Austin
3:46 pm
Thu February 23, 2012

The Austin Energy Rate Debate Isn’t Going Anywhere, Anytime Soon

Get ready to keep talking about Austin Energy’s rate increases.

As KUT reported yesterday, the Austin City Council approved a timetable for work sessions delving deeply into all aspects of the proposed rate increase: rates for houses of worship, rates for out-of-Austin customers, the utility’s debt service requirements, solar and renewable energy goals, and practically any other issue you can imagine.

A timetable favored by council members Laura Morrison, Mike Martinez and Kathie Tovo was adopted yesterday, over a more compact proposal from Mayor Pro Tem Sheryl Cole.

Cole’s timetable would have seen a final decision come by May. The Morrison/Tovo/Martinez proposal passed with an amendment stripping the work session dates from the document, meaning the timeline could see some acceleration. But considering that timeline called for 10 work sessions – and initially prescribed “final policy direction” as coming in September – it’s plain to see the Austin Energy rate debate will continue on for months, well after the May council elections.

As KUT also noted yesterday, debate over the differing timetables turned into an impromptu debate over the 3.5 percent interim rate increase offered by Morrison and Tovo. As the utility had previously requested a decision by March, the longer timeline somewhat implicitly calls for an interim rate hike to take place while a broader solution is drafted.

However, two potentially-problematic aspects of the interim increase came to light yesterday. First, Austin Energy manager Larry Weiss said the utility would need more than the roughly $35 million collected by a 3.5 percent increase to cover its costs and keep cash reserves up.

Secondly, the interim 3.5 percent increase wouldn’t affect all customers, like large industrial users who have their power rates locked in a contract. In order to garner the $35 million a true across-the-board increase would collect, rates on users would really have to rise by roughly 5.9 percent.

The interim increase is posted as an action item at council’s next meeting, March 1.