Austin Energy Rate Update – November 2022

Oct 14, 2022 | Utility Rates

As you may know, Austin Energy (AE) is about to increase the cost of electricity in the City of Austin. There is some good news, it is however mostly bad news.
First a little bit of background. Electric generation fuel cost for all utilities in the USA have increased significantly the past 12-18 months. In particular, natural gas prices have increased 222% since 2020 as can be seen in this table (2022 average price is for first 9 months of 2022):

As natural gas comprises some 35% of AE’s fuel mix, some cost increase was expected. Not expected, was the bombshell of a letter sent by AE to the City of Austin on 9-21-2022, where AE requested a 71% increase in the Power Supply Adjust charge (AKA Fuel Cost) effective 5 weeks later!!  The proposed 71% increase, or some 2 cents per kWh, would have meant ADDITIONAL energy cost for AE customers (commercial and residential) of almost $300,000,000.It is clear that Austin Energy does not control the commodity markets, and as such a rate increase was inevitable. Better and more timely communication, however, from AE would have lessen the impact for its customers.

Short list of good news:

  • City Council rejected the 71% PSA cost increase and instead have authorized a “phased in approach” over the next 3 years.
Long list of bad news:
  • City Council approved an increase of the Power Supply Adjustment (PSA) of 52%
  • The PSA increase is effective with the November invoices (Yes, in 16 days)
  • More AE rate increases likely in January
  • Blue Ocean estimates the PSA increase alone will add 13% – 15% to energy costs in 2023 for commercial customers
  • 2023 Building/Property Budgets likely will have to be redone

The new rates impact on your facility(ies) will vary as peak demand and kWh changes from month to month.  If you are already a client (thank you!), Blue Ocean will be monitoring your rates and providing more detailed information.

Again, the best approach to mitigate rising energy cost continues to be Pro-active Energy Management Strategies.