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Austin Energy’s Proposed Flat Rates Worry Low-Income Advocates

Aug. 12, 2016—Beginning in January of this year, Austin’s city-owned utility, Austin Energy, has had its proposed commercial and residential rate changes under review. The City Council supplied an impartial hearing examiner and formed the Austin Energy Oversight Committee to oversee the rate case. Since that time, several interest groups have spoken up against the proposed rates in public hearings, including during one held this month.

Of particular concern to low-income advocates is the proposal to set a fixed rate for residential users that would penalize those who use the least amount of energy. The proposed flat rate would benefit households that generally use more electricity, but for those struggling to make ends meet by reducing their energy usage in an effort to save money, the flat rate is potentially harmful.

Already during this rate case, advocacy groups such as Public Citizen and Sierra Club have argued that low-income households have high home energy burdens, a claim supported by numerous studies. According to one industry-backed study, titled Energy Cost Impacts on American Families, households that earn less than $50,000 a year pay 23 percent of their annual income on home heating and cooling costs. That is considerably more than those who make more than $50,000, who only pay 7 percent of their annual income on home heating and/or cooling bills. According to this study, 48 percent of American families fall into that less than $50,000 a year category.

In Austin’s Travis County alone, according to the most recent Home Energy Affordability Gap report by low-income advocate Roger Colton, there are over 111,000 households whose income falls below 150 percent of the federal poverty line (FPL). In Texas, to qualify for LIHEAP, the household must fall below that 150 percent line. Austin Energy defends its proposed rate plan, stating that the households that are in the lowest tiers of usage don’t actually pay for the cost of generating or supplying that energy to their homes. It also claims that many low-income households are actually in higher tiers during the majority of the year, so the flat rate wouldn’t be that great of a hike.

The Committee is expected to make its decision by the end of August. Any rate changes approved by the Austin City Council are expected to start in January 2017.

Sources: Media Sources, Austin City Council, Austin Energy