Austin Energy increased its power supply adjustment rate by 5% four times in the past five months, meaning higher costs for consumers. The most recent increase hit electric bills on March 1.
The average consumer will pay about $171 more yearly, according to the city’s Taxpayer Impact Statement. Austin Energy spokesperson Matt Mitchell said doing business in the ERCOT market led to the cost increases. Austin Energy buys electricity on behalf of customers, and when energy is expensive — such as during hot summers — the PSA rate helps recuperate costs.
“We have to recover the funds that we’ve spent to buy that electricity, and we do that by adjusting the power supply adjustment,” Mitchell said.
The ‘customer charge,’ a flat fee Austin Energy charges all customers, also increased from $10 to $14 over the past year and will be $15 in 2025.
“We needed to make up ground,” Mitchell said. “It was eroding our finances because we were spending more than we were taking in.”
Austin Energy charges customers on a sliding tier scale depending on energy usage, Mitchell said. The increased PSA rates come on top of a shift in the structuring of usage tiers and increased prices per tier. Now, customers are charged more for using the same or less amount of energy than before.
Before March 2023, Austin Energy charged 2.8 cents per kWh for tier one customers who used under 500 kWh of energy per month. Now, tier one only accounts for usage under 300 kWh per month at 4.08 cents per kWh, according to Austin Energy’s website. As customers move up in tiers, the rate per kWh becomes more expensive.
But some energy customers are unhappy with the higher bills. Anthony Brooks, an electrical and computer engineering sophomore, said his electricity bill increased in the past couple months. Even after Brooks removed an unnecessary $14 monthly charge from his account, his bill remained about the same.
“I haven’t changed any of my habits,” Brooks said.
Brooks pays around $65 a month for his electric bill and avoids using air conditioning to conserve costs.
“Not using AC, I would have thought that my electric bill would have been a lot lower, but apparently not,” Brooks said.
Brooks has a fixed income based on a stipend he receives from the military.
“With that increase in price, I’ve been struggling to pay for rent and the electricity separately,” Brooks said. “Per month I am spending around $50 to $100 out of pocket.”
Mitchell said increasing rates is Austin Energy’s only option to recuperate costs.
“We are a public utility that works for and is beholden to our community, and the only way that we have to raise capital, to keep our bond rating secure, to keep financial stability is through rates to our customers,” Mitchell said. “Those rates reflect the realities of the energy markets.”
Mitchell said population growth in Texas has increased energy demand.
“Demand continue(s) to reach new all-time highs every summer and winter for Texas. When the demand is that high for energy, the energy costs more,” Mitchell said. “(Raising rates) really is the best mechanism we have to be respectful of the budgetary pressures of our customers and also maintain the financial health and stability of the utility.”
