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Council weighs options for 2023 Austin Energy rates

Tuesday, November 22, 2022 by Kali Bramble

With just a month before holiday break, City Council is fighting to resolve significant disagreements among stakeholders, outside counsel and Austin Energy on changes to utility base rates effective 2023.

Council began this round of deliberations with the final recommendation of the Electric Utility Commission, which endorsed a number of approaches floated to tackle rate shock but failed to come to a consensus on a concrete revenue requirement. With that number as the foundation for the rates soon to hit consumers, Council will now decide how much, if any, to cut back on the proposed $35.7 million increase.

“We have to determine how much revenue we need to raise,” Mayor Pro Tem Alison Alter said at an Austin Energy Utility Oversight Committee meeting earlier this month. “We don’t have to agree with the revenue that Austin Energy is putting forward … but if we don’t figure out what we agree on, then any exercise on the rate design and structure is not really useful.”

The 2023 rates proposed by the utility have stoked controversy, especially with changes to the power supply adjustment already raising bills by $15 as of November. Most unpopular is a proposal to increase the fixed residential service charge from $10 to $25 per month, a move critics argue would discourage conservation and disproportionately impact low-income consumers.

“As a lower-income student renter, I conserve as much energy as I can … I feel like my efforts at conservation are being violated by this proposal,” UT student Angela Enriquez said. “How is it that I and thousands of other students at UT Austin will be burdened by this rate increase, when most of us live in apartments and do not use as much energy as the higher-income residents in larger spaces than us?”

With these issues in mind, the EUC unanimously rejected Austin Energy’s three-tiered, fixed-cost-heavy rate design, recommending four or five tiers that more evenly disperse bill increases and a residential charge of no more than $12 per month. Yet its position on a revenue requirement was less resolute, approving a range between the Joint Consumer Alternative’s proposed $6.5 million and $15 million on a 6-3 vote with notable disapproval from Chair Marty Hopkins, who said she deferred to the impartial hearing examiner’s judgment ($31.3 million).

Council members seem prepared to amend the utility’s General Fund transfer, an adjustment endorsed by both the IHE and independent consumer advocate that would reduce the revenue requirement by about $5 million, though it would mean cuts elsewhere in the city’s budget. Staffers are also discussing phasing the increase over a number of years.

While a final call on the revenue requirement remains to be seen, Austin Energy has announced a work plan to nearly double enrollment in its customer assistance program (currently assisting 35,000 customers under 200 percent of the federal poverty line) by 2024. Still, Austinites will have to stay tuned until early December, when Council will vote on the final rate design.

Those interested can skim the impartial hearing examiner’s report for a summary of the parties’ positions, as well as the Joint Consumer Alternative proposal to review some popular alternatives.

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