Item 14- Recommendation against increasing Austin Energy monthly Customer Charge — original pdf

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ELECTRIC UTILITY COMMISSION RECOMMENDATION 20250811-014 Date: August 11, 2025 Subject: Recommendation against increasing Austin Energy monthly Customer Charge Motioned By: Seconded By: Recommendation Recommendation against increasing the Austin Energy monthly Customer Charge for residential customers without a rate case Description of Recommendation to Council The Electric Utility Commission understands the need to increase rates to make up for a budget shortfall in FY 2026, but recommends that the monthly Customer Charge for residential customers remains at $15 per month until the conclusion of the next rate case. Any additional revenues that the Austin City Council believes are critical to collect from customers without the benefit of a full rate case should be levied from volumetric rates. This will preserve the important incentive to conserve energy and will protect lower-income customers who aren’t eligible for Customer Assistance Program (CAP) discounts from inequitable increases. Furthermore, the Austin City Council should consider scheduling Austin Energy rate cases more frequently than once every five years to better keep Austin Energy budgets aligned with costs. Rationale: The appropriate amount for the monthly Customer Charge for residential customers was a hotly contested issue in the last Austin Energy rate case, in 2022. Austin Energy proposed increasing the residential Customer Charge from $10 per month to $25 per month. The Independent Consumer Advocate and nearly all other parties to the rate case opposed this proposed increase on the grounds that it was inequitable and would reduce the incentive to conserve energy. Several Austin City Council members also raised similar concerns. As a result, the final decision approved by the Austin City Council was to phase in an increase to $15 per month over the course of three years. The remaining revenues were to be collected in the volumetric rates. As part of the proposed budget, Austin Energy is requesting a 5% increase in base rates in FY 2026, and also contemplating similar requests in future years of 5%. The FY 2026 budget proposal includes increasing the residential monthly Customer Charge from $15 per month to $16.50 per month and the fee would likely also be increased in future years. While the EUC recognizes the need for a base rate increase, we are concerned about a significant increase of five percent and specifically a significant increase in the residential monthly Customer Charge from $15 to $16.50 per month without going through a rate case. This is a significant change in rate design. Changes in rate design should be handled through a future rate case, not through the annual budget process. 1 of 2 Given that Austin Energy has requested increases to base rates as part of the budget process every year since the last rate case, it appears that scheduling rate cases at a more frequent interval than once every five years would be appropriate. Vote For: Against: Abstain: Absent: Attest: [Staff or board member can sign] 2 of 2