Updated Aug. 31 at 11:40 a.m. to reflect that Austin Energy has yet to determine the budget cuts it will make in light of the $42.5 million revenue reduction. The average electric utility customer will see a decrease in their annual bill, according to new Austin Energy rates adopted today. The new rates take effect Jan. 1. Austin City Council approved restructuring the rates and fees for Austin Energy, the city-owned utility provider, following a seven-month-long public rate review process. An initial proposal that came before council on Thursday would have increased the annual bill of the average customer in Tier 1, the lowest electric usage level. Council asked staffers to return with a new option, one that would give Tier 1 users more relief and users in Tiers 4 and 5 smaller decreases. "I was [really] pleased Austin Energy was able to figure out a way—with prodding from the council—to come up with a rate schedule that lowered rates for everyone but puts us and moves us forward on the rate stabilization that Austin Energy wanted," Mayor Steve Adler said after the unanimous vote. Austin Energy is reducing its revenue by $42.5 million to alter its rate structure. In order to make up for the revenue decrease, Austin Energy will have to cut from operating and/or capital expenditures. It remains unclear what those cuts will be, said Carlos Cordova, a spokesperson for the utility. A 1.9 percent decrease in the residential base rate lowers the number of customers that could see bill increases but relies more on revenue from higher-tiered customers who use more electricity. In January the city of Austin initiated a public process to examine Austin Energy’s rates. Citizen groups and local entities intervened in the case to contest the utility’s proposed revamp of rates and fees. Among the intervenors were environmental groups Public Citizen and the Sierra Club, which announced a settlement Thursday with Austin Energy to accept the new rate schedule and address the organizations’ concerns. Public Citizen and the Sierra Club championed at a press conference Thursday what they believe are key concessions resulting from the rate case. These include decommissioning by 2022 the Austin Energy- and Lower Colorado River Authority-owned coal-fired power plant in Fayette County, agreeing to ensure solar and energy efficiency programs are sufficiently funded, developing policies for compensating commercial solar owners, and meeting these environmental objectives while keeping residential electricity rates affordable. Expected savings The average residential customer in each usage level, or tier, is expected to save the following amount over a year on their electricity bills: Tier 1 (460 kilowatt hours): $4.12 Tier 2 (960 kilowatt hours): $34.52 Tier 3 (1,471 kilowatt hours): $69.30 Tier 4 (2,459 kilowatt hours): $50.77 Tier 5 (3,451 kilowatt hours): $9.69