Austin Energy
12:17 pm
Mon May 14, 2012

Council Members Pitch New Austin Energy Rate Plan

Is the long-deliberated redesign of Austin Energy electric rates coming to a close?

Three members of the Austin City Council – Mayor Pro Tem Sheryl Cole, Chris Riley and Bill Spelman – seemingly hope so. The three held a press conference this morning to propose a new rate structure for the city utility, which they would like to take effect this fall.

“I wish we could wait another year or two before proposing higher electric rates, but we can’t,” said Spelman. While he admitted no one wants an increase in rates, the five-tier rate structure the group proposed – with rates increasing in amount as customers use more electricity – could allow for rates to be lowered in the future. For residential customers, the average rate increase will be reduced from 20 percent in the originally proposed plan to eight percent. A monthly fixed charge, originally proposed at $22, has been lowered to $10.

For houses of worship, the average increase initially proposed has been lowered to 18 percent, with a cap of 12.5 cents per kilowatt hour.

Schools are slated for a rate reduction. The new design would give Austin area schools a 10 percent discount on energy bills. Cole also outlined a plan for a “‘plus one” program, an option to be included on customers’ electric bills, to contribute towards the district’s energy costs.

Altogether, the rate proposal is divided into two phases. Phase 1 would take effect September 1, and garner an estimated $71 million extra for the utility. Plans were less certain for Phase 2, effective October 2015, which would collect an extra $35 million. Further rate adjustments could be made based on how well Phase 1 performs.

So what does Austin Energy plan to do with the extra $106 million the rate increase is projected to earn? Aside from rebuilding its cash reserves – oft-stated as the driving factor behind the rate hike – the utility also plans to increase its Customer Assistance Program for needy ratepayers. To help offset the increase in rates, the utility would increase the customers the CAP serves from 10,000 to 25,000 over the next two to three years. It would accomplish this in part by implementing automatic enrollment eligibility for customers through SNAP and Medicaid assistance programs.

The new proposal didn’t offer a direct answer to the politically-fraught question of whether utility customers outside of Austin should receive a break on their bills. However, it did say that on June 7, the three council members will offer a resolution to “investigate options for new governance structures,” and that “out of town customers need a voice” in the utility’s governance.

“Our proposal today is not the final word on the rate package,” council member Riley said. “I feel confident that this is a solid, solid proposal, but I’m also confident that we will continue to benefit from the ongoing input we are sure to receive from our colleagues, from the consumer advocate, and from folks in the community who care deeply about the rate proposal. I look forward to that continued conversation as we move toward a final adoption of the rate package.”

The Austin City Council has held 10 work sessions on Austin Energy rates since March 7; three additional meetings are currently scheduled. The council has expected to have a final decision by late May or early June.