The Council will limit the increase in energy bills, but by how much?
Tuesday November 8th, 2022 by Kali Bramble
City council members have their work cut out for them this month, with the first of six working sessions leaving a lot of work to do before their vote on Austin Energy’s base rates for 2023.
With the decision of the Independent Examiner largely in his favor, Austin Energy continues to offer a move to higher fixed monthly fees to address its underrecovered costs. Yet Council members are concerned about the impacts of these large increases for residents already adjusts to an increase in power adjustment fees, not to mention Austin’s ongoing affordability crisis.
“I just want to punctuate this conversation with the fact that the PSA increase happened today, and so many of our Austin Energy customers are already feeling that average $15 increase on their bills,” said Vanessa Fuentes, member of the board. “And then here we are looking at a proposal that would more than double the base rate amount from $10 to $25. I am very concerned about the price shock effect this could have on our residential customers.
Austin Energy’s outdated rate-level structure currently results in below-cost energy bills for 77 percent of residential consumers, according to utility manager Mark Dombroski. With mounting pressure from the two recent credit rating downgrades, Austin Energy says it can no longer rely on the five-tier rate structure, based on 2009 consumption data, to reliably recover operating costs.
“As people move into Austin, they move into more and more energy-efficient homes. Customers just aren’t using as much energy, and that’s a good thing,” said Jackie Sargent , chief executive of Austin Energy, “But our fixed costs that we recoup with base rates are increasing. Our infrastructure is aging and needs to be maintained, rebuilt and upgraded. Plus, we need to add new substations to serve new neighborhoods and larger buildings…and we continue to see rising costs for labor and materials.
With reviews like independent consumer advocate John Coffman and the Labour/Green Coalition Texas Climate Jobs Project Arguing that the new tariffs would disproportionately impact low-income, low-consumption customers, Austin Energy pointed out that low income does not always mean lower energy consumption. To illustrate their point, Dombroski compared usage patterns among the affluent downtown population in 78701 with the working class of northeast Austin in 78724, noting that the latter was significantly higher.
“If you’re driving around Austin, that makes sense; think of all the new condos and apartments we’ve added downtown, in the Rainey Street neighborhood, Mueller,” Dombroski said. “These are very efficient units and that’s where a lot of people are moving in. They are very expensive units that require a high income to purchase.”
Still, many were skeptical, with Fuentes noting that comparing a dense, multi-family downtown neighborhood with a largely single-family 78724 might not account for higher-income demographics in other residential areas.
“I appreciate that chart you’ve presented…but it also indicates that the percentage of single family homes in this downtown ZIP code is about 18% compared to the Northeast ZIP code, which is almost 75%,” Fuentes said. “And we know that people who live in condos and apartments will traditionally use less energy, so I guess I’m just asking for more information.” Council member Kathie Tovo and Mayor Steve Adler agreed, asking the utility to come back with more complete evidence.
Austin Energy also addressed accusations of backtracking on its environmental goals, saying high tariffs to encourage conservation have not proven effective. according to data. With no evidence of clustering at the upper ends of the tiers and parallel consumption patterns outside the city limits (where customers are sorted into three tiers rather than five tiers), Austin Energy says residents generally unresponsive to these pricing signals, noting that states like California are abandoning the approach.
Yet the Council takes criticism seriously. Board member Leslie Pool, who chairs Austin Energy’s utility oversight committee, says they will explore all possible options, including implementing the increase over three to five years, using four levels instead of three and by reassessing the transfer of the general public service fund. Expanding the utility’s customer assistance program, currently limited to those at 200% of the federal poverty level, is also on the table.
The Commission will revisit the matter on Wednesday, when Austin Energy, the Independent Hearing Examiner and all participants in the base rate case are invited to give another round of testimony. In the meantime, everything related to the base rate review can be found on the city clerk website.
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