builder Scott Turner’s testimony in favor of the bill, Biederman conceded that “cities need to grow … but they don’t have to grow over the top of people and roll them over.”

The constraints that the city of Austin is putting on housing is not such a big deal, reasoned Biederman, because “home builders can build homes wherever you want, wherever you got land.”

“Regulation outside of the city is much less,” he said. “Outside the city of Austin it’s a lot easier. There’s a lot of open space around. And it just doesn’t seem fair to individuals that they have to change their lifestyle, their community because homebuilders need to be able to build homes because Texas really needs them.”

This ringing endorsement of sprawl given by Biederman is the logical conclusion of the positions taken by many of Austin’s “progressive” anti-development folk.

And yes, it’s obviously deeply ironic that a politician whose identity is based on nostalgia for the rugged individualism of the Texas frontier is so willing to sacrifice individual property rights.

The conflation of property rights with protest rights was a recurring source of confusion for members of the committee. In general it is the opponents of the bill who seek to restrict property rights by keeping zoning as restrictive as possible (single-family zoning). And yet somehow they appeared able to convince members of the committee that it is their “property right” to increase the voting threshold by which City Council rezones other people’s properties.

Most of the committee members were clearly unfamiliar with the debate around the issue and had a hard time making sense of the fact that both sides were claiming the mantle of affordability.

“Somewhere there’s some disconnect because you and the opposition have the same goals, it seems to me,” said Committee Chair Joe Deshotel, a Beaumont Democrat.

This might take a while.

Could the Lege save land use reform in Austin?

A bill that would make it much easier for Austin and other Texas cities to overhaul their land development codes is getting a hearing at the Capitol today. The House Committee on Land & Resource Management will take up HB 2989, a bill authored by Rep. John Cyrier, a Bastrop Republican, which would clarify that … Continue reading Could the Lege save land use reform in Austin?

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Biden vs. Austin NIMBYs

This is an excerpt from the April 5 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

There’s a lot to love about the American Jobs Act, Biden’s sprawling $2 trillion infrastructure package. It represents the type of massive investment in America’s physical and human infrastructure that hasn’t occurred since the 1960’s. It’s the Green New Deal in all but name. The only thing missing, as far as I’m concerned, is a dedicated fund for pedestrian and bike infrastructure, but I hope that changes.

In addition to combating climate change, stimulating the economy and making America more globally competitive, Biden has framed the package as a generational opportunity to reduce racial and economic inequality. Some of that comes courtesy of investments that disproportionately benefit the poor: public transit ($82B), affordable housing ($263B), home health care ($400B).

But Biden is also proposing programs specifically aimed at redressing past injustice, such as highway projects that demolished minority neighborhoods (I-35, Mopac) and/or separated them from opportunity (I-35).

Here are a few words of which Austin’s leaders may take particular note:

So apparently the White Knight we thought was saving our democracy from the Orange Menace was just a developer shill all along.

(Take a moment to consider the irony: it was actually Trump, the real estate developer, who embraced the defense of single-family zoning as a campaign issue)

Liberal defenders of exclusionary zoning in Austin may be inclined to dismiss this as an unfortunate vestige of Biden’s centrist tendencies. After all, the guy went along with much of the Clintonite neoliberal agenda of the 90’s (NAFTA, financial deregulation, welfare reform) and stood apart from the other Democratic frontrunners in 2020 by avoiding attacks on big business and the 1%.

Alas, Austin NIMBYs won’t get much comfort if they look further to the left. Biden’s plan mirrors a bill proposed by Elizabeth Warren in 2018, which if passed would set up a $10 billion competitive grant fund aimed at encouraging cities to reduce barriers to housing production, such as:

  • “revising or eliminating off-street parking requirements”
  • “revising minimum lot size requirements and bans or limits on multifamily construction to allow for denser and more affordable development,”
  • “instituting incentives to promote dense development, such as density bonuses”
  • “allowing accessory dwelling units”
  • “streamlining regulatory requirements and shortening processes, reforming zoning codes, or other initiatives that reduce barriers to housing supply elasticity and affordability”

In both Biden’s proposal and Warren’s bill, there’s a lot of room for interpretation. Austin’s zoning code is certainly restrictive, but it’s certainly less restrictive than, say, Woodbridge, Conn., a suburb of New Haven, where the minimum single-family lot is 1.5 acres.

