Major Gas Bill Hike to be Contested by Austin City This Fall

Major Gas Bill Hike to be Contested by Austin City This Fall

The upcoming decision by the Texas Railroad Commission, which oversees the state’s oil and gas industry, may cause a significant rise in the gas bill next year. Texas Gas Service (TGS) has proposed a rate increase that could reportedly increase the monthly gas bills of some Austin-area residents by as much as $10 in the coming year.

This new rate was initially set to be effective from July 8. However, the cities of Austin, West Lake Hills, Bee Cave, and Pflugerville have passed resolutions to deter this increase for a duration of 90 days. Furthermore, a coalition of cities plans to appeal this rate increase to the Railroad Commission, representing the ratepayers, with Austin at the forefront, being the city with the most customers.

The Reason Behind The Proposed Rate Hike

The reason attributed by TGS for the rate hike is the $25.7 million in revenue lost during the Covid-19 pandemic and the 2021 Winter Storm Uri, as stated in their June 3 announcement. TGS also mentioned on their website, that due to a faster increase in demand than supply, along with the general state of the global economy, war in Ukraine, and adverse weather conditions, there has been a significant increase in prices worldwide. It is also notable that the natural gas prices are nearly 100% higher than they were a year ago.

The 2021 Texas Legislature enabled gas companies to recover their winter-storm-related debt by charging residential consumers higher rates for the next 30 years. Unsurprisingly, this caused an uproar.

Larger homes using more gas would bear the brunt of this change, with a proposed increase of up to $9.53. However, small properties could also expect an increase of around $6.26 monthly. According to Paul Robbins, a long-time consumer advocate, offering two different rates for consumers to choose from seems to be unnecessarily confusing.

Consumer Concerns

He also questioned why TGS immediately needs to recoup all these lost costs. In his words, “In 2020, they had a rate case, and the basis for that rate was set, but they could do interim annual adjustments to that. So if there was an unexpected Winter Storm Uri or Covid problem that caused rates to go up, then that would presumably have happened in the year that it happened.”

Consumer charges have already been rising every year, due to Gas Reliability Infrastructure Program (GRIP) increases. To Robbins, the proposed rate increase seems much higher than would make sense given the years TGS claims to be recouping the increase from. Using TGS data, Robbins calculated that between 2019 and 2024, bills increased by 57 percent due to regular GRIP increases. This recent proposed rate would mean a 106 percent increase over the 2019 rate and a 31 percent increase compared to this year’s rate.

Interestingly, while residential consumers will face higher rates, commercial and industrial customers will see a decrease. Small and large commercial customers could expect a 9 percent and 7 percent decrease, respectively. Even more striking, industrial consumers would see a substantial 34 percent decrease.

Future Steps and Possible Interventions

Moving forward, city officials and organizations like the Sierra Club are looking into their options before making a decision. While larger government involvement may seem unlikely, everyone is encouraged to voice their concerns about higher utility costs to their City Council members. The hope is that together, the citizens of Austin can contest this proposed rate hike. However, the biggest challenge remains: even if the Austin City Council is convinced that this rate hike is inequitable and unnecessary, Texas Gas Service could appeal the vote and likely have it overruled by the Railroad Commission.