Northwest Austin Edition | November 2022

breaking down the electric bill Austin Energy has proposed two rate increases to customers’ monthly electricity bills. The following sample bill shows what the line-item breakdown will look like if all rate changes are approved. The timeline provides recent key dates pertaining to the rate increases. BILL CHANGES EFFECTIVE NOV. 1 Pass-through charge increase, around

2020 March 11: COVID-19 pandemic declared in the U.S. Sept. 2020-Sept. 2021: The year used by Austin Energy as a basis for the proposed rate Feb. 13-17: Winter Storm Uri May-Aug.: Lower-than-typical temperatures 2021

$15 for average customer monthly 3 Regulatory charge: recovers transmission costs and other regulatory items billed by the Electric Reliability Council of Texas 4 Community benefit charges: funds additional programs and services 5 Power supply adjustment: the cost of fuel for power plants and electricity purchased from the grid

SAMPLE BILL FOR 2022-23 PROPOSED CHANGES Service details ELECTRIC SERVICE STREET ADDRESS, ZIP: 78XXX Rates based on kilowatt-hours used. The bill below uses 860 kWh as an example, as Austin Energy typically uses 860 kWh as an average residential usage amount.

2022

May-Aug.: Higher-than-typical temperatures Nov. 1: Austin Energy customers see first rate hike on monthly utility bill Nov. 15 : Base rate case will come to Austin City Council

Customer charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25.00 Tier 1 first 300 kWh at $0.03633 per kWh . . . . . . . . . . . . . . . . . . $10.90 Tier 2* next 560 kWh at $0.04133 per kWh . . . . . . . . . . . . . . . . . $23.14 Regulatory charges 860 kWh at $0.01491 per kWh . . . . . . . . . . . $12.82 Community benefit charges $0.00516 per kWh . . . . . . . . . . . . . . . $4.44 Power supply adjustment 860 kWh at $0.04371 per kWh . . . . . . $37.59 Residential sales tax Taxable amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $113.89 City sales tax 1% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.14 TOTAL CURRENT CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $115.03

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BILL CHANGES FINALIZED DEC. 1 EFFECTIVE JAN. 1, 2023

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to cover the utility’s budget shortfall. In November, AE’s recalculated bud- get shortfall amounted to $35 million, and the council is looking at a 5.6% increase to recover the remaining costs, which would cost residents an undetermined amount more monthly. The figure could still change following public meetings set to be held in late November, and City Council will sign off on a new base rate Dec. 1, effective Jan. 1 for customers. When AE started work on reviewing its rates in April, it used 2021 as the test year to show consumption patterns and costs from previous years. “The rate proposal is built upon a false foundation,” said Bill Oakey, a former member of the city’s electric utility commission. Documents submitted to City Council by the participants in the review process showed concern that 2021 was abnormal because of Win- ter Storm Uri, a mild summer and the ongoing pandemic. Although AE normalized the year to reflect average trends, participants said the utility’s efforts were insufficient. The proposed base rate increase is expected to be much higher for a busi- ness or industrial customer, according to NXP, a semiconductor company that operates manufacturing facilities in Austin. As part of the base rate increase, AE’s current proposal would also increase the customer charge 150% from $10 to $25. If approved, the change would go into effect Jan. 1. Base rate increase, monthly cost TBD 1 Customer charge: currently fixed at $10, proposed to go up to $25 monthly 2 A fixed charge per kWh used: AE is proposing to reduce the number of tiers it uses to break down charges from five to three tiers

Dec. 1: Austin City Council is expected to make a decision

2023 Jan. 1: Customers will likely see a second rate hike with a new base rate on the monthly utility bill

*TIER 2 INCLUDES USAGE UP TO 1,200 KWH AND TIER 3 INCLUDES USAGE ABOVE 1,200 KWH.

SOURCE: AUSTIN ENERGY/COMMUNITY IMPACT

the regulatory charge, which recov- ers the Electric Reliability Council of Texas costs in the electric industry; and the community benefit charge, which funds additional programs and services that provide a benefit to the greater community. AE was not able to recover $104 mil- lion in PSA costs in 2021-22. The util- ity company kept the pass-through charges at a lower rate than normal in 2021 because it had some funds left from when it sold electricity to ERCOT during Winter Storm Uri. AE officials gave back the added reve- nue to their customers in the form of a lower-than-normal PSA, according to AE documents. The approximately $15 monthly charge for three years will help the public utility company recover this shortfall, according to an AE spokesperson. The second increase under consid- eration is the base rate, which was last reviewed in 2017 and was expected to undergo a review in 2020; however, the COVID-19 pandemic delayed the process. The base rate is composed of the base cost per kilowatt-hour of elec- tricity used and the recurring monthly customer charge. AE conducts a cost recovery review every few years to ensure that its base rates are sufficiently covering the cost of owning and operating the utility. In September, AE proposed a 7.6% base rate increase that would cost the average resident $15.56 more on their monthly power bill to bring in $48 mil- lion more in annual revenue needed

Environment and climate organi- zation The Sierra Club is part of city discussions and has voiced why it opposes AE’s current proposal that increases the customer charge. “No matter the amount of energy used or the amount of electricity used, you would still have to pay that $15 increase, which isn’t a good incen- tive for people to conserve energy,” said Cyrus Reed, conservation direc- tor of Sierra Club’s Lone Star chapter. How we got here AE is a publicly owned company that was established in 1895 and serves about 521,000 residential and com- mercial customers. That number has increased by 80,000 since 2016. “Our customer base continues to expand as we see steady growth in Austin,” AE spokesperson Matt Mitch- ell said. “New construction means new demand for energy, and that means added infrastructure costs, [and] that is why it is essential that our base rates cover those rising costs, something that the current rate structure does not.” AE recently completed the Bluff Springs substation in Southeast Austin, and the Rainey Street substation is set to come online as early as December to support the increase in usage, Mitchell said. Some consumer advocates agree with AE when it comes to updating their infrastructure. “If you build a new transmission line, you need to pay for it,” Robbins said.

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which usually undergo revision every five years. If approved, this could add up to another $15.56 to the average customer’s monthly bill starting in January. AE officials said the public utility needs these increases to balance rising inflation and infrastructure costs as well as offset customers reducing their energy usage. These conservation efforts are causing a budget shortfall for the utility company. While AE officials say the causes for rate increases are outside of their control, the sudden rate hikes have left questions about why AE waited so long to voice concerns about cost recovery. “There’s going to be a lot of people that don’t know this is coming,” said Paul Robbins, a consumer advocate who has participated in the city of Aus- tin discussions. Explaining the charges The rate raises in question include the pass-through charge that is approved annually and was reflected on bills starting in November. To account for several factors, the average customer will see around a $15 monthly increase on pass-through charges for three year. There are three main components of pass-through charges, including the power sup- ply adjustment, or PSA, that refers to the cost of fuel for power plants and electricity purchased from the grid;

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