But the message from the national Democratic Party is unequivocal: exclusionary zoning is a barrier to equality. It’s not something that any elected Democrat should support, let alone devote their political career to saving.

The growing chorus on behalf of housing justice in liberal/Democratic circles bodes well for supporters of reform in Austin. No, it’s not going to change Kathie Tovo, Alison Alter and Leslie Pool’s minds about the land development code (although I could see it affecting Ann Kitchen). But if their message is fundamentally at odds with that coming from liberal media outlets and national liberal leaders, it will make it harder for them to recruit a new generation of anti-density leaders.

If supporters of reform in Austin want to finally move the ball, they should jump all over this. The old adage that “all politics is local” has in recent years been flipped on its head: all politics is national. Most people consume more national political news than local news and they feel a stronger association with national political leaders than with local elected officials. Therefore, the best way to convince a liberal voter who only casually pays attention to City Hall that NIMBYism is not the right position is to point them to national figures they trust. This should have been apparent five years ago when the Obama administration began urging cities to reduce zoning barriers to housing, but it has become even clearer in the past year, during which a detested Republican president waged a dog whistle-infused campaign in defense of single-family zoning.

So here’s a question for City Council members: Whose position on exclusionary zoning do you support? Trump’s or Biden’s?

This is an excerpt from the April 5 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

A curiously tight vote on affordable housing in Southeast Austin

Well this was very interesting. City Council came closer than I would have expected yesterday to killing an affordable senior housing project in Southeast Austin. It was particularly interesting to see CM Vanessa Fuentes vote against the project, a troubling sign for housing advocates, many of whom have voiced cautious optimism that the newcomer, despite … Continue reading A curiously tight vote on affordable housing in Southeast Austin

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Can Austin bury I-35? And a chance for more housing on Rainey

Can Austin bury I-35? City Council is starting to push back on TxDOT’s vision for I-35. Kinda. To be clear, we’re talking about the $4.3 billion I-35 Capital Express Central project, not to be confused with Capital Express North or Capital Express South expansions that will be underway even sooner. The Central project is between … Continue reading Can Austin bury I-35? And a chance for more housing on Rainey

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Natasha Harper-Madison’s biblical case against Prop B

This is an excerpt from the March 18 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

I finally got around to watching the ATXelerator forum on Prop B — May ballot initiative to reinstate the homelessness camping ban. The online discussion pitted Matt Mackowiak, the head of the Travis County Republican Party who is leading the Prop B effort, against CM Natasha Harper-Madison and Matt Mollica, the executive director of ECHO Austin, the homelessness advocacy group.

Mackowiak, a professional political consultant and frequent talking head on local TV, was characteristically insolent and hyperbolic, displaying contempt for both the people he was talking with and the people he was talking about.

To hear Mackowiak tell it, City Council’s repeal of the camping ban is responsible not only for the proliferation of homelessness encampments in public places but for the homelessness crisis itself. He says Austin has become a “magnet” for homeless people from around the state and country. He specifically claimed that there are “nonprofits” around the country facilitating this by “putting the homeless on buses to cities they want to go to.”

“There’s a program called Operation Homestead, where nonprofits put people on buses to the cities they want to go to and get them out of other cities around the country. Austin is probably the single most attractive place in the country right now for a homeless person to go, partially because of the weather but partially because of the camping ordinance, which basically allows them to do anything they want, anytime they want, anywhere they want, with very, very few restrictions and almost no enforcement whatsoever.”

