Item 8- Texas Gas Service Overview — original pdf

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Austin Resource Management Commission Anthony Brown, Manager of Rates and Regulatory Bryan Weeks, Director of Engineering May 20, 2025 Natural Gas Serves Every Area of the Economy Source: Energy Information Administration, Monthly Energy Review, 2024 2 Third-largest Natural Gas Utility in Texas Committed to Texans • Serves 706,000 Texans • Available in 111 communities • Employs over 1,000 Texans • Economic impact of nearly $137M in 2024 • Charitable giving: $524,335 in 2024 We've delivered reliable, affordable natural gas to our customers since 1906 3 Cities in the Central-Gulf Service Area • Austin • Dripping Springs • Lakeway • Port Arthur • Bastrop Rural • Galveston • Lockhart • Port Neches • Bayou Vista • Georgetown • Luling • Rollingwood • Beaumont • Gonzales • Marble Falls • Shiner • Bee Cave • Groves • Mustang Ridge • Sunset Valley • Buda • Hutto • Nederland • Westlake Hills • Cedar Park • Jamaica Beach • Nixon • Yoakum • Cuero • Kyle • Pflugerville 4 Mission, Strategy and Core Values Mission – Why we exist We deliver natural gas for a better tomorrow Strategy – How we get there • Safe Operations • Capital Investments • Delivering Foundational Energy • Serving Customers • Engaged & High-performing Workforce Core Values – Our compass Safety: We are committed to operating safely and in an environmentally responsible manner. Ethics: We are accountable to the highest ethical standards and are committed to compliance. Inclusion & Diversity: We embrace an inclusive and diverse culture that encourages collaboration. Service: We provide exceptional service to our customers and support each other. Value: We create value for all stakeholders; our customers, employees, investor and communities. 5 Committed to Safety & Reliable Service • Work When Safe philosophy • Following guidelines set forth by state and federal agencies • Investing in damage prevention technology ▪ Line locating ▪ Leak detection • Reliable service ▪ No significant outages during Winter Storms Uri (2021), Elliott (2022), Mara (2023), Geri (2024) and Kingston (2025) despite frigid temperatures 6 Austin System Maps 7 Consumer Price Index (CPI) Inflation Rate 10.0 Austin, TX CPI Inflation Rate U.S. General Inflation Rate 8.0 6.0 4.0 2.0 0.0 2018 2019 2020 2021 2022 2023 2024 Source: U.S. Bureau of Labor Statistics 8 Labor Inflation Rate 10.0 U.S. Labor Inflation Rate Austin, TX Labor Inflation Rate 8.0 6.0 4.0 2.0 0.0 2018 2019 2020 2021 2022 2023 2024 Source: U.S. Bureau of Labor Statistics 9 Approved Central-Gulf Service Area Net Plant In Service and Rate Base $1,200,000,000 $1,000,000,000 $789,508,300 $883,321,900 $923,519,300 $700,298,800 $810,609,000 $1,000,645,700 $800,000,000 $543,598,500 $631,009,100 $600,000,000 $458,004,600 $546,915,800 $702,916,300 $613,663,900 $400,000,000 $200,000,000 $- 2020 2021 2022 2023 2024 2025 Net Plant In Service Total Rate Base 10 Central Gulf Service Area Customer Count 310,260 315,390 318,920 322,250 324,980 328,520 300,000 250,000 200,000 150,000 100,000 50,000 0 227,720 230,170 231,560 232,850 233,670 234,980 2019 2020 2021 2022 2023 2024 Central Gulf Service Area Austin Incorporated Customer Classes Represented: Residential, Commercial, Industrial, Public Authority, CNG 11 Small Residential Average Bill $50.00 $40.00 $30.00 $20.00 $10.00 $- Customer Charge Volumetric Charge Cost of Gas $5.38 $5.55 $7.49 $5.55 $13.47 $10.82 $5.55 $14.90 $8.47 $14.90 $18.37 $20.36 $22.85 $18.00 $21.36 $6.98 $5.55 $16.00 2020 2021 2022 2023 2024 2025 • The customer charge incrementally increased annually from 2020-2023 via GRIP filings. With the 2024 rate case settlement, this amount decreased for small residential customers and remains lower than the 2023 amount. • The volumetric charge only increased in 2024 following the rate case settlement. • The cost of gas is not set by Texas Gas Service, and customers are billed exactly what we pay (with no markup). 12 Large Residential Average Bill $100.00 $80.00 $60.00 $40.00 $20.00 $- Customer Charge Volumetric Charge Cost of Gas $17.82 $14.17 $16.00 2020 $13.74 $14.17 $18.37 2021 $19.13 $14.17 $20.36 $34.42 $14.17 $22.85 $27.64 $21.63 $20.30 $20.30 $30.00 $33.36 2022 2023 2024 2025 • The customer charge incrementally increased annually from 2020-2025 via GRIP filings and the 2024 rate case settlement. • The volumetric charge only increased in 2024 following the rate case settlement. • The cost of gas is not set by Texas Gas Service, and customers are billed exactly what we pay (with no markup). 