New Electric Rates Take Effect With October 2012 Utility Bills

City of Austin Customer Assistance Program Summit - June 28, 2012

The Austin City Council has unanimously approved a system average 7% rate increase.  The Council will further assess rate adjustment needs in 2014 and will review rates thereafter every five years. This increase in base electric rates is the first since 1994. The Council also reaffirmed that Austin Energy rates must remain in the lower 50% among Texas electric utilities.  

The Council approved a 5-tier inclining rate structure (Energy Charge) for residential customers that provides especially low rates for the first 500 kilowatt-hours (kWh) of electric use.   

New 5-tier residential base electric rates:

Energy Use	October-May	June-September
First 500 kWh	1.8 cents per kWh	3.3 cents per kWh
From 501 - 1,000 kWh	5.6 cents per kWh	8.0 cents per kWh
From 1,001 - 1,500 kWh	7.2 cents per kWh	9.1 cents per kWh
From 1,501 - 2,500 kWh	8.4 cents per kWh	11.0 cents per kWh
From 2,501 and above	9.6 cents per kWh	11.4 cents per kWh

The Council also broadened eligibility through which disadvantaged customers can qualify for utility bill assistance. To fund this customer assistance, the Council approved a monthly charge to residential customer $1.74 per 1,000 kWh and 65 cents per megawatt-hour (MWH) for businesses. 

Other key components of the new residential rate structure approved by Council include the following: 

Residential

• A $10 monthly Customer Charge. Currently the Customer Charge is $6.

• Summer rates will apply during June, July, August and September only. Currently summer rates apply during six months (October-May). This means under the new rates customers will pay lower rates 8 months a year. Summer rates are higher due to the higher cost of meeting summer electric demand. 

Line items that will continue on the electric bill

• Power Supply Adjustment (currently the Fuel Charge): recovers dollar-for-dollar fuel and power supply costs.

• Regulatory Charge (includes the current Transmission Service Adjustment Rider):  recovers dollar-for-dollar Austin Energy’s share of state grid management costs and state transmission use and construction costs.

New line item

Some costs currently recovered within base electric rates have been removed from the new base electric rates to be recovered through an individual line item. These services (listed below) benefit customers and the greater community as a whole. These costs will be recovered on the electric bill through a single monthly line item called the Community Benefit Charge.

• Customer Assistance: $1.72 per 1,000 kWh to fund utility bill discounts for low income customers. This funding should more than double the number of customers that can be assisted annually to 25,000.

• Service Area Streetlights:  93 cents per 1,000 kWh to maintain and power the streetlights and traffic signals in Austin and all communities served by Austin Energy.

• Energy Efficiency Services:  $2.89 per 1,000 kWh for energy efficiency programs, the least expensive offset to new generation.

Overall impact of new residential rates and structure

Summer electric bills will increase by less than $10 per month for the smallest users and between $13 and $24 per summer month for average users. Winter electric bills would increase by less than $7 per month for small through average energy users.

Voluntary contributions

City of Austin utility customers have check off options on their utility bill that allow for voluntary contributions to the Customer Assistance (Plus 1) Program that provides emergency utility bill assistance (as opposed to utility bill discounts provided monthly) to customers facing extraordinary emergencies such as loss of job. There is also a check off for community Tree Planting. The Council approved an additional check off box for voluntary contributions to help Independent School Districts with their utility bills.