Monday, July 20, 2020 by Nina Hernandez

Austin Energy Covid rates could revert as soon as November

During an Austin Energy budget presentation on Friday, the Electric Utility Commission learned that the rate cuts the utility put into place this spring as part of its Covid-19 recovery efforts will expire at the end of this fiscal year.

The utility cut rates for all customers earlier this year due to the pandemic and the city’s resulting stay-at-home order. But those base rates will return to pre-pandemic levels when the new rates go into effect in November.

Commissioner Karen Hadden asked staff when the rates would revert back. “With the new budget? What’s the timing on that?”

Austin Energy Finance Director Joseph Gonzales said new rates typically go into effect in November. That’s why the utility is working to get in front of City Council in October so it can maintain that schedule.

“That’s a little bit concerning to me,” Hadden said. “Because certainly we’re still deep in the midst of dealing with Covid here. So that’s an issue that I think we might need to pursue a little bit later down the line.”

Gonzales said the utility felt it was important to provide the assistance during the summer months. “When we get to November, we expect demand to be reduced and the impact of those rates to be significantly reduced,” he said. “But it’s certainly something we will be looking at as we finalize those rates.”

Next year, the typical ratepayer – a residential customer using 860 kilowatt-hours per month – is projected to have a monthly bill of $84.60. That amount should grow to $87.30 by Fiscal Year 2024-25.

This year’s base revenue remains relatively flat, with customer growth projected at 1.7 percent.

The Power Supply Adjustment fee, a charge for what it costs to provide power, will be finalized in September. Regulatory charges will also be decided in September, and staff expects them to revert to pre-Covid levels.

No changes to the Community Benefit Charge – a fee that helps the city pay for things like street lighting, customer assistance and energy efficiency – are expected.

In terms of operating expenses, the power supply expenses will also be finalized in September. A line clearance contractual increase will cost $9.7 million, but will ensure system reliability and reduce outages. It will also allow the utility to get caught up on line clearance cycle times and support the city’s wildfire mitigation efforts.

Citywide cost-of-living increases will cost $3.6 million and the Supplemental Retirement Contribution will cost $1.5 million. Finally, Austin Energy will bring on 29 new full-time employees, which will have a net impact of $1.86 million and increase the number to 1,813 full-time employees altogether.

Austin Energy’s Working Capital reserve fund is expected to shrink from $379 million in 2020 to $376 million in 2021. The Contingency Reserve will stay the same at $106 million. The Power Supply Stabilization Reserve will stay static at $110 million. The Capital Reserve Fund will get a $5 million injection to $74 million.

Photo made available through a Creative Commons license.

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Key Players & Topics In This Article

Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.

COVID-19

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