Mackowiak is thus describing homeless people as an invasive species that the city is allowing to spawn. It’s also remarkable to see an American, let alone a Texan, let alone a Texas Republican, express horror at people exercising freedom of movement and of a government that allows people “to do anything they want …. with very, very few restrictions.” Isn’t that the story of Texas that Greg Abbott tries to tell every day?

(Also, I’m having trouble finding any meaningful evidence of the bussing homeless people to Austin operation that Mackowiak referenced. The only “Operation Homestead” that my trusty Google is turning up is a group of activists who took over vacant buildings on behalf of Seattle’s homeless in the early 90’s. I have requested more information from Mackowiak; he hasn’t replied yet.)

And yet, despite all of the dehumanizing language, Mackowiak insists that he cares about the homeless (“I’m a Christian”) and that lifting the camping ban has actually made life worse for them.

Harper-Madison offered a respectful and compassionate contrast. She was likely the best ambassador possible for the anti-Prop B forces. I found her Scripture-infused opening comment particularly strong:

“Austin is not the only city grappling with homelessness. The City Council did not create Austin’s homelessnesss crisis in 2019. Poverty has been a part of civilization long before Jesus himself declared without qualification that blessed be the poor. And despite that pretty clear statement, there’s still that stubborn theological tradition woven into American history about how being poor, is a sign of sinfulness. I think what we did is recognize that you don’t have to be rich and successful to be blessed in the love of God.”

I say this as an atheist: the language of the Bible is a far more effective tool for social justice than the language of the academy. Why? Because far more people have gone to Church and learned “love thy neighbor” than have gone to college and learned about critical race theory. The more progressives understand this, the more they’ll win.

NHM calls out NIMBYism

On at least one front, Mackowiak was right: the city is not doing a good job of housing the homeless. Some of the city’s efforts have been disrupted by the pandemic, which diverted some space designated for permanent supportive housing to quarantine people recovering from covid and just generally prompted a diversion of resources and attention. But there has been frustration on City Council with City Manager Spencer Cronk’s slow movement on implementing the plans they’ve passed to get people into housing.

Harper-Madison also stressed over and over again that the issue was “housing, housing, housing, housing, all housing types, all parts of the city.” She even conceded a common argument made by conservatives, who point to the Community First homeless community as an example of private sector success. That type of housing settlement, she said, is not allowed by Austin’s land development code, and that’s a problem.

Harper-Madison thus described Prop B:

“This ballot item won’t create new housing. It won’t invest in services … it won’t stop anyone from holding a cardboard sign at an intersection. It will simply punish people who can’t afford a bedroom in our increasingly unaffordable city.”

What’s the actual problem?

I do think there’s a good chance that Prop B passes because it’s certainly not just conservatives who are upset about the camping situation. It is awful. In my own neighborhood, the sidewalks under the highway at Ben White & Menchaca have now been completely taken over by tents. I don’t think anyone could look at that and not conclude that it is a societal failure.

But is the failure that the world’s most prosperous society has people living in abject misery, or is it that that misery is now visible? For what it’s worth, I think one can believe the greater failure is the former and still believe that there should be greater restrictions on where people can camp. Whatever the answer is, the only fool-proof solution is housing, housing, housing.

This is an excerpt from the March 18 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

Without the outages, Austin Energy may have lost big money

This is an excerpt from the March 8 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

It’s time to explain a few things about Austin Energy that I have come to realize most people don’t understand.

Many understandably believe that Austin Energy generates power and then distributes it to Austin homes and businesses. Therefore, they figure that if 40% of Austin lacked power during the storm, it was because AE simply wasn’t generating enough. Or they see a report about how an AE biomass plant sat idle during the storm and conclude that more Austin homes would have been powered if that plant had been running.

