It’s Official. Austin City Council Approves New Austin Energy Rates

Rate Case press conference with Mayor Adler

In a rare unanimous vote, Austin City Council approved new rates for Austin Energy that makes official a joint settlement among 20 parties, including the Sierra Club and Public Citizen.

Beginning on January 1, 2017, residential, commercial and industrial customers will all see a slight decrease in rates. Residential rates will continue to be based on how much energy a home uses, with lower energy consumption continuing to cost substantially less than higher energy consumption. Austin has a unique five tier rate structure whereby the more electricity you use, the higher the rate you pay. That structure will continue. However, there will no longer be a higher summer rate. Instead, the new rates will be the same year-round. 

City Council came up with a slight tweak to the settlement to ensure that all ratepayers see a decrease no matter which “tier” of consumption they reach. In making their decision, Council members and Mayor Steve Adler pointed to a transparent process, including an informal rate case before an independent hearings examiner as being key to bringing parties together.

“What we did was unprecedented in terms of looking at cost of service, in terms of responding to data requests, in terms of an open process,” Adler told the dais. “The consensus was pretty wonderful --and I add my appreciation to everyone.”

Sierra Club’s Lone Star Chapter and the Texas Office of Public Citizen entered into the rate case as joint parties back in May and participated in the rate case.

While 18 of the parties reached a settlement with Austin Energy relatively quickly, Sierra Club and Public Citizen continued to negotiate with Austin Energy on two key issues: how solar commercial customers will be compensated for excess solar generation, and how Austin Energy will meets its commitment to end its use of coal by 2022 by retiring our share of the Fayette coal plant.

Under the terms of the agreement with Sierra Club and Public Citizen -- and endorsed by City Council -- Austin Energy commits to studies and a process to identify how it will reimburse commercial solar owners within a year. In addition, Austin Energy is setting aside $5 million in its contingency reserves to begin the process of paying off debts we owe on the coal plant, and to conducting both a legal analysis and a financial analysis to present the lowest cost option to allow us to pay off those debts and begin the retirement process. Both of these analyses must be presented to City Council by June of next year.

Cyrus Reed, who led the Sierra Club’s efforts during negotiations, said the following when an agreement was reached. “After months of work on the rate case, and weeks of intense negotiations, we finally have a settlement that ensures sufficient funding for solar and energy efficiency programs, keeps residential rates low, and creates a process to deal with two fundamental policy issues: how to compensate commercial solar owners and how we are going to retire the Fayette coal plant that is responsible for most of our carbon dioxide pollution.”