Amid outcry, Austin Energy works to offer compromise on rate hikes

Biedrzycki said the monthly rates are too high, and too much cost is shifted from industrial customers to residential customers, which is especially difficult for those on fixed incomes. She and several others questioned whether Austin Energy truly needs the amount of money the company has cited.

Numerous representatives from various faiths also expressed concern the proposal favors industrial and commercial users. Under the proposal, houses of worship would not be charged the reduced "sanctuary rate" but would be considered residential or commercial users.

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

AE's modifications to this plan were presented to council Feb. 2. The proposal outlined four main changes, including phasing in the 12.5 percent rate increase in two steps. The first phase would mean an 8.7 percent increase in 2012 and a 3.8 percent increase in 2014.

The utility stated that if the proposed increases are not in place by summer, it will lose $77 million this year. To have the rates solidified by summer, City Council would need to take action in March.

While the residential monthly fixed fee set in the original proposal would remain at $22, the first 200 kilowatt-hours would be included. AE would also remove delivery and demand charges for small businesses and some small worship centers, which would have a time-of-use fee option.

Although it was an attempt to resolve concerns, members of City Council still took issue with the modifications. Mayor Lee Leffingwell questioned whether members would be prepared enough to vote in March on a proposal that is so complex.

On Feb. 9, councilwomen Laura Morrison and Kathie Tovo proposed an interim 3.5 percent system-wide rate increase as an alternative measure that would begin in June and expire after one year.

"We've heard from the community loud and clear that the Austin Energy rate proposal will have too much impact on ratepayers, especially our families, our small businesses and our faith community, all of whom would experience very high rate increases," Morrison said. "It's important to keep Austin an affordable city to live in, especially in these difficult economic times."

According to Tovo, if approved, the interim solution would go into effect in June and remain in place for approximately one year. Tovo expressed a commitment to the financial health of Austin Energy, but the rate structure must be balanced with affordability.

Tovo said the 3.5 percent increase would help with the utility's financial bleeding while allowing time for the council to help craft a more equitable plan.

The plan has support from TROSE and several other public advocacy groups. At a public hearing Feb. 9, members of the public seemed to also be more comfortable with the temporary increase.

Tovo and Morrison have hit the pause button, and we support that proposal," said Tom Smith, director of Public Citizen's Texas Office, a consumer and environmental advocacy group.

Smith recommended City Council take the extra time to get help from outside sources on drafting a new plan.

AE spokesman Ed Clark said what they presented was substantially more as far as the rate increase, but it is now up to the City Council to decide.

Now, we just simply need a rate increase," Clark said.

Clark also said he was confident that the utility would receive some sort of direction from council in the next couple weeks, and that AE would be ready to act on it.

At a special called meeting Feb. 22, council directed the city auditor to conduct a review of AE's revenue requirements with completion of the review targeted for late April. Council also began debate on an interim increase, but further discussion is set for its regular meeting March 1.

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