Austin Energy is a municipal-owned utility company, and as such, ratepayers are not allowed to search for better deals. This is what critics call a government monopoly, and although citizens have recourse - taking their rate concerns to the city council - that entity is incentivized to maximize their profits with the utility. 

When it comes to Austin Energy, data about the utility’s wholesale operations is less easily found. This makes it harder for residents to determine whether the utility is running as it should and whether their charges are out of line or adequate for the area and service provided. Critics have complained about a lack of transparency and accused Austin Energy of selling wholesale energy at a loss, which is then subsidized by other ratepayers. 

When Austin residents open their bill from Austin Energy each month, they see their energy charges, but there are also a variety of other charges that boost the total. Austin Energy says they have some of the lowest rates in the state, but how do those extra charges stack up for customers?

First, a breakdown of the rate structure.

There are five tiers based on how much energy a consumer uses each month. These charges vary, from 2.801 cents per kilowatt hour (kwh) for those who use up to 500 kwh a month, to 10.814 cents per kwh for those who use more than 2,500 kwh per month. Most residential customers fall into Tier 2, using an average of 860 kwh a month, according to Austin Energy.

The tier pricing is as follows, per kilowatt hour.:

• Tier 1 (up to 500 kwh): 2.801 cents 
• Tier 2: (up to 1000 kwh): 5.832 cents 
• Tier 3: (1001–1500 kwh): 7.184 cents
• Tier 4: (1500 to 2500 kwh): 9.314 cents
• Tier 5: (over 2500 kwh): 10.814 cents

The 5-tier structure applies to customers inside Austin, and accounts for 85 percent of Austin Energy’s customer base, the utility says. 

The next charges are set rates, per kilowatt hour of energy used, no matter what tier a customer occupies. The power supply adjustment charge  covers what Austin Energy spends to provide power to customers. The regulatory charge covers Austin Energy’s share of maintaining and using the transmission grid. There are other regulatory fees as well, and all of these are established and approved by the Public Utility Commission of Texas. 

• Power supply adjustment: .154 cents
• Regulatory charges: 1.52 cents

The final section of charges is the group called community benefit charges. These pay for citywide use of things like street lights, which benefit all Austin residents, pay for the customer assistance program and energy efficiency programs. These are also charged per kilowatt hour used by the customer. 

• Customer assistance program: 0.154 cents 
• Service area street lighting: 0.154 cents
• Energy efficiency programs: 0.335 cents.

What can concerned customers do?

Residents cannot appeal rate decisions to the state Public Utilities Commission. The courts only review legal issues. This means that there’s little to no accountability and that rate payers are essentially stuck.

Should there be a better option for Austin residents?