BOARD/COMMISSION RECOMMENDATION Resource Management Commission Recommendation No. 20260120-002 Recommendation on Texas Gas Service Franchise Introduction The City of Austin (The City) has a 20-year franchise agreement with Texas Gas Service (TGS), which is the company’s license to operate in the city limits. That franchise agreement expires in October of 2026. The renewal of the franchise is a once-in-a-generation opportunity to correct or reform longstanding problems that include high rates, high fuel costs, poorly designed rate structures, poorly performing energy conservation programs, scant funding to assist low-income ratepayers, and lack of progress in shrinking the company’s carbon footprint. 1.0 Selection of Company and Term of Franchise WHEREAS, Texas Gas Service, the fifth consecutive owner of the main private gas utility that has provided service in the city limits of Austin since the 1870s, has never participated in a competitive process to determine if the company offers ratepayers adequate or better service; and WHEREAS, the current term of the franchise is 20 years (a 10-year initial period with a subsequent 10- year automatic renewal with minimal conditions), is too long a time period to lapse without a revised regulatory agreement; and 1.1 High and Inequitable Rates WHEREAS, Texas Gas Service (TGS) residential gas rates have gone up about 108% between 2019 and 2025, which is 79% above inflation; and WHEREAS, Texas Gas Service has proposed three rate increases since 2024; and WHEREAS, these rate increases are largely driven by the cost of capital expansion or improvements of the system, and no city or state regulator has the ability to prevent these expenditures prior to their occurrence; and WHEREAS, TGS does not collect full payment for new infrastructure (known as Contribution in Aid of Construction or Capital Recovery Fees) required for new customers, thus subsidizing new customers while increasing gas bills of existing customers; and WHEREAS, when Austin Energy and Austin Water implemented full capital recovery fees, they experienced rate decreases; and WHEREAS, Austin’s municipal utilities have progressive tiered rates that charge less per unit for less usage, while Texas Gas Service has historically maintained a regressive flat rate, which discourages conservation and adversely affects lower-income ratepayers who typically consume less energy; and 1.2 Low-Income Assistance WHEREAS, TGS currently has no customer assistance program that reduces monthly gas bills for low- income customers; and WHEREAS, TGS only provides minimal funding for emergency bill payments for low-income customers; and WHEREAS, in contrast, Austin Energy …
PROPOSED AMENDMENTS Resource Management Commission 20260120-02 Recommendation on Texas Gas Service Franchise Introduction The City of Austin (The City) has a 20-year franchise agreement with Texas Gas Service (TGS), which is the company’s license to operate in the city limits. That franchise agreement expires in October of 2026. The renewal of the franchise is a once-in-a-generation opportunity to correct or reform longstanding problems that include high rates, high fuel costs, poorly designed rate structures, poorly performing energy conservation programs, scant funding to assist low-income ratepayers, and lack of progress in shrinking the company’s carbon footprint with the company. 1.0 Selection of Company and Term of Franchise WHEREAS, Texas Gas Service, the fifth consecutive owner of the main private gas utility that has provided service in the city limits of Austin since the 1870s, has never participated in a competitive process to determine if the company offers ratepayers adequate or better service; and WHEREAS, the current term of the franchise is 20 years (a 10-year initial period with a subsequent 10-year automatic renewal with minimal conditions), is too long a time period to lapse without a revised regulatory agreement; and 1.1 High and Inequitable Rates WHEREAS, Texas Gas Service (TGS) residential gas rates have gone up about 132% 108% between 2016 2019 and 2025, which is 96 79% above inflation; and WHEREAS, Texas Gas Service has proposed three rate increases since 2024; and WHEREAS, these rate increases are largely driven by the cost of capital expansion or improvements of the system, and no city