Still more questions than answers approaching Austin Energy rate case vote

City Council appears far from resolved heading into today’s vote on Austin Energy base rates, leaving last Tuesday’s work session with the case’s biggest questions still unanswered.

On the top of the list is the issue of revenue requirement, with many hesitant to approve the full $35.7 million Austin Energy claims it needs to recover costs. With next month’s bill increases dependent on that number, Council members are scrambling to determine what can be whittled away without hurting the utility’s finances.

Most on the dais seem poised to adjust the utility’s General Fund transfer, a move endorsed by the impartial hearing examiner that would reduce the revenue requirement by $4.4 million. At Council’s request, Austin Energy ran a scenario with this $31.3 million figure, including a four-tiered rate design with a phased increase to the customer service charge climbing from $14 to $16 per month by the end of 2025. The design would be a significant deviation from the utility’s initial three-tiered proposal and $25 monthly service fee that critics argued could abruptly price out lower-income consumers.

“I think these options reflect a movement in the right direction in terms of both the policy you’re trying to get to and the political realities of where the Council is,” Mayor Steve Adler said. 

Still, others voiced interest in further adjustments, with Mayor Pro Tem Alison Alter and Council Member Kathie Tovo questioning whether pandemic-era moratoriums on late fees may have inflated Austin Energy’s calculated revenue gap. Alter and Tovo argued that their case felt particularly relevant following the utility’s fourth quarter report, which shows a preliminary $21 million more in revenue than anticipated (Austin Energy maintains this is a result of record-hot summer temperatures).

Further complicating matters are plans to improve the Customer Assistance Program, a measure endorsed by Council to mediate rate shock but given an additional $2.5 million to $6 million price tag by Austin Energy officials, who claim they will need to run numbers on additional staff and data use agreements to manage the expansion.

“If there’s a way for us to set this rate structure so that we include that $2.5 to $6 million to fund the CAP program administration, I think that would be really significant,” Adler said. “Then our message to the community would be, rather than a $15 increase, we are doing a $14 increase, still maintaining tiers and price signals, but we’re actually investing in increasing the number of people participating in the CAP program, which is the most equitable thing we could do.”

Austin Energy officials will return Thursday with a number of models incorporating these changes, though it remains to be seen whether Council feels comfortable voting on such a tight turnaround. Those following the case might prepare for a postponement to Dec. 8, the last meeting before the clock runs out.

For all things base rate review, check out the city clerk’s website, as well as our past coverage of the case.

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