13 Small Commercial Average Bill $160.00 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $- Customer Charge Volumetric Charge Cost of Gas $25.45 $7.86 $53.33 $19.62 $7.86 $63.37 $27.30 $7.86 $72.44 $49.14 $7.86 $83.92 $39.46 $17.32 $60.00 $30.88 $17.32 $72.88 2020 2021 2022 2023 2024 2025 • The customer charge incrementally increased annually from 2020-2023 via GRIP filings. With the 2024 rate case settlement, this amount decreased for small commercial customers and remains lower than the 2023 amount. • The volumetric charge only increased in 2024 following the rate case settlement. • The cost of gas is not set by Texas Gas Service, and customers are billed exactly what we pay (with no markup). 14 Large Commercial Average Bill $1,200.00 $1,000.00 $800.00 $600.00 $400.00 $200.00 $- Customer Charge Volumetric Charge Cost of Gas $396.46 $122.48 $53.33 2020 $305.64 $122.48 $63.37 2021 $425.43 $122.48 $72.44 2022 $765.56 $614.77 $122.48 $83.92 2023 $222.04 $75.00 2024 $481.07 $222.04 $87.88 2025 • The customer charge incrementally increased annually from 2020-2023 via GRIP filings. With the 2024 rate case settlement, this amount decreased for large commercial customers. • The volumetric charge only increased in 2024 following the rate case settlement. • The cost of gas is not set by Texas Gas Service, and customers are billed exactly what we pay (with no markup). 15 Industrial Average Bill $3,500.00 $3,000.00 $2,500.00 $2,000.00 $1,500.00 $1,000.00 $500.00 $- Customer Charge Volumetric Charge Cost of Gas $2,035.93 $326.44 $790.20 $1,131.39 $326.44 $623.37 $1,038.33 $303.76 $1,033.21 $1,326.91 $303.76 $571.38 2021 2022 2023 2024 2025 $1,054.34 $812.83 $326.44 $485.44 $326.44 $320.96 2020 • The customer charge incrementally increased annually from 2020-2023 via GRIP filings. With the 2024 rate case settlement, this amount decreased for industrial customers, then increased via the 2025 GRIP. • The volumetric charge only increased in 2024 following the rate case settlement. • The cost of gas is not set by Texas Gas Service, and customers are billed exactly what we pay (with no markup). 16 Public Authority Average Bill $600.00 $500.00 $400.00 $300.00 $200.00 $100.00 $- Customer Charge Volumetric Charge Cost of Gas $181.40 $139.85 $55.47 $81.70 2020 $55.47 $101.28 2021 $194.66 $55.47 $117.75 2022 $350.29 $311.20 $244.02 $55.47 $138.49 $67.33 $155.97 $67.33 $181.93 2023 2024 2025 • The customer charge incrementally increased annually from 2020-2025 via GRIP filings and the 2024 rate case settlement. • The volumetric charge only increased in 2024 following the rate case settlement. • The cost of gas is not set by Texas Gas Service, and customers are billed exactly what we pay (with no markup). 17 Contribution in Aid of Construction Requirements • The goal: Existing customers do not subsidize new customer main extensions. • CIAC (Contribution in Aid of Construction) is a payment from new customers to cover the cost of extending natural gas service when the project isn’t fully cost-justified by future revenue. • Texas Gas Service does not waive CIAC to compete for new customers. • Revenue from the project must cover its cost, so that existing customers don’t subsidize new service extensions. • Texas Gas Service limits investment to the equivalent of 10 years of projected revenue; any excess cost requires CIAC. • With Austin’s growth, many new developments generate enough revenue to justify the investment without needing CIAC. Texas Gas Service CIAC by Year 2020 2021 2022 2023 2024 $690,862 $339,647 $1,443,001 $1,940,905 $493,068 18 Customer Assistance Programs • Texas Gas Service has a long-standing partnership with Travis County Health and Human Services (HHS) to help customers with natural gas bills using Company funds. ▪ Travis County also manages and administers LIHEAP customer assistance funds. • In 2024, Texas Gas Service contributed $165,000 to the Share the Warmth program, with residential customers donating an additional $66,264. • Customers can apply for assistance at seven Travis County HHS locations or online. • Assistance is income-based, and an information-sharing agreement allows county staff to access account info for faster service. 