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Austin Energy lowers proposed rate increase below affordability goal


From the August 20, 2014 issue of Public Power Daily

Originally published August 20, 2014

Austin Energy is lowering its proposed increase to the average monthly residential bill from 4.4 percent to 2.6 percent to stay below a system-wide affordability goal, the Texas utility said Aug. 15. The average 1,000 kilowatt-hour monthly bill would increase by $2.72. Earlier this summer, Austin Energy proposed increasing the bill by $4.67. The utility said it will collect the same amount to cover mandated expenses, but will spread out the collection over a longer period of time.

The Austin City Council will consider the proposal when it takes up the city’s budget in September. The increased charges would go into effect on bills starting Nov. 1, 2014, Austin Energy said.

The charges will result in a 1.9 percent increase to Austin Energy’s overall revenues, keeping its system average below the council goal of no more than 2 percent annual increases. The recommendation will require Austin Energy to undercollect $19 million from its "Regulatory Charge," the utility said. The collection will occur over multiple years.

Austin Energy is proposing to increase the Power Supply Adjustment charge by $2.36 and the Regulatory Charge by 36 cents on the average monthly bill. Earlier this summer, Austin Energy proposed increasing the Regulatory Charge by $2.33.

The proposed increases to the Power Supply Adjustment and Regulatory Charge are pass-through charges, Austin Energy noted. Pass-through charges are used to recover costs for specified expenses on a dollar-for-dollar basis and cannot be used for other purposes, the utility said.

The Regulatory Charge is Austin Energy’s share of the statewide costs for using the transmission grid, as well as the costs for the management, expansion and upkeep of the lines. Transmission providers in the Electric Reliability Council of Texas recently completed a $6.7 billion expansion of the state transmission grid to provide access to energy resources in the western half of Texas, including new wind production resources, Austin said. Transmission providers expect to complete more than $3.6 billion in additional projects between 2014 and 2018.

The Power Supply Adjustment charge is a dollar-for-dollar recovery of Austin Energy’s costs for fuel and power supply expenses to generate electricity at its power plants and to buy and sell power on the market, the utility said. The colder than normal winter created a 5 percent higher than normal demand for energy from Austin Energy customers. The increase in demand translated into natural gas prices that were 25 percent higher than the previous year, Austin Energy said. However, the utility's diverse generation portfolio helped minimize the proposed increase caused by the cold winter and higher natural gas prices, Austin Energy said.
 

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