Tuesday, February 23, 2021 by Jo Clifton

Austin Energy customers need not worry about skyrocketing bills

Austin Energy customers, like the customers of other utilities throughout the state, experienced power outages and water shortages caused by winter storm Uri. But unlike customers of other utilities, Austin Energy customers will not be facing a huge spike in their electric bills as a result.

Austin Energy spokesperson Jennifer Herber points out that customers of some other utilities are receiving shockingly high bills because they have variable price billing, which means they are “vulnerable to sudden price swings in the wholesale energy market.” However, as Austin Energy explains on its website, “Austin Energy’s base rates are fixed and must be authorized by Austin City Council,” after a rate review process.

The website explains, “Residential customers are billed for their actual energy usage, measured in kilowatt hours (kWh), recorded from their electric meter. Anyone without power during this time period had no electric use recorded from meters during these outage events. Austin Energy customers are charged only for the power consumed and will be charged at the existing rates as approved in the November 2020 rate tariff. If a customer consumed higher than average kWh, their electric bill will be higher than a normal month. If a customer consumed less than their average kWh, their bill will be less than a normal month.”

Austin Energy customers also pay a charge to cover fuel for the utility’s own power plants as well as the cost of electricity purchased from ERCOT, the statewide grid. That charge is called the power supply adjustment. Under state law, Austin Energy and other utilities are required to sell their power to the grid and then buy power for their customers from the grid, even if they lose money in the process.

At its special called meeting Thursday, Council will consider an emergency ordinance to waive the assessment of late fees on delinquent utility bills. In addition, Council will be considering ordinances to waive residential permitting and development fees related to repairs needed as a result of the winter storm.

Council Member Leslie Pool, who chairs Council’s Austin Energy Committee, notes that Council directed the utility to reduce its power supply adjustment by 1.9 percent last November. It did so after considering fuel costs at the time.

Herber pointed to the Austin Energy website, which says the utility will evaluate the cost of buying electricity from ERCOT and subtract the net revenue from generating electricity during the storm. After that, “the utility will then have a better indication of the financial impact” on the power supply adjustment so it can make recommendations to Council. Pool said she did not expect that to happen until summer, when Council looks at its budget.

Pool said the city’s water utility lost about 300 million gallons of water as a result of the storm. She said Council will be expecting a report from Austin Water about how it might handle wastewater rates this year. Normally, wastewater rates are adjusted to take into account how much water each utility customer used during the winter months.

For Austin Energy, as well as the city, setting rates and the charge for the power supply is a delicate operation. If the rates are too high, people will complain and some will argue that Austin should not be able to control its own utility. But if the rates are set too low, the utility will have trouble taking care of its power plants and employees. In addition, Austin Energy provides significant revenue the city uses to fund parks and emergency services, among other things.

Photo made available through a Creative Commons license.

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Key Players & Topics In This Article

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

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.

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