None of this is true. Let me explain:

  1. Austin Energy, like every other utility in ERCOT, is required to sell all of the power it generates into the ERCOT grid. It does not have the option to “keep” the power for its own customers.
  2. To power our homes, it then buys back power from the grid that comes from generators all over the state.
  3. Therefore, your home is not necessarily powered by the energy generated by AE.

As I explained the other day, during the week of the storm AE was a net generator, meaning that it provided more power to the grid than its customers (us) consumed. As a result, in contrast to the utilities (and their customers) that got crushed by the sky-high prices of energy during the crisis, AE likely made money –– money that can be invested in a way that benefits the community it serves.

This context is important when you look at the debate in past years between AE and environmentalists over how much of the utility’s generation should be renewable. AE’s reluctance to phase out its fossil fuel generators was due to the potential financial risk. They wanted to be sure that in the event of sky-high prices, they would be able to sell as much power to the grid (at the same high price) as AE customers were consuming. If you’re completely reliant on intermittent wind or solar power, you can’t be assured that your generation will meet demand in every circumstance.

But what if there hadn’t been outages?

Until yesterday, the only information I had from AE was that it was “net generator.” However, in its presentation to City Council yesterday, the utility offered more specifics in the way of this graph:

The black line represents AE’s “load,” or the amount of power being consumed by Austin homes and businesses.

CM Alison Alter made an important observation: although AE’s generation mostly exceeded its consumption throughout the storm, it almost certainly only was a net generator because nearly half of its customers didn’t have any power. Had there not been massive outages ordered by ERCOT, the utility would have been forced to buy more power off the grid than it was providing.

“While we can say that we met the needs of our load, such as it was reduced, and that’s better than what happened in other markets, it’s not clear that we would have been able to meet our needs absent ERCOT’s load sheds,” she said.

Therefore, “We were still contributing to the need for the load shed in the first place.”

Yep. AE’s status as a “net generator” during the storm was largely due to the fact that roughly 220,000 Austin homes were without power.

AE did not push back on that point, simply pointing out that its generation was hampered by the unprecedented storm.

This is definitely something important for the utility to consider in its long-range plans. If for some reason ERCOT had not ordered the outages but energy prices had still been extremely high, AE would have spent a fortune providing power to its customers but not have sold enough to cover the cost. And that might have put the utility in the precarious situation that many other utilities across the state now find themselves in. The utility would not have been able to immediately pass the cost on to customers, but it may have been forced to seek a rate hike at the next available opportunity.

This is an excerpt from the March 4 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

New bill would make it much easier for Austin to get new code

This is an excerpt from the March 8 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

Identical bills filed on Friday would make it much easier for City Council to adopt a new land development code.

The bill, which was filed in the House by Rep. John Cyrier, R-Lockhart, and in the Senate by Sen. Nathan Johnson, D-Dallas, amends a provision of the local government code to draw a clear distinction between rezonings “that only affect an individual lot or a limited area of contiguous lots or land” and a “comprehensive revision of the regulations or boundaries.”

The bill specifies that site-specific zoning cases could be challenged via “valid petition,” in which either the owner of the property or (more commonly) the owners of 20% of the land with 200 feet protest the rezoning. In those cases, City Council needs a ¾ majority to adopt the rezoning.

However, comprehensive rewrites of the code or code amendments that apply uniformly across the city could not be challenged via valid petition.

The city of Austin and plenty of other legal experts have argued that this was always the case. However, a year ago Travis County District Judge Jan Soifer disagreed, telling City Council that as long as property owners were objecting to their properties being rezoned as part of a new LDC, Council needed a ¾ majority to approve it. That would mean nine out of 11. That essentially put the new code on hold, since at the time there were only seven members of Council in favor.

Who’s behind this bill? Will it pass?

From my very limited knowledge of Cyrier, gleaned largely from reading his online biography, he is a fitting author of this bill. He is a general contractor by trade and has served on the executive board of the Real Estate Council of Austin in the past. I don’t know much about Johnson — this bill was not included on the list of legislative priorities he unveiled a few months ago.

