A Shocking Proposal

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In December, Austin Energy, the city-owned utility company, proposed increasing electricity rates by 12 percent. Austin City Council’s consideration of the proposal is ongoing, but the plan is drawing increasing scrutiny because the rate increase would disproportionately affect low-usage residents.

Residents of large homes may see an increase of about 17 percent while UT students who rent small apartments could be saddled with a rate increase as high as 41 percent, according to Austin Energy’s estimates. The company’s proposal would increase the monthly base fee from $6 to $22 and would bring Austin Energy $136 million per year in additional A sannual revenue.

Austin Energy needs to raise its rates because its operating expenses are outpacing its revenue, but the proposal fails to consider the impact on city residents. If approved, it could take effect as early as this summer. Rather than implement a drastic increase, the city should gradually increase rates to help residents adjust to the change and to reduce the impact, as Mayor Lee Leffingwell and other city leaders have suggested.

Additionally, the company is unfairly relying more heavily on residents than commercial entities to cover increasing costs. Historically, commercial tenants paid higher energy rates than residential ones. Austin Energy posits its proposal will correct a decades-long imbalance. But Mayor Leffingwell cried foul: “We shouldn’t now put our financial house in order disproportionately on the backs of homeowners and renters.”

Austin Energy’s proposal was ill-delivered. The company should reevaluate its proposal to ensure the increases do not unequally impact low-income and low-usage residents.