The debate on a proposed rate increase for Austin Energy customers has come to Lakeway.

On April 14, the Austin and Lakeway city councils held a joint hearing on the proposed rate increase at Lakeway City Hall. The hearing was part of an effort to include the approximately 450,000 Austin energy customers outside of Austin involved in the conversation about the proposed rate hike, Austin Mayor Pro Tem Sheryl Cole said.

There are about 2,100 Lakeway residents and 640 commercial businesses served by Austin Energy, according to the City of Austin.

"I thought it was very productive," Councilman Alan Tye said of the meeting.

After 17 years of a stagnant base rate, Austin Energy (AE) said in September that a $131 million shortfall necessitated a rate hike. Lakeway residents and city leaders who spoke at the April joint hearing questioned raising rates on customers who live outside Austin at the same level as customers inside Austin.

AE is a city-owned utility, and a portion of a rate increase would go back to the City of Austin general fund.

"It is essentially paying part of the City of Austin's budget for which we have no benefit," Tye said of the proposed rate increase.

State Rep. Paul Workman, R-Austin, in January testified on behalf of residents who live outside of city limits but are still within Austin Energy's coverage area. He urged that customers outside Austin pay less.

Multiple proposals

Members of the Austin City Council are scheduled to vote on the Austin Energy rate increase May 24. There have been multiple rate hike proposals debated by city leaders.

The AE original plan would have implemented a 12.5 percent system-wide rate increase. The system-wide increase was met with significant resistance from city leaders and the public.

Austin Energy's modifications to the plan were presented to council in February.

But outcry from the Austin City Council, members of the public and advocacy groups curbed the hikes and sent AE back to the drawing board.

In March, Austin City Council considered an alternative 3.5 percent system-wide increase.

However, AE General Manager Larry Weis said a 3.5 percent, one-year interim increase beginning in June would not be sufficient, resulting in a $78 million shortfall by June 2013.

He said the utility prefers no interim increase and for council to instead focus on working on a final rate plan.