Austin Energy approves discounted electric rates
Council grants 6-month extensions; 8 other big users losing discounts.
Austin Energy’s top three power users — all semiconductor companies — will get a six-month contract extension on their discounted electric rates, a savings of millions.
The Austin City Council voted Thursday night to give Austin Energy’s top three power users — all semiconductor companies — a six-month contract extension on their discounted electric rates, a sav- ings of millions.
But the council stopped short of granting a similar extension of these discounted rates to about eight other large power users, companies such as Dell Inc. and National Instruments.
Council Member Greg Casar, who led the effort not to grant most of these companies continued discounts, released a statement Friday saying the council was finally ending “electric bill subsi- dies” for them.
The council still has one issue to negotiate next week. On Thursday night, it tentatively approved on second reading a contract extension for Austin’s largest hospital systems, the Seton Healthcare Family and St. David’s Health-Care. It’s not clear yet whether the health care companies have the votes to secure final approval next week.
The City Council is facing pressure on these con- tracts because they expire at the end of the month and because of the threat by a powerful state senator to impose some form of deregulation on Austin Energy if the large users aren’t appeased.
Some of the biggest employers in Austin have been lobbying the City Council for weeks to extend their Austin Energy contracts, which grant them a discounted elec-
tric rate of $60 to $65 per megawatt-hour.
But despite a parade of speakers from some of Austin’s biggest companies and nonprofits, all testifying to their financial impact and longtime ties to the community, a majority of the council couldn’t be persuaded to extend the contracts for more than just the top three industrial users, Freescale Semiconductor, Samsung Austin Semiconductor and Cypress Semiconductor. (Cypress, which used to be called Spansion, technically got a new tariff that set its rates lower because it has its own substation.)
Roger Wood, the chairman of the Coalition for Clean, Affordable, Reliable Energy, a group that represents some of Austin Energy’s biggest customers, said they appreciated the council’s decision to extend the contracts for some of the large users.
But Wood said he was “extremely disappointed” that the council did not grant extensions to everyone. He pointed out that the state of Texas and the University of Texas secured two-year extensions of their discounted rates in December, under the old City Council.
For the businesses that didn’t get a contract extension, their rates are set to increase to $79 to $89 per megawatt-hour at the end of the month, according to CCARE.
The group has argued against increasing those rates because other large businesses pay even less in other Texas markets. CCARE says when these businesses’ contracts with Austin Energy expire, the rates for some of the large power users will become 35 percent higher than the average rates in “benchmarked Texas cities.”
Some council members argued Thursday that it made no sense to grant rate breaks to large industrial users when residential customers are struggling with ever-increasing electricity bills.
Council Member Ora Houston said she was more concerned about the people who work for these large companies.
“I have to think of those people, the people on the late-night shifts, those that clean and those that cook and don’t have the luxury of being able to manage when
Some on the council cited residential customers’ struggles.
rates are increased,” Houston said.
Austin Energy said the extra revenue from raising the rates on large industrial users would not affect residential customers’ rates but would help the utility shore up its reserves.
Casar noted that the users not among the top three knew their contracts would expire and rates were set to increase. He added that he had concerns about the lack of scrutiny of these utility breaks for large customers, which he described as another economic incentive for businesses.
It’s not clear whether the council’s decision is enough to please state Sen. Troy Fraser, R-Horseshoe Bay, who authored the bill to partially deregulate Austin Energy.
The council has one more meeting to vote on this issue before the legislative session ends June 1.