I also have no read on this bill’s chances of success at this time. Because the Lege is only in session for 140 days every two years, bills that are not a top priority among the chamber’s leaders often die simply because the clock runs out.

One group that is involved in pushing for the legislation is Texans for Housing, whose board of directors includes five people from Houston, DFW, College Station and Austin. The one local is urbanist activist Dan Keshet.

It will be very interesting to see how this plays out. The traditional business-oriented wing of the GOP would be inclined to defer to industry (RECA etc) in support of this legislation, especially since they know that this is aimed at helping cities lower barriers to development, not raise them.

However, the defense of single-family zoning has become a rallying cry among some conservatives over the past year. Trump tried to extend the racial anxiety prompted by the Black Lives Matter protests into zoning, claiming that Democrats were going to “abolish the suburbs,” and force middle class people to live near undesirables. Empower Texans, the far right pressure group, has expressed support for those fighting Austin’s new LDC, and I wouldn’t be surprised if Dan Patrick, who largely controls what happens in the Senate, is sympathetic to their argument.

Finally, what will Democrats, especially Austin-area Democrats, say about the bill? At this point, I have no clue.

So, what happens if it passes?

Immediately after the Soifer decision, Council voted 7-4 to appeal, but two of those seven (Flannigan & Garza) are now gone and it’s far from certain that there remains a majority in favor of pursuing the appeal. Mackenzie Kelly was explicit in opposing the city’s position during her campaign, while Vanessa Fuentes’ views on the LDC are less clear.

If this bill passes, all of the questions about the appeal and the lawsuit become moot, but the fight over land use reform would be far from over. There are only five members of Council who support the new LDC, while four (Tovo, Pool, Kitchen, Alter) are opposed and the two new members have expressed varying degrees of opposition.

The big question mark is Fuentes, who has said she believes there must be more market-rate housing in all parts of the city but said she wanted to see greater anti-displacement protections in the new LDC. What would it take to get her on board? And does Adler have the stomach to approve a new code 6-5?

This is an excerpt from the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

Thanks to Austin Energy, we aren’t facing huge electric bills

This is an excerpt from the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

 

I’d like to circle back to something an Austin Energy spokesperson told me last week:

Preliminary analysis indicates that Austin Energy was a net generator during the event. Based upon what we currently know, we do not anticipate any negative impacts regarding Austin Energy’s ability to continue to operate and to meet outstanding financial obligations.

It’s worth pondering that for a moment. Although I do think AE needs to answer some tough questions about how it managed the outages, it’s good to know that at the very least, after the hell that half of Austin endured two weeks ago, people can rest assured they won’t get hit with a financially devastating utility bill.

The historic Seaholm Power Plant, which is no longer in use.

Elsewhere in Texas, many of those who were lucky enough to have maintained power during the storm are now confronting four or five-figure bills. In fact, even some who lost power got hit hard. The Texas Tribune explains:

As the bad weather bore down, it froze natural gas production and wind turbines, choking off the supply of electricity as demand skyrocketed. In response, the Public Utility Commission, appointed by Abbott, let the wholesale market price of electricity rise to $9 per kilo-watt hour, a 7,400% increase over the average 12 cents per kilo-watt hour.

Karen Knox, a special education teacher in Bedford…lost power during the crisis but still owes some $7,000 to Griddy, an electricity provider located in Houston.

At first, it may seem like the surge in prices only hurt those poor souls on “variable” electricity plans. Indeed, there is no shortage of smug market fundamentalists who would shrug at these people’s misery, insisting they are not in fact victims but rational market actors who made a risky bet.

But actually, many Texans on fixed rate plans may see their bills go up in the coming years. From the Tribune:

Kaiba White, an energy policy specialist with consumer advocacy group Public Citizen, said the costs would be passed on to customers one way or another.

