FAQs

2022 Base Rates Review - Frequently Asked Questions

We will continue to add answers to FAQs during the course of the 2022 base rate review process. Please check back for future updates.

What is a base rate review?

A base rate review is how Austin Energy changes rates that cover the costs involved in providing electricity. Austin Energy policy requires regular financial review to accurately recover costs and reflect community priorities. If needed, Austin Energy begins a base rate review to fix any issues in cost recovery. The review is open, transparent and includes public participation.

Watch this video to learn about Austin Energy’s base rate review

Ver video en español: Revisión de la tarifa base de Austin Energy (video)

Why does Austin Energy need a base rate review?

Austin Energy completed a cost-of-service study that looked at Fiscal Year 2021 financial data on the costs of providing electric service. This study found a growing gap between revenues and costs, which means Austin Energy's current base rates and rates structures are not meeting the costs of serving the community. This imbalance needs to be corrected.

Balancing revenues and costs will ensure Austin Energy’s financial stability, allowing the utility to safely continue delivering affordable, reliable electric service to the community.

Key base rate review drivers include:

  • An outdated residential base rate structure, which does not accurately reflect customer costs
  • Higher operation and maintenance costs
  • Continued customer growth, which requires infrastructure additions and improvements
  • Lagging energy sales, compared to customer growth
  • Grid reliability

What is Austin Energy proposing?

Based on the completed cost-of-service study, Austin Energy needs a $48 million base revenue increase. That is a 7.6% increase to overall base rates.

Visit 2022 Base Rate Recommendations to get details on the proposed changes

Based on Austin Energy's proposal, what will change on a residential bill?

Based on the proposal, Austin Energy residential customers will see:

  • An increase in the Customer Charge, from $10 to $25.
    • This change helps Austin Energy recover costs to serve our growing customer base without relying so heavily on power consumption.
  • A reduction in the number of residential tiers, from five to three.
    • Reducing the number of tiers will simplify rates and better align Austin Energy’s revenue recovery with the cost of serving its customers. The proposed tiers are:
      • Tier 1 (0-300 kWh) — 3.8 cents
      • Tier 2 (301-1,200 kWh) — 4.3 cents
      • Tier 3 (1,201+ kWh) — 4.8 cents
  • Outside- and inside-City of Austin residential customers together in the new tiers and rates.

A residential customer with typical use of 860 kWh would see an increase of $15.56 to their electric bill. Actual bill impacts depend on use and will vary from customer to customer.

Visit 2022 Base Rate Recommendations to find all Austin Energy proposed base rate changes

Download 2022 Base Rate Review Community Meeting Presentation for Residential Customers (pdf)

Based on Austin Energy's proposal, what will change on a business bill?

Based on the proposal, bill impacts for business customers will depend on their business customer category (small business, large industrial customer, etc.).

Some changes include:

  • In general, increasing Customer Charges to better recover fixed costs and enhance Austin Energy’s financial stability.
  • Combining Electric Delivery and Demand Charges where applicable to simplify billing and adjusting that rate to match cost trends.
  • Eliminating the adjustment for low load factor customers to bring customers closer to what it costs to serve them.

Visit 2022 Base Rate Recommendations to find all Austin Energy proposed base rate changes

Download 2022 Base Rate Review Community Meeting Presentation for Business Customers (pdf)

How will this impact bills for customers in the Customer Assistance Program?

Many residential customers enrolled in the Customer Assistance Program could see a decrease in their electric bill because of the base rate proposal, though some may see a small increase. Actual bill impacts will depend on use and vary from customer to customer.

Does Austin Energy follow guiding principles for the base rate review process?

Yes. Austin Energy is following an open and transparent process with the following guiding principles:

  • Establish equitable and fair rates that support Austin Energy’s financial stability
  • Ensure stable bills and simple rates
  • Protect vulnerable customers
  • Preserve energy efficiency and conservation

What does the 2022 base rate review look like and what is included?

On Monday, April 18, Austin Energy proposed base rate changes and launched a public and transparent base rate review process. The base rate review includes only those costs that make up Austin Energy’s base rates, such as financial obligations and utility operation and maintenance expenses. It does not include a review of pass-through expenses such as power supply costs; regulatory costs, which help operate the statewide transmission system; or energy efficiency costs.

