Suburban Austin Energy customers, including Four Points, to pay $1.5M in surcharges

By LYNETTE HAALAND, Four Points News

Suburban Austin Energy customers will have a surcharge added to their electric bills starting next month to pay off the $1.5 million legal costs that were incurred to challenge rate fairness for out-of-city customers.

Last year Homeowners United For Rate Fairness — a group spearheaded two years ago by Executive Director Mark Farrar, a Steiner Ranch resident — challenged AE’s rate increases. The City initially refused to give outside customers a discount but HURF alleged it was discriminatory. HURF challenged the rates with the Texas Public Utility Commission.


The settlement was approved in March and will provide about $5.75 million in discounts to the approximately 50,000 suburban customers who live outside the city but must purchase electricity through Austin Energy.

As of last week, however, it seems as though HURF and suburban AE customers are being penalized for this win.

On Sept. 10, the Austin city council adopted the city budget for the upcoming 2013-14 fiscal year. In a last-minute move, the Austin city council members increased the rates of suburban Austin Energy customers, making them pay for appealing the utility’s rates to the PUC.

AE’s attorneys told the council that $1.5 million was spent on lawyers and consultants to defend the utility’s rates before the commission. Without council action to the contrary, they said, the cost of the appeal would be spread across all AE customers inside and outside of the city, according to sources.

Council member Chris Riley said he thought it was unfair that in-city customers be forced to help pay for the appeal, since they didn’t protest AE’s rates. It would be more equitable,  he said, to allocate all of the cost to outside ratepayers.

Riley asked AE’s lawyer if it would be legally defensible to charge rate case expenses only to outside ratepayers, and he was told “yes.”  Riley moved to amend AE’s rate schedule to recover the rate case expenses from suburban customers by adding a surcharge to their bills.

Council members Laura Morrison and Sheryl Cole agreed that it would be “more fair” to in-city customers to shift the entire cost to out-of-city ratepayers.

Mayor Lee Leffingwell pointed out that the PUC appeal had been negotiated and settled in good faith by the city and outside ratepayers. Nothing in the settlement mentioned a surcharge, he said, “and now we want to tack this on.” Maybe it’s legal, he said, “but it’s not dealing in good faith–and that will be the perception we are creating here.”

Council members brushed aside Leffingwell’s objections, and approved Riley’s motion on a vote of 6-1, Farrar said.

“We believe the City of Austin has shown that it is incapable of dealing forthrightly and fairly with out-of-city ratepayers. We will ask the PUC to enforce its settlement. You can also be sure our state legislators will cite these bad  faith dealings as evidence to support legislation to end Austin Energy’s monopoly in the next legislative session,” Farrar said.

A monthly suburban surcharge of 57 cents per 1000 kWh is scheduled to be added to suburban customers’ bills for the next two years, beginning Oct. 1, 2013.

“That’s between $1 and $1.50 per month for most Four Points homeowners. It’s not a lot of money, but it’s the principle,” Farrar said.

HURF’s plan detailed in next week’s paper.