“If they [the electric provider] don’t have a mechanism that allows them to do that in the immediate — like on the next bill or the next several bills — it’ll end up getting rolled into the overall cost of service,” she said. “It’s just a matter of whether it’s going to get passed on in an immediate way, in a shocking way … or spread out over time.”

Now, at least one expert I talked to disputed this, saying that the competition in the retail electricity market is fierce enough that companies may just eat the huge costs they incurred during the storm and not pass them onto their customers. But some of them won’t be able to afford to do that. For instance, Brazos Electric Power Cooperative, the state’s oldest and largest power co-op, just declared bankruptcy and it sounds like it’s not going to be the only one. From Reuters:

The state’s grid operator, Electric Reliability Council of Texas (ERCOT), on Friday said $2.1 billion in initial bills went unpaid, underscoring the financial stress on utilities and power marketers. More providers likely will reject the bills in coming days, executives said.

“The municipal power sector is in a real crisis,” said Maulin Patani, a founder of Volt Electricity Provider LP, an independent power marketer that is not a member of the Brazos coop. ERCOT should suspend the service charges to halt further defaults, he said in an interview on Sunday.

In other words, it’s likely we’re going to need a state bailout to keep many of these utilities afloat. Hooray for the free market.

Meanwhile, the People’s Republic of Austin and its customers don’t have this problem. Why? Because, according to what Austin Energy has said, the city-owned utility likely made money during the storm. You see, AE is both a generator and a distributor. It owns power plants that generate power that it, like every other Texas generator, is obligated to sell into the broader ERCOT market. But it simultaneously buys electricity from the ERCOT market to power Austin homes and businesses.

Thus, when prices are high, AE is paying up the wazoo for electricity like all other utilities, but it is also flush with cash from the money it’s making selling the energy it’s generating from its power plants and wind farms. Are you following me?

Now, if AE’s generators had all gone offline during the crisis, the situation would be very different. Austinites wouldn’t have been hit with high utility bills right away, but AE may have faced a serious financial difficulties that could have forced City Council to hike rates, perhaps substantially.

Here’s what Robert Cullick, who was AE’s comms director from 2014-19, says:

We need more information from the City. The news that Austin was a “net generator” during the freeze could be very, very important. On the face of it, It means that when power jackknifed from $40 to $9,000 per unit, Austin Energy may have been selling as well as buying. That would have protected consumers against the price gouging that was occurring in the market. That would be great. But we have to find out which plants were producing power. If the units that were producing were coal, gas or nuclear-powered, the freeze raises political questions — these are the very units that environmental lobbyists are pushing the Council to close prematurely because they prefer renewable sources. We deserve the whole story.

Well, to be fair, renewable sources aren’t merely a preference. They’re a moral imperative and, most of the time, they’re cheap, which is why utilities have invested so heavily in wind power in recent years. However, it is true that we likely do not have the storage technology yet to rely entirely on renewables. We still need to have sources that can be dispatched at any time, whether the wind is blowing or the sun is shining.

So if it was the coal-powered Fayette Power Plant or the one remaining unit of the gas-powered Decker Power Plant that kept AE (and its customers) from losing its shirt during the storm, that certainly makes it harder to vociferously campaign for their closure, as environmental groups have done in recent years.

TO BE VERY CLEAR, all of the above has very little to do with whether Austinites kept their lights on two week ago. Austin Energy’s ability to produce power does not have any direct effect on whether its own customers have power because it is obligated to sell whatever power it generates into the broader ERCOT grid. So, the overall effect of AE’s success as a generator during the storm was that it helped to stabilize the statewide grid and it prevented financial disaster for the utility and its customers (you and me).

At the very least, one should hope that AE’s apparent ability to perform while so many of its peers failed means that we will no longer have to live under the continual threat of privatization by the legislature. After all, at least we’re paying our bills.

This is an excerpt from the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

Heads roll at ERCOT. Don’t fall for it.

