2022 Base Rate Recommendations

Austin Energy's Proposed Base Rate Changes

After a financial review that looked at Fiscal Year 2021 data on the costs of providing electric service, Austin Energy found that it needs to increase base revenue by $48 million through an overall base rate increase of 7.6%.

Austin Energy's current base rates and rates structures are not meeting the costs of serving the community. This is not because of Winter Storm Uri. Austin Energy needs to adapt to a changing landscape for electric utilities and specific conditions in the Austin area so it can continue to safely deliver clean, affordable, reliable energy, and excellent customer service.

If approved, this increase will help Austin Energy better recover its costs while continuing to provide value to the community.

Documents Available for Download and Review

Proposed Changes for Residential Customers

  • Update an outdated residential base rate structure by reducing the number of tiers from five to three and leveling the price difference between the new tiers.
    • Tier 1 (0-300 kWh) — 3.8 cents per kWh
    • Tier 2 (301-1,200 kWh) — 4.3 cents per kWh
    • Tier 3 (1,201+ kWh) — 4.8 cents per kWh
  • Better recover fixed costs by increasing the Customer Charge from $10 to $25 so the utility can rely less on energy sales.
  • Bring outside- and inside-City of Austin residential customers together in the new rates since there is no cost difference in serving those customers.

With the proposed changes, a residential customer with a typical use of 860 kWh would see an increase of $15.56, though actual bill impacts depend on use and vary from customer to customer.

Proposed Changes for Business/Commercial Customers

  • In general, increase Customer Charges to better recover fixed costs and enhance Austin Energy’s financial stability.
  • Combine Electric Delivery and Demand Charges where applicable to simplify billing and adjusting that rate to match cost trends.
  • Eliminate the adjustment for low load factor customers to bring them closer to what it costs to serve them.
  • Bill Houses of Worship in the same way as all other business/commercial customers.
  • More equitably recover discounts offered to State of Texas facilities, local school districts, and military facilities by spreading those costs across all customers.

Bill impacts for business customers depend on business customer category (small business, large industrial customer, etc.).

Business Secondary Customers (Small Businesses)

  • Business Secondary Customers < 10 kW
    • Increase Customer Charge from $18 to $35.
    • Reduce energy charge from 4.80 cents to 3.07 cents per kWh.
    • Based on these changes, this class would receive an overall base rate increase of 7.9%, but actual impacts depend on electric use.
  • Business Secondary Customers ≥ 10 kW < 300 kW
    • Increase Customer Charge from $27.50 to $55.
    • Reduce energy charge from 2.42 cents to 1.68 cents per kWh.
    • Combine the Delivery and Demand charges, adjusting the combined rates from $8.69 to $9 per kW.
    • Based on these changes, this class would receive an overall base rate decrease of 6.3%, but actual impacts depend on electric use.
  • Business Secondary Customers ≥ 300 kW
    • Increase Customer Charge from $71.50 to $275.
    • Reduce the Energy Charge from 1.96 cents to 1.64 cents per kWh.
    • Combine the Delivery and Demand charges, adjusting the combined rates from $10.90 to $11.50 per kW.
    • Based on these changes, this class would receive an overall base rate decrease of 3.6%, but actual impacts depend on electric use.

Primary Customers (Large and Industrial Businesses)

  • Primary Customers < 3 MW
    • Increase Customer Charge from $275 to $300.
    • Combine the Delivery and Demand charges and hold the combined rates at $11.50 per kW.
    • Increase the Energy Charge from 0.05 cents to 0.37 cents per kWh.
    • Based on these changes, this class would receive an overall base rate increase of 8.4%, but actual impacts depend on electric use.
  • Primary Customers ≥ 3 MW < 20 MW
    • Increase Customer Charge from $2,200 to $2,500.
    • Combine the Delivery and Demand charges, adjusting the combined rates from $13.67 to $14 per kW.
    • Increase the Energy Charge from 0.05 cents to 0.18 cents per kW.
    • Based on these changes, this class would receive an overall base rate increase of 5.0%, but actual impacts depend on electric use.
  • Find more base rate details for higher-level service categories in the Austin Energy 2022 Base Rate Filing Package (3 MB - pdf)

Proposed Changes to the Value of Solar

As part of the base rate review, Austin Energy is also proposing updates to the Value of Solar (VoS). A recent study found that updates are needed for the VoS components to better align with current costs.

Proposed changes include:

  • Update the societal benefits calculation to reflect the positive impacts of solar generation in Texas.
  • Change the funding source for societal benefits from Power Supply Adjustment to Community Benefits Charge to clarify how customer charges support clean energy.
  • Update the avoided cost methodology to use the embedded costs approach to increase accuracy and better align with standard rate-making practices.
  • Residential and Commercial Non-Demand 
    • Increase Value of Solar credit from 9.70 cents to 9.91 cents per kWh
  • Commercial Demand Solar capacity < 1,000 kW-ac 
    • Increase Value of Solar credit from 6.70 cents to 9.91 cents per kWh
  • Commercial Demand Solar capacity ≥ 1,000 kW-ac 
    • Increase Value of Solar credit from 4.70 cents to 7.24 cents per kWh

Next Step: Public Review

The Austin City Council has designated an Impartial Hearing Examiner to review information from the electric utility, community stakeholders and customer groups. Through the review, the Impartial Hearing Examiner will assist the Austin City Council in establishing fair and balanced base rates through the impartial review of Austin Energy's recommendations and through the deliberate consideration of the perspectives and opinions of the utility's customers.

Specifically, the Impartial Hearing Examiner will:

  • Examine all issues and make a recommendation on Austin Energy’s base rate proposal.
  • Conduct open and fair proceedings.
  • Make recommendations to Council.

Review the Impartial Hearing Examiner (IHE) public review process

Visit the City Clerk’s website to view the official record of filed documents

Learn More

Date last reviewed or modified: 4/21/22

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