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Austin Energy’s Proposed Rate Increases Hurt Austin’s Residential Consumers and Continues the City’s Corporate Welfare Program

Consumer, low income and environmental groups say the low-income and low energy use customers will bear a disproportionate share of the proposed Austin Energy rate increase and are calling on Austin Energy customers to attend the second of four hearings of the Electric Utility Commission (EUC) on Monday night, September 19th at the Austin Energy Headquarters located at 721 Barton Springs Road, Austin, TX at 6PM.

At that hearing, the commission will be hearing customers’ thoughts on $113 million dollar rate increase proposal for Austin Energy (AE).

“Getting the rates right is critical to assuring that people can afford to live in this city and will continue to move here, said Tom “Smitty” Smith, the director of the Texas office of Public Citizen.  “We see five flaws to the current proposal:

  • they haven’t proven they need this much of a rate increase;
  • the proposed rates overcharge residential consumers almost 20% more than previous methods of allocating costs;
  • the proposed rates continue to be a corporate welfare program that subsidizes large industrial consumers and places the burden on average customers;
  • the proposed rates are unfair to low income users; and
  • the proposed rates discourage conservation and renewable energy use.”

The EUC will be hosting a series of hearings on the proposed rate increase. Monday’s hearing is the second of four and will focus on these issues.  Several consumer groups and low-income advocates will present their alternative proposals.

Josh Houston with Texas IMPACT said, “As an essential element of the city’s social safety net, the issue of electric rates intimately links the faith community and disadvantaged ratepayers.  Austin Energy’s proposed rate design adversely impacts both.  However, it is a false dichotomy that there has to be a choice between clean energy and affordable rates for disadvantaged ratepayers.  Austin Energy has always been an innovative leader and we are confident there’s a solution beneficial to both God’s creation and ‘the least of these’.”

There are numerous elements to the Austin Energy proposal that contributed to some residential customers paying more than their fair share of a rate increase.

“This is a case about subsidization:  Residential ratepayers subsidizing industrial ratepayers; and residential small (low energy) users subsidizing residential large (high energy – over 5,000 Wh per month) users,” said Lanetta Cooper, an attorney with Texas Legal Services Center.

Ms. Cooper elaborated saying, “Austin Energy used assumptions that unfairly shifted costs away from the large commercial and industrial customers onto residential customers and has admitted many of its large commercial and industrial customers are paying $20 million below AE’s cost of service.  If AE had followed the methodology that was consistent with City of Austin council’s precedent, residential customers would have had 20 million dollars in costs less allocated to them.  Unfairly, AE is seeking to raise residential rates twice as much as the increase it needs for the whole utility.”

Much of the huge disparity in rate increases for residential users is due to an increase in fixed customer charges that include economic development costs that benefit commercial customers and have nothing to do with the provision of electric service to residential customers and the addition of a new wires charge from $6 to $25. This results in raising residential small user rates 42%.

Cyrus Reed, the Conservation Director of the Lone Star Chapter of Sierra Club said of this, “Austin Energy’ s recommended rate increase puts too much of a burden on low energy users working families and the residential sector in general with these proposed new high fixed costs  Instead AE should adopt new rates that are a fairer balance between industrial and residential, support it’s generation plan to encourage energy efficiency and conservation solar and moving away from continuing to rely on burning coal at its Fayette power plant.”

Austin Energy customers are encouraged to attend and participate in the meetings in any of three ways:

  • speak during citizen communications (3 minute limit) at any meeting
  • submit written questions or comments at any time via the rate review website
  • request an opportunity to provide formal comments or a presentation during EUC rate review meetings.

Comments or questions on the rate proposals or a request to make formal comments at an EUC meeting may be submitted directly via email to ratereview@austinenergy.com.