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Environmental, consumer groups oppose gas rate hike

Friday, May 1, 2020 by Jo Clifton

Nine leaders of environmental and consumer organizations have sent a letter to the mayor and City Council urging them to reject the rate increase proposed by Texas Gas Service and restructure its rates in a manner designed to help low-income customers and discourage consumption. They note that it is particularly important not to put additional burdens on people during the pandemic.

One of the signees is David Foster of Texas Clean Water Action, who told the Austin Monitor on Thursday, “It is callous for Texas Gas Service to ask for a rate hike of this magnitude at a time when people are losing their jobs and even their homes due to the pandemic.”

Council is tentatively scheduled to consider new rates on May 7. However, it seems likely that the hearing will be postponed.

In addition to Foster, the other signees of the letter include Cyrus Reed of the Lone Star chapter of the Sierra Club and Patrick Murphy of the Sierra Club’s Austin group; Bruce Melton of the Climate Change Now Initiative; Jeannie Nelson of the Austin Tenants Council; consumer advocate and environmental activist Paul Robbins; Robin Schneider of Texas Campaign for the Environment; Kaiba White of Public Citizen of Texas; and Martha Carleton of 350 Austin.

According to the letter, “The current proposal, depending on how it is calculated, ranges from a 22 to 35 percent increase in one year. This would cause economic stress even in a good economy, and we have nothing remotely resembling this right now.”

Low- to moderate-income ratepayers, “many of whom are acutely impacted by high unemployment,” will be impacted disproportionately, with the residential rate structure biased against those customers, according to the letter.

Larry Graham, who represents Texas Gas Service, pointed out that the company had started working on the new rates last summer and filed the case in December, before anyone knew about Covid-19.

The consumer and environmental advocates request that Council enact a much lower monthly charge than what the gas company has requested. They say, “The TGS monthly charge of almost $19 a month is higher than most larger gas utilities in the U.S. In some cases, it is more than twice as high. And if base revenues the gas company receives from monthly fees were proportional to Austin’s electric, water and wastewater rates, the fees would fall to roughly $3 to $5. Austin’s Resource Management Commission recommended that TGS duplicate Austin’s fees at its March meeting.”

Graham told the Monitor Thursday that if the rate case were approved as filed, it would increase the average customer’s bill by $4.88 a month.

But he said even though there is an item on Council’s May 7 agenda, it will likely be postponed again because there is no agreement on new rates between his company and attorneys for the city and other parties involved in the rate case.

According to Graham, negotiations and discussions among the parties are ongoing. “We have not reached any agreement, but if we do reach an agreement it is likely that the amount will be less than” what was originally proposed and the rate hike would not take effect until August.

“The gas company continues to work and deliver gas and we’ve suspended any disconnections for non-payment,” he said. “We’ve cooperated with the city on that and … we’re more flexible on payment plans. We’re very sensitive to the situation that is going on right now.”

TGS asked Council to postpone a previously scheduled hearing because it had not reached agreement with the city’s lawyers. If it cannot reach an agreement by the end of May, TGS will probably ask Council to reject its proposal and send the matter to the Texas Railroad Commission, which would make a final decision.

The authors of the letter also advocate that the top 7 percent of the gas company’s residential customers – who use 15 percent of the total residential volume – pay a 15 percent premium, which could be used to lower the rates for the other 93 percent of customers.

They also propose that TGS collect full capital recovery fees, which are used to finance laying pipes for new houses. The city of Austin has been doing that for several years. They also want the city to persuade TGS to put more money into its customer assistance program for low-income customers and to establish a renewable energy research fund.

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