Thursday, November 21, 2019 by Jo Clifton

Texas Gas Service proposes billing changes

Texas Gas Service, which serves 260,000 customers in Central Texas, including 220,000 within Austin’s city limits, is proposing a new rate design that will give customers new options for how their bills will be calculated.

Larry Graham, manager of community relations, and Stacey McTaggart, regulatory director for the company, told Council’s Audit and Finance Committee Wednesday that they would be filing a new rate plan for Austin and other cities in the area on Dec. 20. City Council, which has the authority to approve rate increases for Austin customers, will have 35 days to review Texas Gas Service’s proposal. Council must act by Jan. 24 to suspend implementation of the new rates and give itself an additional 90 days to review the proposal.

Council Member Alison Alter said she was concerned about the Jan. 24 date, because there is no Council meeting until Jan. 23. However, Graham told her the company intends to postpone implementation of the new rates for 48 days.

After Council suspends implementation, presumably on Jan. 23, it will have until April 23 to approve or reject the new rates. Before that, staff in the Office of Telecommunications and Regulatory Affairs and their rate consultant will work to reach an agreement on the new rates with Texas Gas Service.

All residential customers pay a customer charge and a delivery charge, plus charges for the gas used. Like Austin Energy, Texas Gas Service charges a low fee to fund its conservation program. There is also a city franchise fee, a city tax and a tiny fee (about 4 cents a month) for pipeline safety. Graham used his own bill to demonstrate those charges to the committee. He paid a customer charge of $18.81, a delivery charge of $1.21 and $3.40 for the cost of gas. The city franchise fee was $1.32 and the conservation fee was $1.19. His overall charges for October were $26.78.

However, because Graham uses what the company calls the ABC (average bill calculation) plan, he pays roughly the same amount every month. That means he pays more in the summer when he doesn’t use gas for heating, but his bills do not shoot up in the winter. So the bill he paid for October was $43.96.

Under the current rate structure, every customer pays $18.81 a month for the customer charge. Texas Gas Service is now proposing two options for residential customers based on each customer’s historical annual consumption. Under Rate Design A, the customer would have a lower customer charge, but would pay a higher delivery fee and usage rate, according to McTaggart, who explained the proposal to the committee.

Under Rate Design B, the customer would pay a higher monthly customer charge but would have lower delivery fees and usage rates. The company believes the new rate designs are responsive to concerns about low-income customers with low usage having to pay a high customer charge.

If Council approves the new rate design, customers will be asked to choose between the two rate designs. McTaggart said Texas Gas Service will look at each customer’s bills over the past year and decide which is better for the customer. If the customer disagrees with the company’s decision, they can decide to choose the other option, McTaggart said, but they can only change their rate once a year.

Mayor Steve Adler noted that while many people think that low-income customers have lower usage, people with a lot of money may have much better insulation and therefore would be using less gas.

Alter said she wanted company representatives to visit with her staff to talk about how the new rates might intersect with Council’s climate change goals. McTaggart suggested that the city might have a separate proceeding to talk about environmental concerns.

One Austinite who pays attention to gas company rates is consumer and environmental advocate Paul Robbins. Robbins voiced his complaints about Texas Gas Service before the company’s representatives spoke to members of the committee Wednesday.

Robbins said he would like to see the company charge higher rates for higher gas usage, much like Austin Energy charges higher rates for more usage of electricity. In addition, Robbins said he would like to see an “adequately funded customer assistance program,” more cost-effective conservation programs and the creation of a “renewable energy research fund.”

Robbins has not had much success in his lengthy battles against the gas company, but he is playing David against the company’s Goliath.

For its part, Texas Gas Service likes to compare itself to other gas companies, telling the committee the company has the seventh-lowest residential natural gas bills out of 41 cities surveyed by Memphis Light and Gas as of Jan. 1, 2019. According to the company, the average summer bill for Austin customers was $25.15 and the average winter bill was $62.63, net of taxes.

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Key Players & Topics In This Article

Austin City Council Audit and Finance Committee: a sub-group of the Austin City Council. It's members are charged with oversight of city fiscal operations and anything that falls under the purview of the Office of the City Auditor.

Texas Gas Service

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