or state regulator has the ability to prevent these expenditures prior to their occurrence; and WHEREAS, TGS does not collect full payment for new infrastructure (known as Contribution in Aid of Construction or Capital Recovery Fees) required for new customers, thus subsidizing new customers while increasing gas bills of existing customers; and WHEREAS, when Austin Energy and Austin Water implemented full capital recovery fees, they experienced rate decreases; and WHEREAS, the recent combination of TGS Central Texas and Gulf Coast regions for purposes of ratemaking has raised Austin’s bills while lowering bills in the Coastal region; and 1.2 Rate Structure (Conservation-Based Rates that Also Help Low-Income Customers) WHEREAS, Austin’s municipal utilities have progressive tiered rates that charge less per unit for less usage, while Texas Gas Service has historically maintained a regressive flat rate, which discourages conservation and adversely affects lower-income ratepayers who typically consume less energy; …
Austin Energy Residential Rate Hike Resource Management Commission Paul Robbins • January 20, 2026 Lower-Income Customers Use Less Energy From: Residential Energy Consumption Survey 2020 for Southern U.S. U.S. Energy Information Administration Austin Energy Residential Rates Increased 29% Between 2022 and 2026 The Majority of Residential Customers In Every Council District Have Above-Average Rate Increases Council Can Retroactively Change Rates Make X5% Applicable to Monthly Charge and All Tiers
RESOURCE MANAGEMENT COMMISSION MEETING MINUTES Tuesday, January 20, 2026 RESOURCE MANAGEMENT COMMISSION REGULAR CALLED MEETING MINUTES Tuesday, January 20, 2026 The Resource Management Commission convened in a Regular Called meeting on Tuesday, January 20, 2026, at Austin Energy Headquarters 4815 Mueller Blvd, Austin, TX 78723. Chair Charlotte Davis called the Resource Management Commission meeting to order at 6:04 p.m. Board Members/Commissioners in Attendance: Commissioner Charlotte Davis, Chair; Commissioner Paul Robbins, Vice Chair; Commissioner Kamil Cook; Commissioner Trey Farmer; Commissioner Harry Kennard; Commissioner Martin Luecke; Commissioner Raphael Schwartz; Commissioner Alison Silverstein. Board Members/Commissioners Commissioner Danielle Zigon. in Attendance Remotely: Commissioner GeNell Gary; Commissioners Absent: Commissioner Joseph Gerland PUBLIC COMMUNICATION: General- • Al Braden- Texas Gas Service franchise • Craig Naizer- Texas Gas Service franchise • Shane Johnson- Texas Gas Service franchise • Kaiba White- Texas Gas Service franchise APPROVAL OF MINUTES 1. Approve the minutes of the Resource Management Commission Meeting on November 18, 2025. The motion approving the minutes of the Resource Management Commission regular called meeting of November 18, 2025 was approved on Commissioner Silverstein’s motion, Commissioner Kennard’s second on a 10-0 vote, with Commissioner Gerland absent. DISCUSSION AND ACTION ITEMS 2. Discussion and recommend a policy for the Texas Gas Service franchise negotiations. The motion approving a policy for the Texas Gas Service franchise negotiations was approved on Vice Chair Robbin’s motion, Commissioner Silverstein’s second on a 10-0 vote, with Commissioner Gerland absent. DISCUSSION 3. Discussion on residential electric rates implemented by Austin Energy and its effects on energy conservation and equity. RESOURCE MANAGEMENT COMMISSION MEETING MINUTES Tuesday, January 20, 2026 The commission discussed the residential electric rates implemented by Austin Energy and its effects on energy conservation and equity. This item was tabled to February’s meeting. FUTURE AGENDA ITEMS • Discussion on residential electric rates implemented by Austin Energy and its effects on energy conservation and equity. (Sponsors: Robbins and Davis) • Recommendation on the time of use of rates and demand response (Sponsors: Farmer and Davis) • District Energy Cooling Recommendations and Plans - Silverstein • Briefing on the Community benefit charge and power supply adjustment- Luecke ADJOURNMENT The meeting was adjourned at 8:16 p.m. The meeting minutes were approved at the February 17, 2026 meeting on Vice Chair Robbins motion, Commissioner Silverstein’s second on an 8-0 vote, with Commissioners Gary, Gerland, and Zigon absent.
