Austin Utilities Board approves rate changes for 2023

Published 9:00 am Wednesday, December 28, 2022

The Austin Utilities Board of Commissioners has approved the 2023 Austin Utilities budget and related rate adjustments at the December board meeting, including hikes across all arms of its services.  

According to a press release issued Wednesday morning, AU is not making changes to the natural gas rate but will use a Purchased Gas Adjustment mechanism (PGA) to address gas increases on a month-by-month basis, resulting in anticipated increases of  9-12%. Average households will see a bill increase of between $4.25-$14.38 per month, while small to mid-sized business customers can expect monthly increases of $16 to $639.38 depending on the size of their meter and usage.

According to the release, an anticipated increase of 35-45% for gas transportation along with commodity costs ranging 30-35% higher are driving increases. These increases are having a sizable impact on energy costs across the country. 

“Our team is constantly looking for ways to manage these costs, however, the cost of the actual commodity we purchase to deliver to customers is very volatile,” said General Manager Mark Nibauer. “Increases in natural gas are impacting our rates as more energy is generated using natural gas as coal power plants are decommissioned.”

To minimize the impact of natural gas commodity price spikes to customers, Austin Utilities will use several tools:

  •         A Natural Gas Hedge program that locks in cost for 65-75% of our anticipated usage.
  •         Two pre-pay gas transactions that discount the cost of natural gas.
  •         A plan to increase winter hedge by up to 90% on a month-by-month basis to avoid volatility.
  •         A Propane Air Plant that can displace natural gas load and avoid purchasing high-priced gas.
  •         A commercial gas interruptible program in which customers switch to an alternate fuel.
  •         Peak Gas Alerts to warn customers when costs are high, and conservation should be practiced.

Meanwhile, electric rates will see a 7% increase across all rate classes. 

The average residential customer will see an increase of $5.05 per month and small to mid-sized business customers can expect to see monthly increases in the range of $9.69 to $172.80 depending on the size of their meter and usage. 

About 85% of Austin Utilities’ current customers are residential. A 15.6% increase in energy costs from our wholesale electric provider, caused by the high cost of natural gas to produce power, is driving electric rate increases. The cost to purchase wholesale power is 75% of the electric operating budget. According to the release, AU will continue to work with its electric provider to manage high market costs.

Water rates will increase by 9% for all customer classes. The average residential water customer will see a bill increase of $3.06 per month. Small to mid-sized business customers can expect to see monthly water increases in the range of $6.61 to $47.32 depending on the size of their meter and usage. Higher costs to pump water and increased costs of materials are behind water rate increases.

 Portions of the bill related to sewer charges and storm water fees are controlled and administered by the City of Austin. Changes to these costs are not reported by Austin Utilities.

In August of this year, the City Council approved a 15% sewer increase for 2023, the first of four hikes to take place through 2026 to help generate revenue for the Wastewater Treatment Plant renovation.