The base rate review process includes a review of Austin Energy’s base rate proposal by an Impartial Hearing Examiner. The Impartial Hearing Examiner will review Austin Energy’s base rate change proposal, listen to all issues and positions from participants and make a recommendation on Austin Energy’s base rate proposal to Austin City Council.

As part of the process, an Independent Consumer Advocate, who has specialized knowledge and expertise in utility rates, will represent the interests and priorities of residential and small business customers.

Does Austin Energy offer incentives for solar energy?

Yes. Austin Energy offers a rebate to help reduce the upfront costs of installing a solar energy system at home and offers incentives for businesses as well.

 

How will the base rate review impact the Value of Solar?

As part of this base rate review, Austin Energy is proposing changes to the Value of Solar (VoS) rate, which is the rate at which Austin Energy credits solar customers for the energy produced at their homes and businesses. A recent study found that updates are needed for the VoS components to better align with current costs.

Proposed changes include:

  • Updating the societal benefits calculation to reflect the positive impacts of solar generation in Texas.
  • Changing the funding source for societal benefits from Power Supply Adjustment to Community Benefits Charge to clarify how customer charges support clean energy.
  • Updating 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
    • Increasing Value of Solar credit from 9.70 cents to 9.91 cents per kWh
  • Commercial Demand Solar capacity < 1,000 kW-ac
    • Increasing Value of Solar credit from 6.70 cents to 9.91 cents per kWh
  • Commercial Demand Solar capacity ≥ 1,000 kW-ac
    • Increasing Value of Solar credit from 4.70 cents to 7.24 cents per kWh

Visit 2022 Base Rate Recommendations to find all Austin Energy proposed base rate changes

How is Austin City Council involved?

Austin Energy is a municipal electric utility owned by the City of Austin. The Austin City Council serves as the utility’s governing body. That means the Austin City Council will ultimately set new base rates for Austin Energy after considering Austin Energy’s final proposal, the Impartial Hearing Examiner’s recommendation and any possible agreement that could come from the discussions.

When would changes to the base rates show up on a residential customer bill?

Approved changes would affect electric bills starting in 2023.

How can Austin Energy customers get involved in the process?

Public involvement is essential. You can find online and in-person community meetings to attend and ways to make your voice heard.

Language interpretation services will be available at the community meetings. Please register to identify your language interpretation needs.

For accessible versions of the meeting schedule:

To take part in the formal Impartial Hearing Examiner process as a Participant, you must:

Requests to Participate must be submitted between Monday, April 18 and Wednesday, May 18.

Formal participants may receive Requests for Information from other Participants or Austin Energy. They will need to respond according to the 2022 Austin Energy Base Rate Review Procedural Guidelines (pdf). Participants should regularly check the City Clerk’s website for new filings

Can a customer take public transportation to attend an in-person community meeting?

Yes. All in-person community meetings are scheduled near public transit stops.

What are the key dates for the base rate review process?

Austin Energy 2022 Base Rate Review Timeline

  • April 18 — Austin Energy published base rate proposal; start of base rate review process
  • Mid-April - Mid-May — Community meetings
  • April 18 - September 15 — Formal process, including discovery, briefing, participant presentations and Impartial Hearing Examiner recommendation
  • Late October - November — Electric Utility Commission meeting; City Council meetings; final City Council action
  • January 2023 — Base rate implementation

Did Austin Energy consider affordability when recommending these changes?

Yes. Austin Energy carefully considered its base rate proposal, looking at the changes with affordability and fairness in mind. Electric costs represent about half of the charges on a typical City of Austin Utilities bill, and base rate costs make up about half of that electric portion. With these proposed changes, the utility worked hard to reduce the burden of electric costs on customers while planning for the utility’s financial stability.

What if a customer needs help paying utility bills and is concerned about how the base rate review could affect their bill?

Austin Energy believes the base rate review process will establish more equitable rates. Through policies, programs and public involvement, the impact of electric bills can be reduced for customers while the utility meets its financial policies and continues to provide a significant benefit to those it serves.

For those who may be struggling to pay utility bills, the City of Austin Customer Assistance Programs (CAP) can help. CAP helps qualifying residents through various programs, providing discounts on City utility services including electric service, specialized case management, home weatherization and education classes, among other support services.

Customers can find more information about CAP programs and services as well as utility billing options at City of Austin Utilities.

What kind of actions can customers take to lower energy bills?

Customers have lots of ways to lower energy bills.

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Date last reviewed or modified: 5/13/22

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