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Austin Energy’s proposed rate increase would hit lower-use residential customers hardest

Thursday, April 28, 2022 by Emma Freer

Austin Energy recently launched a public input process to collect feedback on a proposal to increase its base rates by 7.6 percent. The city-owned utility says the price hike is necessary to balance a $48 million shortfall between its costs and revenue. But some lower-use residential customers fear they will disproportionately bear the brunt of the proposal. 

Austin Energy says the typical residential user would see an increase of $15.56 a month. Individual bill impacts would vary depending on customer class and usage.

The lowest-use residential customers – those who use between 1 kilowatt-hour and 750 kWh, accounting for roughly 63 percent of total bills – would see the biggest increase. For instance, a customer using 240 kWH a month would see her bill increase from $19.25 a month to $35.51, a hike of $16.26 or 84.47 percent. This would align her bill more closely with the cost of providing the $54.53 it cost Austin Energy to provide that electricity, according to the proposal

The highest-use residential customers – those who use more than 1,500 kWH, accounting for roughly 8 percent of total bills – would receive a discount. A customer using 2,700 kWH a month would see his bill decrease from $338.88 a month to $276.27, a drop of $62.61 or 18.48 percent. This would align his bill more closely with the $235.85 cost.

Austin Energy says its proposal would establish more equitable rates by right-sizing bills relative to costs and by correcting uneven subsidies. 

“Generally speaking, higher usage customers have been overpaying under current rates,” an Austin Energy spokesperson wrote in an email to the Austin Monitor. “The proposed rates result in customers paying charges that are closer to Austin Energy’s costs to provide electric services.” 

But some residential customers say the proposal will disincentivize energy saving among the bulk of users.

Cody Farris recently posted about the proposed rate changes on the ATX Urbanists Facebook group. “If keeping my thermostat at 72 instead of 68 in the summer saves $5 a month instead of $10 a month will I make that sacrifice still?” he commented.

Others say the proposed rate increase is too financially burdensome, especially given recent grid failures. 

Leon Barry, who lives in Windsor Park, responded to a Nextdoor post by Austin Energy soliciting feedback on its proposal. “No thanks!” he wrote. “Our power has been very unreliable and to ask for that big of a hike isn’t doable for many people in this area!”

Austin Energy last increased its base rates in 2013. Since then, the utility says a number of factors have prompted the need to revisit its rate structure, including:

  • higher operation and maintenance costs
  • continued customer growth, which requires infrastructure additions and improvements
  • lagging energy sales, compared to customer growth
  • grid reliability

New housing is more energy efficient, which the spokesperson says Austin Energy supports, but “the other side of that coin is that the flat energy sales do not keep pace with customer growth in terms of addressing the cost to serve them.”

As was reported by KUT’s Andrew Weber:

(Austin Energy) insists the rate hike is not attributable to last year’s historic winter storm — one in which the utility by putting its excess energy back on Texas’ beleaguered energy grid.

For the next few months, Austin Energy customers will be able to provide feedback online. Then a third-party examiner will shepherd the negotiations and present the findings to city officials and eventually to City Council.

Council members will vote on the rate changes in the fall, and it will go into effect in January.

You can learn more about the public input process, which features a series of in-person and online public meetings, at Austin Energy’s website.

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here. This story has been changed since publication to cite Andrew Weber’s reporting. 

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