Photo: Seaholm Power Plant. Credit: roxannejomitchel, CC BY-SA 2.0.
By Cyrus Reed
Electricity rates are complicated. Usually utilities assess their revenues and expenditures annually, but about every five or 10 years they will propose a rate “adjustment,” and in most cases, it means an increase. In Austin, it is no different. A month ago, Austin Energy, dropped a rate proposal that will raise rates for most customers, and certainly almost all residential ratepayers.
What are we all worked up about?
Sierra Club engaged in the previous rate case in 2016 and worked hard to keep fixed fees (the base monthly fee that all residential ratepayers pay no matter their energy use) stable, at $10 a month, and move the rate design toward a pro-energy-efficiency five-tiered rate system. We won other important victories as well. We established a value of solar payment for residential and commercial buildings with solar panels on their roofs. We also established a robust community benefit charge that helped working class customers get a discount and established an energy efficiency service fee to pay for solar and energy efficiency rebate and solar incentive programs. These reforms weren’t perfect, but the 2016 rates were fair and led to a settlement solution ultimately blessed by Austin City Council.
Fast forward to 2022. Austin Energy now says those rates worked too well. Customers are not using enough electricity and aren’t providing the “base rate” revenues to meet all the utility’s expenses. If you want to dig into their proposal, you can find it here. If approved as is, Austin Energy’s proposed base rate changes translate to an overall base rate increase of 7.6%.
While there are also some proposed changes on other classes of customers – from small businesses to large corporations – the main changes are on the residential side. They have proposed a substantial rate increase that – if approved – would mainly be on the backs of residential ratepayers (about 75% of the proposed adjustment). How? Mainly by raising the fixed monthly fee that everyone pays from $10 to $25, and then flattening the tiered rate structure (the more you use, the higher rate you pay) from five tiers to three. That flattening would reduce the incentive to save energy, if approved.
Austin Energy has also proposed adjustments to the Value of Solar payments that bear some further investigation. While they have not proposed any changes to the Community Benefit Charge or Energy Efficiency Service Fee, to meet our robust solar and energy efficiency goals, we may need to look at these more carefully.
Finally, given our long-term commitment to transition off of coal and our commitment to end all fossil fuel use by 2035, we are not sure if these rates will adequately set up the non-nuclear decommissioning funding stream needed to accomplish those worthy goals.
Should we just accept the new rates?
The Sierra Club will fight for the fairest and most equitable rates, and if you are an Austin Energy customer you should too.
How? Well, we are doing it formally. To their credit, the CIty of Austin has set up a mini-rate case, and the Sierra Club is entering as a party in the proceedings before an Independent Hearings Examiner. Here is our statement of intent. We are not alone, though. Just as we did in 2016, we are joining forces with our friends and colleagues at Public Citizen’s Texas Office to represent residential ratepayers, fight for fair compensation for solar owners, ensure energy efficiency programs are protected, and that Austin is still on a stable path to a zero-carbon utility by 2035.
This doesn’t fall on us alone. You can participate too. Stay tuned for ways you can let Austin Energy leadership know that you want fair rates that continue to encourage energy efficiency and continue to put us on a path to shedding reliance on fossil fuels for our electricity before 2035 (as called for in the 2030 Austin Energy Resource Plan).
Ultimately, the Independent Hearings Examiner will make a recommendation that will first go to the Electric Utility Commission, and then to City Council for approval. Along the way, there may be hills and valleys, but with your help, we can ensure that Austin Energy gets the revenues it needs without hurting working-class Austinites, and without undermining our efforts to be more energy efficient, and to move away from fossil fuels.