Council rejects Texas Gas Service rate hike

Despite reining in its initial proposal, Texas Gas Service has still failed to win over City Council in its endeavor to raise prices for Austin ratepayers.

The utility faced backlash this summer with news of its plans to aggressively hike fixed monthly fees, prompting Austin and 16 other cities in its service area to join forces in campaigning for a compromise. Though the coalition has reached a settlement, Council voted last Thursday to reject the new proposal, claiming the utility’s concessions were not enough to seal the deal.

TGS’s initial proposal would have seen its $16 monthly service fee rise to $25.50 and $39 for new classes of small and large residential customers, a hike amounting to a 14 percent increase for the average consumer’s bill. Similarly, “small” and “large” commercial customers would have seen their $53.33 fee rise to $85 and $100, respectively, though new rate designs would have ultimately meant bill decreases for the average commercial consumer.

Now, the utility is offering a scaled-back plan, proposing an increase to $18 and $30 in monthly service fees for small and large residential customers, and $60 and $75 for commercial customers. Still, watchdogs at City Council, Austin’s Resource Management Commission and organizations like Public Citizen, Environment Texas and Sierra Club are dissatisfied with the concessions.

“If the gas company wins its proposal, it will have increased residential rates by 105 percent since 2019,” Resource Management Commissioner Paul Robbins said at last week’s City Council meeting. “Austin should not have to deal with this constant onslaught of price gouging. … San Antonio’s municipal gas utility only 70 miles to the south charges just half of these rates.”

While TGS says the increases are necessary to cover rising gas prices and the demand to expand infrastructure, critics argue that the cost is being unfairly shouldered by existing ratepayers. In contrast, Austin’s municipally owned water and electric utilities recover 100 percent of the cost to expand services through premiums charged to new customers.

Additionally, critics say the utility’s proposal is out of line with Austin’s equity and environmental values, with a regressive rate structure that disproportionately burdens low-income customers and fails to send price signals encouraging conservation.

Despite their objections, Council shares jurisdiction in the matter with Texas’ Railroad Commission, which is set to review the case in coming weeks. While there is reason to doubt the industry-friendly body will share its concerns, the review process will provide an opportunity to appeal to the state’s Office of Public Utility Counsel, which could help to further challenge the case.

In the meantime, exasperated critics are looking ahead to 2026, when the city’s franchise agreement with the utility is set to expire. 

“We are reaching a crisis of affordability where municipalization needs to be considered,” Robbins said. 

“It seems that the city needs to get serious about finding a way out of this situation,” Resource Management Commissioner Rafael Schwartz added. “Whether that’s municipalization or some other outcome, one initial action Council can take is to adjust the Resource Management Commission’s purview to include gas utility issues, as has been previously asked.” 

Photo made available through a Creative Commons license.

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