19 Winter Storm Uri Cost Recovery • Without House Bill 1520, utilities would have had to immediately charge customers billions in unexpected Winter Storm Uri natural gas costs. • This would have created significant financial hardship for millions of customers. • HB 1520 allowed utilities to work with the Railroad Commission to finance those costs through bonds, spreading recovery over years instead of months. • The resulting Winter Storm Uri surcharge appears in the gas cost line item on bills. • The current Customer Rate Relief (CRR) charge is $0.118 per Ccf, effective as of September 2024. 20 2024 Central-Gulf Service Area Rate Case • Texas Gas Service filed a rate case in the CGSA on June 3, 2024. • The City of Austin, along with Texas Gas Service cities, cooperated with a coalition of similarly situated cities we serve to facilitate the review of the rate case. • Texas Gas Service Cities intervened in the RRC proceeding (Docket OS-24-00017471). • Texas Gas Service, RRC staff and Texas Gas Service Cities reached a settlement agreement that was approved by RRC Commissioners on November 19, 2024. • New rates were implemented in December 2024. 21 Upcoming Events • Hard Hat Day – June 6 and June 11, 2025 • Franchise Agreement – Expires October 16, 2026 • Future filings – GRIP and Pipeline Integrity Testing (“PIT” Rider) filing annually in February. • Future Rate Case – Texas Gas Service is required to file a rate case no later than November 2030. Texas Gas Service will provide 30 days written notice to our regulators prior to filing any future full rate case. • Energy Efficiency – Texas Gas Service will provide an update at the July RMC meeting. 22 Thank You Appendix Small & Large Residential Average Bills Small Residential Avg Bill Customer Charge Vol Charge (Ccf) Cost of Gas (Ccf) Avg Consumption (Ccf) Large Residential Avg Bill Customer Charge Vol Charge (Ccf) Cost of Gas (Ccf) Avg Consumption (Ccf) 2020 2021 2022 2023 2024 2025 $28.52 $16.00 $0.33000 $0.41041 17 $29.30 $18.37 $0.33000 $0.31640 17 $33.39 $20.36 $0.33000 $0.44040 17 $41.87 $22.85 $0.33000 $0.79250 17 $43.72 $18.00 $0.87646 $0.63641 17 $44.73 $21.36 $0.87646 $0.49800 17 2020 2021 2022 2023 2024 2025 $47.99 $16.00 $0.32626 $0.41041 43 $46.28 $18.37 $0.32626 $0.31640 43 $53.66 $20.36 $0.32626 $0.44040 43 $71.44 $22.85 $0.32626 $0.79250 43 $77.94 $30.00 $0.46737 $0.63641 43 $75.29 $33.36 $0.46737 $0.49800 43 The small and large residential customer class did not exist from 2020 to 2023. Bills for those years are calculated using actual residential rates and 2024 average consumption. 24 Appendix Small & Large Commercial Average Bills Small Commercial Avg Bill Customer Charge Vol Charge (Ccf) Cost of Gas (Ccf) Avg Consumption (Ccf) 2020 2021 2022 2023 2024 2025 $86.64 $53.33 $0.12679 $0.41041 62 $90.85 $63.37 $0.12679 $0.31640 62 $107.61 $72.44 $0.12679 $0.44040 62 $140.92 $83.92 $0.12679 $0.79250 62 $116.77 $60.00 $0.27930 $0.63641 62 $121.07 $72.88 $0.27930 $0.49800 62 Large Commercial Avg Bill Customer Charge Vol Charge (Ccf) Cost of Gas (Ccf) Avg Consumption (Ccf) 2020 2021 2022 2023 2024 2025 $572.27 $53.33 $0.12679 $0.41041 966 $491.49 $63.37 $0.12679 $0.31640 966 $620.35 $72.44 $0.12679 $0.44040 966 $971.95 $83.92 $0.12679 $0.79250 966 $911.81 $75.00 $0.22985 $0.63641 966 $790.98 $87.88 $0.22985 $0.49800 966 The small and large commercial customer class did not exist from 2020 to 2023. Bills for those years are calculated using actual residential rates and 2024 average consumption. 25 Appendix Public Authority & Industrial Average Bills Industrial Avg Bill Customer Charge Vol Charge (Ccf) Cost of Gas (Ccf) Avg Consumption (Ccf) 2020 $1,701.75 $320.96 $0.12707 $0.41040 2569 2021 $1,624.71 $485.44 $0.12707 $0.31640 2569 2022 $2,081.20 $623.37 $0.12707 $0.44040 2569 2023 $3,152.58 $790.20 $0.12707 $0.79250 2569 2024 $2,202.06 $571.38 $0.14569 $0.63640 2085 2025 $2,375.30 $1,033.21 $0.14569 $0.49800 2085 Public Authority Avg Bill Customer Charge Vol Charge (Ccf) Cost of Gas (Ccf) Avg Consumption (Ccf) 2020 2021 2022 2023 2024 2025 $318.57 $81.70 $0.12549 $0.41040 442 $296.60 $101.28 $0.12549 $0.31640 442 $367.87 $117.75 $0.12549 $0.44040 442 $544.24 $138.49 $0.12549 $0.79250 442 $535.27 $155.97 $0.13768 $0.63640 490 $493.41 $181.93 $0.13768 $0.49800 490 26