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

Transgender Day of Remembrance held outside Austin City Hall
Transgender Day of Remembrance held outside Austin City Hall

The tone of the Transgender Day of Remembrance event held outside Austin City Hall on Monday evening was, as always, a bittersweet mix of hope and sadness as organizers and attendees proclaimed their pride to be transgender and mourned the loss of transgender individuals who were killed this year. For years, Austin has participated in the international...
EAST AUSTIN FIRE: Mobile home blaze in Bastrop Highway under control, officials say
EAST AUSTIN FIRE: Mobile home blaze in Bastrop Highway under control, officials say

A fire at a mobile home located in East Austin near U.S. 183 is now under control, Austin fire officials said Monday night.  The structure at the 500 block of Bastrop Highway was heavily involved when the fire was reported about 10 p.m., officials said. The mobile home was abandoned and no one was injured, officials said. 
U.S. 183, I-35 projects waver after Abbott, Patrick trash tolls
U.S. 183, I-35 projects waver after Abbott, Patrick trash tolls

Several key Central Texas highway projects — including expansions of U.S. 183 in North Austin, U.S. 290 in Southwest Austin and Interstate 35 through the heart of the area — are once again in limbo after Gov. Greg Abbott and Lt. Gov. Dan Patrick last week staked out firm anti-toll positions. “Right now there’s a billion dollars...
UPDATE: Fire at downtown Hilton hotel now out, fire officials say 
UPDATE: Fire at downtown Hilton hotel now out, fire officials say 

11:30 p.m. update: The Hilton Hotel in downtown Austin was partially evacuated Monday night after a dryer malfunction on the third floor, Austin fire officials said. Firefighters responded around 7:15 p.m., and all guests were allowed back in around 10 p.m. The fire was confined to a laundry room, but the fire is estimated to have caused $200...
Police: Taylor man used Snapchat to try to blackmail girl into sex
Police: Taylor man used Snapchat to try to blackmail girl into sex

A Taylor man accused of demanding sex from a 15-year-old girl on Snapchat faces new charges because he also threatened to post nude pictures of another girl if she did not have sex with him, an affidavit said. Arthuro Medrano, 20 was charged Thursday with two counts of unlawful disclosure or promotion of visual material, a state jail felony punishable...
More Stories