City Council nixes Austin Energy’s base rate hike, approves new rates

The Austin City Council unanimously approved Austin Energy’s bid to redo its residential electric rates Monday, after the city-owned utility dropped its controversial proposal to increase its base electric rate.

Under the revised rate structure, publicly released the day of the vote, all of Austin Energy’s 400,000 residential customers would see their electric bills cut — with the average customer projected to save $62 a year, utility figures show.

“This is what I consider a historic moment for us in Austin,” said Council Member Sheri Gallo, who chairs the utility’s oversight committee. “The city now has before it the opportunity to significantly address the issue of affordability in Austin with the setting of our new electric rates.”

As part of the vote, the council also signed off on the $42.5 million package of annual cuts that Austin Energy and its major customers agreed to earlier this month.

“We lowered electric rates for everyone in a way that supports conservation, cleaner air, better business practices and local control of our utility,” said Mayor Steve Adler, speaking in favor of the entire package.

The bulk of those cuts, $36.5 million, will go toward reducing electric bills for industrial and commercial customers, who had long complained that they paid some of the highest rates in the state. Major customers, such as data centers and large hospitals, will see their electric rates cut 24 percent.

Austin Energy’s major customers, including Samsung Austin Semiconductor and NXP Semiconductors, agreed not to ask the Public Utility Commission to review the rate deal. They also agreed not to ask the state Legislature to intervene in the management of the utility before 2020.

The deal included $5 million to help reduce residential electric rates. Initially the utility proposed to bump up the base rate paid by everyone, while cutting rates for those using more energy. Austin Energy scrapped that plan after finding last week that it would be a tough sell to the council members, who didn’t want to raise anyone’s rates.

The original proposal was controversial in large part because of how Austin Energy’s residential price structure works: Customers pay the base rate for their first 500 kilowatt-hours of electricity; then a second, higher rate for the next 500 kilowatt-hours; then an even higher rate for the third 500 kilowatt-hours, and so on.

Conservationists had long backed the structure, which increases the price of electricity as customers use more power, as an effective way to encourage conservation.

Utility executives, though, said it made them too dependent on selling high-priced electricity during summer heat waves to pay the bills for the entire year. They argued for increasing the base rate and decreasing the other rates as a way to cut most customers’ bills while improving the long-term financial stability of the utility.

The base rate fight quickly became a battle over who would ultimately pick up the tab: millionaires living in energy-efficient downtown condos or poor families who don’t use much electricity simply because they can’t afford it.

Data from the utility showed that during hot summer months, low-income customers in its bill discount program were more likely to end up in Austin Energy’s more expensive third and fourth use tiers than better-off customers.

However, a review of yearly data from Austin Energy by local activist Paul Robbins found that on average — over 12 months — lower income meant lower energy use.

That fight led Adler to ask the utility last week to come up with a residential rate plan that would allow it to lower all rates — which became the plan presented to the council Monday.

It wasn’t exactly what the utility was hoping for, but it’s what Austin Energy could get.

“The original proposal, in our view, strikes a balance on long-term revenue stability, and we would like to make a little more incremental progress there,” utility executive Mark Dreyfus told council members. “But given the parameters that the council discussed on Thursday (we believe) this to be the best option to meet those parameters.”

Reader Comments ...

Next Up in Local

Middle school runner chooses kindness over competitiveness
Middle school runner chooses kindness over competitiveness

A middle school athlete from Michigan showed that sportsmanship was more important than winning a cross country race, reported. >> Read more trending news Amelia Malburg, an eighth-grader at Mason County Eastern, was running in a meet when she noticed her teammate was on the ground and struggling. Malburg said she generally...
Katrina victim says FEMA demanded money back 7 years later
Katrina victim says FEMA demanded money back 7 years later

A Florida woman said she was forced to pay back thousands of dollars she received from the Federal Emergency Management Agency after Hurricane Katrina. >> Read more trending news Deborah Campbell said the IRS came after her seven years after she got the money. "We were guaranteed that this was not needed to be repaid," the Jacksonville...
Iran tests new ballistic missile
Iran tests new ballistic missile

Iran tested a new ballistic missile that reportedly is capable of carrying multiple warheads, CNN reported Saturday, citing the nation's state-run broadcaster announced. >> Read more trending news “Iran has released footage of the successful test-launch of its new ballistic missile, Khorramshahr, a few hours after it was unveiled during...
Memo: Seattle officer bragged that 'mini Mafia' controlled off-duty contracts
Memo: Seattle officer bragged that 'mini Mafia' controlled off-duty contracts

As an FBI investigation into Seattle’s off-duty police work unfolds, additional claims of questionable tactics by officers have emerged, including a report that one policeman proudly called his fellow officers a “mini Mafia” in the way they secured, enforced, and collected on private security and traffic contracts in the booming city...
Trump touts transparency on Twitter
Trump touts transparency on Twitter

President Donald Trump has no intention of scaling back his Twitter presence.  >> Read more trending news The president, campaigning for fellow Republican Luther Strange in Alabama on Friday night, touted his provocative and sometimes controversial tweets, CNN reported. "That is the great thing about Twitter," Trump said during...
More Stories