Sierra Club Calls on Austin City Council to Delay Consideration of Energy Fuel Cost Hike

Protestors argue for fairer Austin Energy rates.

The community protests at Austin Energy headquarters. Photo by Adal Rivas, Sunrise ATX.

The Sierra Club is calling on the Austin City Council to delay consideration of Austin Energy’s latest proposed fee increases, which are No. 71 on Thursday’s agenda, that would raise the average residential bill by $20 per month at the same time that the utility is seeking a similar increase in base rates. [Editor's Note: Austin City Council recently voted to delay this conversation until mid-October.]

The huge proposed increase in fees is largely due to the increasing cost of electricity sold in the ERCOT (Electric Reliability Council of Texas) grid, which itself is driven by rising gas prices. In fact, wholesale electricity prices have doubled within ERCOT due largely to those gas price increases. Unfortunately, Austin Energy is asking to put all of this cost on the backs of working-class Austinites. At the very least, Austin City Council must delay this decision to allow for more deliberation and public input.

The Power Supply Adjustment (PSA) and Regulatory Fees, along with the Community Benefit Charge (CBC), are set annually by City Council through a tariff. Earlier this month, Austin Energy sent its proposal to the City Council to increase the PSA by 71 percent and the Regulatory Fee by 24 percent. The PSA is a pass-through fee that looks at the previous year’s costs of wholesale energy purchases, as well as revenues earned from our power plants – both contracted and owned by Austin Energy. Similarly, the Regulatory Fee measures the costs imposed by the grid operator – ERCOT – on the market for administration, transmission, and resiliency services. The proposal does not impact the CBC – which supports both low-income discounts and energy efficiency and has yet to be set, in part because parts of the base rate case could impact the CBC itself. Both ERCOT fees and wholesale market prices did rise significantly in 2022, and Austin Energy’s proposal on its face makes sense, but for residential customers the timing couldn’t be worse and is unacceptable. 

First, the Austin Energy proposal has not even been discussed by the Electric Utility Commission, which is an advisory council to City Council on Austin Energy issues. At the very least, the proposal should be sent to the commission, which next meets Oct. 17, for further deliberation. 

More importantly, however, the proposed increases would be on top of a potential base rate increase. In April, Austin Energy proposed a significant increase in rates that would in particular hit residential ratepayers. Under their proposal, the fixed monthly fee paid by most residential ratepayers would rise from the current $10 a month to $25 a month, regardless of the amount of electricity they use. 

Earlier this year, the Sierra Club joined with Public Citizen and Solar United Neighbors in becoming a participant in a rate hearing. On Monday, we filed our final exceptions in the rate case, arguing that Austin Energy’s rate case is unfair to residential ratepayers and would undermine important policy considerations set by City Council. 

In addition to opposing the increase in the fixed monthly cost, Sierra Club and our allies are opposed to other changes sought by Austin Energy, such as reducing the number of tiers in their rate structure – from 5 to 3 – and flattening the rates, meaning there is less incentive for customers to save energy. In addition, Austin Energy is seeking to recover the costs of the Fayette coal plant even though City Council has told it to stop burning coal by the end of 2022. Furthermore, Austin Energy is seeking to allow certain commercial and industrial customers to stop paying the Energy Efficiency Service Fee that supports the energy efficiency programs that help all customers, and a proposed change in the “Value of Solar” program could undermine support for onsite solar programs. 

The rate case next goes to the Electric Utility Commission on Oct. 17 for consideration before heading to City Council.