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Austin Energy rate hike could be higher than projected

Tuesday, July 19, 2011 by Bill McCann

Austin Energy residential customers face possible rate increases that would be substantially higher than the 12 percent average that has been widely reported, according to preliminary figures presented to the advisory Electric Utility Commission (EUC) on Monday night.


The preliminary figures show that increases in monthly residential electric bills could be anywhere from 14 percent for average power users to 74 percent for those using small amounts of electricity per month. 


The figures also show that, based on cost of service, residential customers would pay about 11.5 cents a kilowatt-hour under the new rates, compared to about 9.6 cents currently. Large industrial customers would pay less than 7 cents a kilowatt-hour, compared to about 6 cents currently. 


While Austin Energy is scheduled to bring its formal recommendations to the commission later this summer, utility officials gave the commission an early look at residential rates currently under consideration at last night’s meeting. 


Residential ratepayers using 250 kilowatt-hours a month, for example, would see their bills go from $23 to $40, a 74 percent increase, according to the preliminary proposal. Customers using 750 kilowatt-hours would see a 20 percent increase, from $65 to $79. Those using 1,250 kilowatt-hours would see their bills rise from $115 to $132, or 14 percent. High-end residential customers using 3,250 kilowatt-hours of electricity monthly would see their bills jump from $310 to $398, or 28 percent.


Customers using up to 1,000 kilowatt-hours a month represent 64 percent of all residential ratepayers, according to the utility. Average residential usage is between 900 and 1,000 kilowatt-hours a month.


Utility officials stressed that while percentage increases may seem steep, actual dollar increases would be reasonable, especially since base rates have not increased in 17 years. They pointed out that under the proposed rate changes 82 percent of the residential customers would see monthly bill increases of less than $20. But commissioners were quick to respond that $20 a month could have a big impact on people who are already hurting financially.


Austin Energy has been drafting updated rates for residential, commercial and business customers, with the objective of increasing revenues by 12 percent to obtain what utility officials say is needed to meet the utility’s $1.1 billion annual operating needs. On Sept. 1, utility officials are scheduled to present proposed rate changes to the EUC, which will hold several public meetings before making recommendations to the City Council later in the fall. The council is expected to take final action on the rates in late 2011 and the rates will go into effect in 2012.


Under the preliminary rates, the existing $6 customer charge on every residential bill would increase to $15, and a new $10 electric delivery charge would be added to monthly bills. Each residential bill also would include an energy charge that would increase in five tiers as usage increases. It would range from 5 cents per kilowatt-hour at a usage of less than 500 kilowatt-hours to 13 cents a kilowatt-hour for usage over 2,500.

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