Five members of the ERCOT board who aren’t Texas residents have resigned in response to outrage over last week’s disaster.

I will concede, it is extremely unbecoming of ERCOT to resort to out-of-staters to fill its board. This is a state of 30 million and the historic energy capital of America. Are there really not enough qualified candidates in that pool?

Our state leaders are peddling these resignations as a meaningful response to last week’s crisis. They are hoping that the crisis will be interpreted by voters as simply the result of absentee leaders being asleep at the wheel.

Don’t fall for it.

First, ERCOT does not have meaningful regulatory power. It’s the Public Utility Commission, whose board is appointed by the governor, that calls the shots. Here’s what one longtime energy insider tells me:

“Essentially the PUC gives (ERCOT) the ability to write rules. However if the rules are controversial then they can be appealed by anyone to the PUC. So practically that means they mostly write technical rules or small ball rules. Big policy items are at the PUC.”

ERCOT’s job is to prevent the grid from collapsing. Last week, it did its job. It does not have the ability to force utilities to generate or store power in anticipation of the type of major surge in demand that took place last week. When Texas deregulated its electricity market 20 years ago, it placed its faith in the market addressing that issue. Last week the market failed, and it will fail again unless significant changes to the system are made.

In many other states, utilities are paid to have additional energy capacity that may not be useful 99% of the time. In other words, when customers pay their electrical bills, they are not just paying for the energy they are using, but for the investments the utility has made in preparation for an emergency. In Texas, power generators aren’t required to prepare for major demand surges, but they are incentivized to do so; when demand skyrockets they are able to sell their power for a fortune to power distributors.

Texas’s system is supposed to result in lower prices most of the time. In practice, it may have resulted in lower prices for large commercial customers but it has not resulted in lower utility bills for your average residential customer. From today’s Wall Street Journal:

Texas’s deregulated electricity market, which was supposed to provide reliable power at a lower price, left millions in the dark last week. For two decades, its customers have paid more for electricity than state residents who are served by traditional utilities, a Wall Street Journal analysis has found…

…Those deregulated Texas residential consumers paid $28 billion more for their power since 2004 than they would have paid at the rates charged to the customers of the state’s traditional utilities, according to the Journal’s analysis of data from the federal Energy Information Administration.

Robert Cullick, who oversaw communications at Austin Energy from 2014-19 and had a similar role at the Lower Colorado River Authority from 1991-2001, described the state’s system thus:

“Power is generally cheap, except when it’s extraordinarily expensive. Power is generally reliable, except when it’s off for four days.”

The good news for Austinites is that not only are Austin Energy rates codified by city ordinance, but because AE is both a generator and a distributor, it both sold and purchased power at last week’s exorbitant rates, meaning that it did not suffer the crippling financial losses that some purely distributor utilities are now passing onto customers. (In other words, AE generates power, which it sells into the ERCOT grid at whatever the market rate is and then it buys the energy back to distribute to its customers. Yes, it’s confusing)

The bad news is that we will likely face power outages again –– just like we did in 2011 –– unless the state imposes new requirements on utilities that it is willing to enforce. For instance, it could mandate that power generators make certain investments to protect their plants from cold weather. But those requirements need to be accompanied by accountability, either in the way of inspections or major penalties in the event that a generator goes offline.

None of these changes will occur by changing who is on the board of ERCOT.

“This is going to take a thoughtful discussion about how much risk I am willing to take in exchange for the few dollars (a month in savings),” says Cullick. Scapegoating ERCOT or renewable power is a distraction from that necessary discussion, he adds.

So far Abbott is not talking about making the type of switch to that type of “capacity” system.

He is, however, talking about requiring winterization — and even providing state funding for it. Having the state pay, rather than utility customers, is a more progressive cost structure. But is this going to be a long-term commitment from the state or just a one-time injection of assistance whose usefulness will wane over time as facilities age?

Cullick’s concluding remark: “I for one am going to Lowe’s to buy a generator.”