"Austin Energy is considering its first rate increase since 1994."
Kathie Tovo on Sunday, May 1st, 2011 in “Voters Guide,” League of Women Voters of the Austin Area.
Kathie Tovo says Austin Energy considering first rate bump since 1994
Answering a question for the May 1 "Voters Guide" from the League of Women Voters of the Austin Area, City Council hopeful Kathie Tovo made us check our pocketbooks. Tovo said: "Austin Energy," the city’s electric utility, " is considering its first rate increase since 1994."
We wondered about that, since our first thought was that surely electric bills went up during that time. Tovo’s campaign manager, Mark Yznaga, told us Tovo was referring to the utility’s base charge for electricity. News reports and posts on Austin Energy’s website show hearings are expected to culminate in the City Council considering a rate bump as soon as later this year.
The utility says in a January "Austin Energy Rate Review" newsletter that since 1994, it’s added more than 100,000 customers, experienced big increases in the cost of materials and services and added business functions while expanding others such as energy efficiency and solar rebate programs. At the same time, the article says growth in Austin Energy electric sales has trended downward of late, requiring the utility to dip into its reserves for operations.
Echoing the newsletter article, Austin Energy spokesman Ed Clark told us the base electric rate, covering the costs of staff, the electric system, power plants, vehicles and the like, has not changed since 1994. It’s 3.55 cents for each of the first 500 kilowatt-hours of electricity used and 7.82 cents for each additional kilowatt-hour. Clark said customers also pay an unchanged $6 monthly service charge,
Yet that doesn’t mean they’ve paid the same amount for electricity every year.
Their bills include such variables as a fee for statewide transmission costs added by the Texas Public Utility Commission in November plus a fluctuating fee tied to ups and downs in fuel costs. At our request, Clark told us what an average residential customer using 1,000 kilowatt-hours a month would have been billed each August from 1994 through 2011. For the period, we calculate, the fuel charge averaged 2.322 cents per kilowatt-hour, though it’s exceeded that every year from 2004 on.
In 1994, the bill for 1,000 kilowatt-hours would have been $79.14. In 2010, the bill for using that much electricity was $100.20 -- an increase of 27 percent. In August 2011, the same usage would be billed $94.72, due to a drop in the fuel charge. Put another way, the 2011 charge looks to be 20 percent more than what it cost a customer using the same amount of electricity in 1994.
A-ha! Is it really fair to say Austin Energy’s rates have not increased since 1994?
Well, we realized, our comparison failed to consider inflation over the years. According to our check using the Consumer Price Index inflation calculator posted online by the Bureau of Labor Statistics, the 2011 bill actually ends up about $15 less than the comparable 1994 bill. When we ran this by Austin economist Stuart Greenfield, he pointed out that according to a finer inflation adjustment tied to household energy prices, the average August 2010 bill was about $33 less than what it was in 1994.
At a glance, still, Tovo’s statement could leave the misimpression that utility customers haven’t had to dig out more dollars for electricity since 1994. They have. We rate the statement Mostly True.