Impact on customers When both rate hikes go into effect, average AE residential cus- tomers could be facing up to about $30 more a month on their bills. Even when Austin City Council adopted the pass-through rate Oct. 13, council members expressed con- cern over their decision. The resolu- tion passed with three members out of eight voting against it. “I cannot, in good faith, sup- port Austin Energy’s power supply adjustment. I constantly hear stories from our community members about displacement, rising rents and stag- nant paychecks,” District 2 Council Member Vanessa Fuentes said. AE provides relief in the form of its Customer Assistance Program, Plus 1 for financial support and energy effi- ciency offerings. AE also has account managers who are in contact with businesses to help identify possible energy incentives. With Austin Water expected to pass increased costs on to customers in 2023, Austin residents could see a rise in other portions of their utility bills in the coming year. As the base rate is being finalized, City Council, AE and independent participants in the discussion are working to prevent AE custom- ers from a similar rate shock in the future. Participants are also trying to ensure there is more frequent com- munication between the public util- ity company and its users, as well as the city. “Council and Austin Energy staff are putting in place safeguards that are meant to insulate our ratepayers as much as possible from a spike in power supply adjustment costs [in the future],” Oakey said.
reasons for the increase Many factors have forced Austin Energy to increase its share of the utility bill to recover power supply adjustment, or PSA, costs over a three-year period instead of one.
Winter Storm Uri also impacted the new AE rates. ERCOT, which manages the flow of electric power in Texas, has become more conservative in its operations since Winter Storm Uri, according to AE. The state’s changes aimed at grid stability have cost $1.5 billion in 2022, according to Potomac Economics. AE was also forced to pay an extra $42 million as ERCOT withheld pay- ment to the utility company when Brazos Electric Cooperative in Waco declared bankruptcy after Winter Storm Uri and could not pay ERCOT for power received during the winter storm, according to AE documents. Additionally, AE operates three natural gas-powered plants in the Austin area. The price of natural gas has also increased due to global factors such as the war in Ukraine, supply and demand of the global commodity, and a record hot summer from May to August, Mitchell said. “When you see a 108% increase year over year in natural gas prices, that is reflective of not just greater demand in Texas, not just greater demand in the United States, but worldwide demand,” Mitchell said. An additional concern under dis- cussion in the base rate review is the percentage of revenue AE is required to return to the city’s general fund transfer. The percentage is allocated by elected City Council members and has ranged from $105 million-$114 million in recent years. This funds the police, public safety initiatives, the 311 phone bank and many other services that support the community. “There has been discussion recently about capping the [general fund transfer] and returning any overage to the utility to offset costs, which could be returned to ratepay- ers in some way. That would really depend on the circumstances of any given year,” Mitchell said.
ercot more conservative
extra revenue exhausted
congestion costs up
2
1
3
Transmission congestion costs of Electric Reliability Council of Texas were higher than any previous year. Costs to move power go up when more power is generated.
ERCOT has operationally changes since Winter Storm Uri. This is leading to increased costs throughout the system.
Last fiscal year, Austin Energy used generation revenue earned during Winter Storm Uri to cut the PSA charge for its customers.
4 higher natural gas prices
Electricity production costs rise as natural gas prices go up. From 2020-22, there was a 170% increase in the average annual cost of natural gas.
Annual averages
$0 $8 Henry Hub Natural Gas Spot Price (Dollars per Million Btu) $10 $5.50 $3.91 2020 $2 $4 $6 2021 2022 $2.04
5 rising number of energy customers Residential customers
Commercial customers 2002 36,612 2022 51,100
2002 315,009 2022 476,721
+51.34%
+39.57%
Austin Energy service area Shared service area
TRAVIS COUNTY
15
1 Austin 2 Bee Cave 3 Village of the Hills 4 Lakeway 5 Rollingwood 6 West Lake Hills 7 Sunset Valley 8 Village of Creedmoor 9 Mustang Ridge 10 Manchaca 11 Buda 12 Del Valle
14
35
4
290
71
MOPAC
3
13
5
1
2
130 TOLL
183
6
12
290
7
71
10
8
11
13 Manor 14 Pflugerville 15 Cedar Park
9
For more information, visit communityimpact.com.
N
SOURCES: AUSTIN ENERGY, U.S. ENERGY INFORMATION ADMINISTRATION/ COMMUNITY IMPACT
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NORTHWEST AUSTIN EDITION • NOVEMBER 2022
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