Major gas bill hike to be contested by city this fall

You might have a much higher gas bill next year, pending an upcoming decision this fall by the Texas Railroad Commission, which oversees the state’s oil and gas industry.

Texas Gas Service proposed a rate hike this year that could raise some Austin-area residents’ bills by up to $10 a month next year. It was supposed to go into effect July 8, but Austin, West Lake Hills, Bee Cave and Pflugerville, among other cities, have all passed resolutions to suspend the increase for 90 days. This fall or winter, a coalition of cities plan to appeal the rate to the Railroad Commission on behalf of ratepayers, with Austin as the city with the most customers.

TGS attributes the rate hike to $25.7 million in revenue lost during the Covid-19 pandemic and the 2021 Winter Storm Uri, it noted in a June 3 statement announcing the increases. On its website, TGS adds that “demand has grown faster than supply can keep up with, coupled with the general state of the economy, war in Ukraine and extreme weather events, we see higher prices across the globe. In fact, natural gas prices are nearly 100% higher than a year ago.” However, the 2021 Texas Legislature paved the way for gas companies to recoup winter-storm-related debt by charging residential consumers higher rates for the next 30 years, the Austin Monitor reported at the time.

Under TGS’s proposal, the increases will vary depending on the size of a residential property: Small properties (those that use 17 Ccf, a unit that measures the volume of 100 cubic feet of natural gas) can expect a $6.26 monthly increase while a larger home (that uses 43 Ccf) could add on up to $9.53. Paul Robbins, a longtime consumer advocate, said offering two different rates for consumers to choose from is unnecessarily confusing. Robbins also calls into question why TGS needs to recoup all those costs now: “In 2020, they had a rate case, and the basis for that rate was set, but they could do interim annual adjustments to that. So if there was an unexpected Winter Storm Uri or Covid problem that caused rates to go up, then that would presumably have happened in the year that it happened.” 

Consumer charges have already gone up every year, due to Gas Reliability Infrastructure Program increases. To Robbins, the rate increase proposal is much higher than would make sense for those years from which TGS claims the increase needs to be recouped. Using TGS data, Robbins has calculated the average customer’s bill increase since 2019, using the small and large consumers’ average usage of about 30 Ccf. Between 2019 and 2024, bills went up by 57 percent due to regular GRIP increases; this most recent proposed rate would increase the monthly bill for 2025 by 106 percent over the 2019 rate and around 31 percent compared to this year’s rate. 

Additionally, the new rates would actually decrease for all the commercial and industrial customers as they increase for residential consumers. Small and large commercial customers would see a 9 percent and 7 percent decrease, respectively. Industrial consumers would see a whopping 34 percent decrease. 

Meanwhile, as the Monitor recently reported, the city’s Resource Management Commission has been asking that City Council authorize changing its ordinance to allow it to comment on TGS rate-setting as well as environmental concerns, at Robbins’ urging. Council’s Audit & Finance Committee heard arguments about the changes on Tuesday, and Council Member Alison Alter called into question why city finance staff members seem to be resisting the city commission’s involvement in the rate-setting process, even sending a memo to the committee on July 18 discouraging them from passing the resolution. 

Shane Johnson, clean energy organizer for the Sierra Club’s Lone Star chapter, who served on the city’s Resource Management Commission from 2018 until this June, told the Monitor in an email that Sierra Club could become an intervenor in the case: “We are considering the rate hike and exploring our options to engage, but in the meantime we call on all Austinites to write their City Council member and raise your concerns about paying even more in utility costs.”

“We heard from thousands of Austinites during Austin Energy’s rate increase in 2022,” Johnson said. “Unfortunately City Finance and Legal staff have been working in bad faith seemingly to undermine this effort to simply provide additional community input and a further advisory role on this matter to City Council.”

For now, Sierra Club’s position is that “renters, working people, and the folks who keep Austin moving shouldn’t have to bear increased costs from a climate disaster like Winter Storm Uri, especially when several gas companies in Texas made massive profits during the storm.” However, they also note that “even if we mobilize to Austin City Council and they are convinced this rate hike is inequitable and unnecessary, Texas Gas Service will appeal the vote and likely have it overruled by the RRC (Railroad Commission).”

Photo by KWON JUNHO on Unsplash.

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