AE Rate Hike Opponents Say 'Do It Over'

On Tuesday, less than a week after the Electric Utility Commission narrowly approved an electric rate increase – the first in 17 years – representatives from environmental, consumer, and low-income advocacy groups issued sharp responses to Austin Energy's proposed package, calling it regressive, "upside-down and backwards," and a "big corporate welfare program."

The case is expected to go to City Coun­cil for a briefing in December, followed by a series of public hearings early next year. But Public Citizen's Tom "Smitty" Smith urged council members to reject the package outright by directing AE "to go back to the drawing board and do this rate case over." He said the large industrial customers, whose rates are locked in until 2015, will be getting cheaper rates at the expense of residential customers and small businesses.

Chief among the opponents' objections is the $25 flat monthly fee the utility is seeking from customers, regardless of how much electricity they use. The proposed fee is more than four times the existing base rate of $6. As a consequence, the rate hike the utility proposes would represent different percentage increases for different classes of customers – those consuming the least amount of power would see the largest percentage jump in their bills.

Several people who spoke Tuesday say they're not opposed to an increase in incremental, equitable stages but that the utility is hitting customers with 17 years' worth of rate hikes in one blow. Such an action, they say, not only strikes most harshly those customers who are barely scraping by, but it also discourages conservation at a time when the utility is ramping up its conservation and alternative energy programs.

According to the utility's own study, some 46,000 households in AE's service area are living on incomes that are either at or below the federal poverty level, noted Carol Biedrzycki, executive director of the Texas Ratepayers' Organization to Save Energy. "Austin Energy has a reputation for being a leader ... in promoting energy efficiency and making bills affordable for low-income families," she said. "This appears to be changing." She said when her group has asked the utility to increase benefits for its low-income rate program and energy efficiency programs, "Austin Energy's response is that they'll make those decisions after the funding is approved. Asking for money without making commitments on how it will be spent is no way to run a public utility."

Tuesday's press conference followed the Electric Utility Commission's Oct. 20 vote, which split along gender lines with Shudde Fath, Linda Shaw, and Barbara Day voting against the rate package; the three are expected to issue a minority report. The commission considered four rate options before settling on Option A – the least desirable to the consumer advocates. The entire package required more than two dozen separate votes and many hours of debate. Day, the panel's newest member, was the harshest critic of the proposed rates, drawing on her legal experience representing consumers in major rate cases. In comments she submitted to staff before the vote, she wrote that the utility had not justified its increase on a number of issues, including the proposed fixed charge for electric distribution to residential customers – a change she said would cause "rate shock to low-use customers." She also questioned the inclusion of a plan to fund pilot projects with the Pecan Street Project, a fledgling incubator for developing green-energy technology. Such a question, she said, should not be included in a rate case without a specific funding proposal. And finally, Day said, she disagreed with all four rate options under consideration, stating that the restructure of rates to adopt fixed charges is "unwarranted and inappropriate."

Austin Energy Proposed Rate (Option A)

Monthly Avg. Use	Current	Proposed	Increase
300 kwh	$27	$43	59%
700 kwh	$62	$78	26%
1,000 kwh	$92	$102	11%
2,500 kwh	$247	$290	17%

Under the proposed rate increase approved by the Electric Utility Commission, residential customers using the lowest amount of electricity would see the biggest increase in their monthly bills.

Source: Austin Energy/Paul Robbins

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Fixed Monthly Fees of Large Texas Municipal Utilities

Brownsville: $3.53

Garland: $5.34

Lubbock: $5.60

Current Austin Fee: $6.00

College Station: $7.00

Bryan: $8.15

Denton: $8.25

San Antonio: $8.25

San Marcos: $8.93

Proposed Austin Fee: $25.00

Of the state's large municipally owned utilities, Austin Energy customers would pay the highest fixed monthly charge, in addition to what they would pay for electricity.

Source: Paul Robbins