Proposed budget includes small changes at Austin Energy, Austin Resource Recovery

Citing Austin Energy’s critically low levels of cash reserves, the utility’s financial planners are proposing that it raise base rates by 2 percent, which will cost the typical residential customer about $1.04 per month, Budget Officer Kerri Lang told City Council at Tuesday’s budget meeting.

Lang said the utility is seeking a $20 million increase in transfers to its reserve fund, which has fallen to a level that worries city officials.

The utility’s typical residential customer currently pays $108.71 per month. The proposed rates for Fiscal Year 2024 would increase that bill to $109.75, Lang said, pointing out that Austin residential customers have some of the lowest rates in the state.

Council Member Alison Alter asked if customers could expect a lower power supply adjustment charge in the coming year.

Stuart Reilly, deputy general manager of Austin Energy, said the utility is expecting to pay lower fuel costs, but keeping the current pass-through rate would increase the utility’s financial resiliency – which Austin Energy considers very important. So, it seems unlikely that the rate would go down.

Lang said the utility also proposes to convert 33 temporary employee positions to permanent jobs. The utility will have 1,924 full-time employees, an increase of 1.4 percent.

Lang outlined the Austin Energy capital improvement program spending plan, starting with $79.8 million to acquire and construct a new field service center, which is anticipated to be completed early next year.

In addition, Lang said the utility plans to invest $6 million to “harden the distribution system against wildfire and extreme weather events” and improve overall reliability. Austin Energy also proposes to spend $31 million to rebuild the Brackenridge substation, which will improve reliability for downtown customers. The estimated completion date for that project is spring 2027.

The utility also plans to spend $23.8 million to build a Southeast substation. This new station would provide capacity at Austin’s airport and power for a new subdivision, as well as meet the area’s growing load.

Meanwhile, Austin Resource Recovery anticipates increasing the rate paid by the typical residential customer by $1.65 per month and increasing the residential clean community fee by 15 cents a month. Lang explained that the utility had suffered a $20.5 million decrease in funds as a result of its response to Winter Storm Mara. Council Member Chito Vela said, “I understand that (the Federal Emergency Management Agency) will reimburse us about 75 percent of those (funds).” He then asked when the city might expect to be reimbursed. The answer was it could take several years, so Council should not count on that money for the upcoming budget cycle.

Austin Resource Recovery and Fleet Mobility Services are planning a joint service center on Johnny Morris Road. The city anticipates that the new center will relieve overcrowding and deteriorating facility conditions.

Vela said it was important to people living in apartments, for example, to be able to take unwanted items to a city facility. They cannot currently do so.

Austin Resource Recovery had asked for $1 million to speed up building a trash transfer center within the city. Currently, trash is driven to a dump in Southeast Travis County. Vela asked Austin Resource Recovery Director Richard McHale whether that $1 million had made it into the budget. McHale said it had not, but he thought they could move forward with planning the transfer center with existing funds.

After the hearing, Vela released a statement about his proposed budget amendments that noted: “Austin is one of the largest cities in the nation without a waste transfer center to improve efficiency and reduce the climate impact of our resource recovery programs. I want to allocate $1M to the planning process for a transfer center in our city. People who live in apartments don’t have access to bulk trash pickup; this item would give them somewhere to go throughout the year to dispose of large items.”

On Tuesday afternoon, Council voted 8-1, with two members absent from the dais, to adopt up to the maximum city property tax rate for next year. Council members Natasha Harper Madison and José Velásquez were not on the dais. Council Member Mackenzie Kelly voted no. Mayor Kirk Watson first announced that the tax rate would be $44.58 per $100 valuation, and no one on the dais corrected him. But Erik Nelson, division chief for budget and performance, came to the podium to remind Watson that the figure was actually 44.58 cents per $100.

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