Another utility rate hike for Austin in the works

Austin's skyline has gone through a lot of changes since Austin Energy last increased its base rate for customers. On Tuesday, utility officials said it's time to catch up.

"We are proposing a Base Rate increase of about 5.6%"

In a work session briefing, Austin council members were told the base rate needs to go from $10 to $25. It’s the amount all utility bills start at. The reason for the hike is a money crunch.

"Our cash reserves are dwindling because of our base rates that are outdated relative to the consumption patterns we're seeing in our community," said AE Spokesperson Mat Mitchell.

The utility is far from broke. Cash reserves total more than $300 million.

"It's it is a lot of money. There's no minimizing that. And at the same time, we're seeing the cost of providing electricity to our customers and to our ratepayers go up, infrastructure costs, reliability cost, substation costs, labor costs. All of those are continuing to go up where our base rates and the revenues that we're taking from those are not covering those costs," Mitchell said.

Base rates pay for a number of things, supplies and equipment, salaries, technology, and payments on principal and interests. As well as transfers into Austin's General Fund budget, which lately totals more than $100 million a year.

"It would have been nice to have had these discussions during our budget talks this year. That way we could, as a council, seen the whole picture of what was going on as far as Austin Energy potentially raising their rates. And then also what we could have cut in our own budget in the general fund," said Council member McKenzie Kelly District 6.

Tuesday's discussion, Kelly noted, comes on the day when utility customers started paying Austin Energy a new fuel cost increase. She is currently a no vote.

"It makes me sick to my stomach to know that there are people who are struggling every day in our community that are going to be charged more for electricity," said Kelly.

There is one other surprising justification for the proposal. Austin's growth and energy efficient new construction.

"We're victims of our own success. Basically, the conservation that we're seeing, and Austin Energy continues to encourage is not being supported by the base rate structure, which is predicated on higher usage customers subsidizing lower usage customers. Right now, we're seeing lower usage customers being served well below their cost of service," said Mitchell.

There is one other twist to this plan. It’s possible some customers could actually see a decrease in their bills.

Over the next few weeks the council will dive deeper into the numbers. That includes, setting rate adjustments based on usage and factoring in customers with solar units and power storage batteries. A vote could happen by early December.