Cities, Texas Gas Service agree to settlement

Attorneys for Central Texas cities including Austin and Gulf Coast cities including Beaumont and Port Arthur, along with attorneys representing the staff of the Texas Railroad Commission, have reached a settlement agreement with Texas Gas Service for a rate increase expected to take effect in August.

Austin City Council rejected the previous request from Texas Gas Service on May 7 and the matter is now in the hands of the Railroad Commission, which regulates the oil and gas industry.

Consumer and environmental advocate Paul Robbins, who has argued against the gas company’s proposed increase, told the Austin Monitor that the agreement represents “a 13 percent residential rate increase, which I think is outrageous.” He stressed that he was talking about the company’s rates and not individual bills.

But Larry Graham, manager for regulatory affairs at TGS, disagreed with Robbins’ conclusions, saying that customers will not see that kind of increase on their bills. Graham said his company’s rates are similar to those charged by San Antonio, Houston and Dallas. “We’re not gouging customers,” he said.

Agency staff will seek approval of the agreement from the three-member commission in August.

Robbins said Texas Gas Service was seeking a 22 percent rate increase when it went before Austin City Council in May, which unanimously rejected the proposal.

One charge that has definitely gone down is the residential monthly service charge – currently $18.81, it falls to $16 a month under the settlement agreement.

Graham said Monday that social distancing and stay-at-home orders were making it more difficult for him to get information from his colleagues. However, he pointed out that Robbins’ advocacy for more funding to help low-income consumers pay their heating bills has been successful.

According to Graham, in 2019, TGS, a division of ONE Gas Inc., contributed just $37,000 to the gas utility assistance program administered by Travis County and Catholic Charities of Central Texas. Under the settlement agreement, TGS will contribute either $100,000 or $120,000 a year, depending on the size of the service area.

TGS has been seeking to consolidate its Central Texas service area with the Gulf Coast service area, which would save on legal fees, among other things. The area that includes Austin also includes cities as far away as Galveston and Cuero and as near as Rollingwood and Sunset Valley. The Gulf Coast service area includes Beaumont, Groves, Nederland, Port Arthur and Port Neches.

Consolidation of these two service areas was the only point of contention left to be resolved when the parties signed the settlement agreement Friday.

Robbins said the $100,000 that TGS plans to put into the Share the Warmth program “is an insult,” given that the country is experiencing the worst recession in a century. If Texas Gas Service would take a page from the books of Austin Energy and Austin Water, it could contribute millions to help low-income customers by putting a small surcharge on each customer’s bill.

“Similarly they’ve ignored renewable energy and this would also be a surcharge on the bill that would not come out of their profits.”

Graham said TGS was not ignoring renewable energy and was planning to do a study on it this year.

Robbins, who filed an appeal with the Railroad Commission, has been notified that he will be given a chance to voice his concerns via Zoom or by phone at a hearing this morning before an administrative law judge.

According to an email from Austin’s attorney, Thomas Brocato, to Robbins, “The city of Austin no longer has legal authority over this matter. It may choose to affirm the settlement once the Railroad Commission adopts it later this summer, but it has no further legal authority over the case. At this point, the cities are simply intervenors in the Railroad Commission docket.”

Photo made available through a Creative Commons license.

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