AUSTIN (KXAN) – City auditors found Austin Energy did not ensure more than two dozen customers were eligible to receive utility discounts through the city's Customer Assistance Program, which is meant to serve low-income residents, according to a recently released special report.

The auditor's office examined a sample of 124 customer accounts that received Assistance Program discounts in the past three years. Auditors found Austin Energy didn't do a secondary check to determine income eligibility on 29 of those.

Eventually, the agency removed all but four from the program, after they had already received discounts for nearly a year, on average. The four remaining still receive discounts, according to the report, but may not be eligible.

The auditor's office pulled the 124-customer sample from a list provided to city council by a concerned citizen, the report stated.

Adler and council members Alison Alter and Kathie Tovo requested the audit. Tovo said the request came after consumer advocate Paul Robbins filed his complaint.

Robbins, a local environmental activist and city utility critic, has been critical of the CAP program for years and has written reports about what he describes as flawed eligibility criteria.

A resident has filed a complaint against the city regarding homes in high-income ZIP codes who are receiving discounts. (Courtesy: Paul Robbins)
A resident has filed a complaint against the city regarding homes in high-income ZIP codes who are receiving discounts. (Courtesy: Paul Robbins)

He told KXAN he requested a CAP participant list and then cross-checked them with who lives in high-income ZIP codes, as well as what their property values were with the Travis and Williamson counties' appraisal districts.

Robbins said he was "exasperated" by finding potentially wealthy people still receiving utility discounts. Because of eligibility rules, the program could be providing discounts to "thousands" of people that don't need it, he said.

One participant on his list, for example, owned five other properties with a total value of nearly $2 million.

"I'm very disappointed in Austin Energy and the way they are running the program," Robbins said. "Their business model is how much money can you give away, not how much money can you give away to people that are deserving of the assistance."

The Assistance Program serves about 33,700 customers each year. Austin Energy spent approximately $14.5 million on the program in fiscal year 2020 and $10.8 million in fiscal year 2021, according to the report.

In response to the audit report, Austin Energy General Manager Jackie Sargent said the program "serves as a national model for similar programs," according to a memo posted Wednesday for city council and Mayor Steve Adler.

"Austin Energy is confident that COA Utilities assistance eligibility and enrollment practices strike the right balance between stringent, industry-best standards and removing barriers to participation for those in need," according to Sargent's memo.

Sargent's memo also said the sample of customers examined by the auditor's office was not a statistically valid random sample, because it pulled from a narrow list, and the audit's findings should not be used to extrapolate general performance of the program.

Who's eligible?

Customers can receive the Assistance Program discount if they or someone in their household qualifies for certain social programs.

Austin Energy uses a vendor to match those customers, who also can't have a property improvement over $250,000, or more than one house.

The utility said they do not double-check those participants' incomes because that's already done in the other social programs.

But Robbins says even though the social service programs themselvesdo screen for income, if that person lives in a wealthy home with others, that wealthy home isnot screened.

"There could be 1000s of people that are undeserving that make over 200% of poverty that are getting poor people's money," he said.

"There could be 1000s of people that are undeserving that make over 200% of poverty that are getting poor people's money."

Paul Robbins, Consumer advocate

The second way for customers to enroll is to "self-identify as eligible" by proving their income or enrollment in a qualifying program.

Customers can get the discount if their household income is below 200% of the federal poverty level, which was less than $53,000 for a household of four last year.

Any customer who owns a second home in the area or has a property improvement value exceeding $250,000 would go through a second income verification process (a property improvement is worth the value of the structures on a property, not the land).

Customers can stay on CAP until that secondary verification was completed, with the goal being 90 days.

"But some extenuating circumstances – such as difficulty producing documents or needed additional wrap-around social services to help – allowed flexibility in the time frame. That was a manual process that has gradually become automated," said Kerry Overton, Deputy General Manager and Chief Customer Officer for Austin Energy.

This flowchart from the auditor's special report shows when and why Austin Energy reviews CAP applications for household income.

Of the 124 customer accounts, auditors found 80% owned property with improvements of at least $250,000, and 18% had more than one home in Travis or Williamson counties. Those customers were asked to complete a second income verification within 90 days, but some were given more time and continued to receive the discount.

Overton said they changed the verification process with the outside vendor to become automated in June of 2021.

"In other words, it went from a retroactive process check to a proactive process check," Overton said.

He also said all enrollees are screened against county tax records to see if they need a secondary income verification.

Auditors said they found four customers in the sample where that did not happen, and the customers continued to receive a discount without an income check.

Robbins said there may also be folks who don't live in expensive homes or neighborhoods but may still have money.

"You may be property poor, but still be rich. You may own diamonds, you may own stock, you may have $3 million in your bank account. And the city does not income qualify most participants in CAP," he said.

Overton said CAP participants are checked annually to see if they still qualify for discounts by income and tax records. He said they're currently looking at moving the tax records check to a quarterly process.

Overton said overall, they believe their processes are working efficiently and effectively. Tovo agrees.

"Of course, we want to make sure that 100% of those who are getting that benefit are eligible," she said. "That number that was identified as being problematic of individuals who probably stayed on that program longer than they should have is really is really very, very small compared to that total universe of 35,000 customers."