Expect rise in electric bills after Austin City Council OKs another set of rate hikes

The Austin City Council, relenting to public backlash against rising electric rates, revised price increases on Thursday and passed the first base rate hike since at least 2012.

The council, by a 7-4 vote, updated electric rates and fees for Austin Energy customers, a change that would amount to an additional $9 a month for the average resident, city officials said.

Wait, didn't they just raise rates?

Yes. The change comes just weeks after the council already approved a $15 a month increase on fuel and regulatory charges, which amounted to $180 annually for the average customer.

Isn't this a bad time for higher bills?

It's true that the new rates, which will take effect in March, come as residents are already feeling the brunt of inflation in gas prices, the cost of groceries and housing prices.

Susana Almanza, who spoke during a Dec. 1 City Council meeting, demonstrated with a $15.30 H-E-B receipt how much the hike would affect poor and working poor families. The money, she said, buys, spaghetti, spaghetti sauce, tomato sauce, four boxes of vermicelli, a bag of rice, beans, tomato sauce, corn tortillas, oatmeal and a bag of potatoes — enough to feed a family for four for a week.

"When you raise that hike, this is what you're taking," Almanza said. "You are taking it out of the mouths of a family for an entire week to feed. We're asking you not to raise the rates, and to understand what it is that the poor, and the working poor, have to struggle with when you continue with these rate hikes."

More:Business groups alarmed at proposed Austin Energy fee hikes

Several other residents and consumer advocates on Thursday also urged minimal rate increases to protect low-income and low-usage customers.

Shane Johnson, who lives in North Austin, said he believed the council should keep the customer charge low, adding that an increase to the customer rate each year would harm the majority of Austin residents, especially after the $15 increase that was implemented in November.

"Paying an extra $5 a month with rate hikes and inflation for anyone living paycheck to paycheck is already hard enough," Johnson said. "This is inexcusable, and we urge you not to increase the customer charge beyond $13."

What does the new plan mean for my bill?

It's going to be an increase for most residents. Every customer has a $10 customer charge on their bill. It is the same for everyone regardless of how much energy they use. The vote increased that monthly service fee to $13, with a plan to increase that fee by $1 over the next three years.

The base rate structure, the rates used to calculate usage, was also adjusted using a four-tier structure. The new rates represent a 5% overall increase, with rates decreasing slightly over the same three years. Customers, however, will still pay the same amount on their bills.

Matt Mitchell, an Austin Energy spokesperson, said that is because the rates work to offset one another. The customer charge increases bolster the utility's income stream — but, in exchange, it lessens the burden on the base rate fee so that future bills don't see significant changes.

Why was this change necessary?

The most recent utility rate review, which is required by ordinance to be performed every five years, revealed that Austin Energy's revenue was not keeping up with the utility's baseline costs, Mitchell said. Austin Energy has 520,000 customers, and an annual operating budget of more than $1 billion.

Mitchell said that previously, high-rate users in the top tier would subsidize the lower rate users. But because of conservation efforts, that base rate structure is not recovering the cost to run and operate the utility because it is outdated.

The revamped rates and fees would help generate an additional $29.5 million a year that city officials said would close the revenue gap needed to maintain the utility's financial stability.

More:Grumet: How to soften the blow of the next Austin Energy rate hike

How was the new plan created?

The Austin Energy Oversight Committee, which is led by City Council Member Leslie Pool, earlier this year was tasked with reviewing the electric rate change and revamping the rate structure. The original proposal would have increased monthly rates and fees by $15 a month for the average user, or $180 annually.

But that work has been heavily criticized by the community with some arguing the new rate will unfairly burden low-income families and those who use little energy

John Coffman, an independent consumer advocate who has hired by the city to scrutinize the rate increase request, said his focus has been to avoid major effects on low-usage customers.

"My concern is economic impact, and not adding to the unaffordability that many folks face right now with a big percentage jump in their monthly utility expenses," Coffman said. "And right on the heels of the power supply adjustment increase, which just took place in November. It's really going to be a one-two punch."

How did the council consider economic impact?

Pool on Thursday cited the council's work over the last several weeks to come up with a way that mitigates rate shock and gets the utility the money it needs to be sustainable. And she felt this plan did that the best.

Jackie Sargent, general manager for Austin Energy, agreed Thursday saying this was the ideal change.

"If you look at where customers come into the system and how they use energy, they stay in those first two tiers, and we want them to," Sargent said. "This will keep those customers closer to what it costs to serve them."

There were also some concerns from environmental groups that a rate increase for lower usage would encourage wasteful use. Mitchell said the current tier structure is an incentive for conservation and something the utility has long advocated and championed, and conservation will continue to be the goal.

How was the council split?

The council was split with a 7-4 vote on the rate increases with Council Members Vanessa Fuentes, Ann Kitchen, Alison Alter and Kathie Tovo against.

Fuentes, and a few others, said this week that, while there is a need to balance out costs, many families are already struggling.

"People are already barely making a living wage and now they are going to have to figure out how to come up with an additional $100 to pay their power," Fuentes said during a work session Tuesday.

Council Member Mackenzie Kelly, who supported the measure, argued that base rates help pay for people and infrastructure and therefore are necessary for success.

"With these changes we are able to move forward in a way that we can continue to keep our utility service provider healthy," she said.

This article originally appeared on Austin American-Statesman: Expect bump in electric bills: Austin City Council OKs more rate hikes