During a special called meeting Feb. 22, the Austin City Council voted to direct City Auditor Ken Mory to conduct a review of Austin Energy's revenue requirements and set a preliminary timetable for further work sessions to consider the utility's rate increase proposal.

Austin Energy said in September that a $131 million shortfall necessitated a 12.5 percent system-wide rate increase, which they modified in February to occur in two-phases in 2012 and 2014.

The utility also stated that if new rates are not in place by this summer, it will lose $77 million this year. In order for that to occur, City Council would have to take action in March.

Mory estimated that a revenue review could be done by the end of April.

Council then discussed a timetable of work sessions for further council consideration of the rate increase proposal, sparking debate among the members between a three-month timeline and a six-month timeline paired with an interim increase.

Mayor Pro Tem Sheryl Cole proposed a timeline with a total of seven council work sessions including the Feb. 22 special called meeting and one on May 24, when final action on a rate increase solution would be taken.

However, council members Laura Morrison, Katie Tovo and Mike Martinez instead suggested six months of work sessions coupled with a temporary increase beginning this summer to help the utility stop some of its financial bleeding.

"I believe a lot more work needs to be done," Martinez stated.

On Feb. 9, Morrison and Tovo presented an interim 3.5 percent system-wide rate increase beginning in June as an alternative measure.

Before taking a vote, council broke for executive session to discuss legal issues surrounding an interim increase. When they returned, Cole asked Austin Energy General Manager Larry Weis whether a 3.5 percent interim increase would be sufficient. Weis responded it would not be enough.

Council also discussed whether an interim increase could be appealed by the Public Utility Commission. City legal counsel advised a timetable on consideration of a final rate increase may help should that occur.

Tovo, Morrison and Martinez's timetable, which includes concluding work sessions by September, was eventually passed by all members—but with several changes made, including the removal of all dates and the removal of a temporary increase.

No action was taken on an interim increase. Council plans to discuss the possibility further at their regular scheduled meeting March 1.

Prior to council's timetable discussion, several witnesses spoke in favor of council taking a minimum of six months to examine the issue and enacting an interim increase by this summer, including Cyrus Reed, conservation director of the Lone Star Chapter of the Sierra Club, and Tom "Smitty" Smith, director of Public Citizen's Texas Office.

"This is an extremely complex deal," Smith said.

A public hearing on the rate increase will be held on March 1 at 6 p.m. at City Hall, 301 W. Second St.