Huge Fuel Charge Increase to Jolt Customers in January!

In a stunning, pre-Christmas surprise late this afternoon, Austin Energy delivered some bad news to the Mayor and City Council.  They are planning to raise the monthly fuel charge on residential electric bills by $5.10 per month for the average user of 1,000 kWh.  This is in addition to and completely separate from the base rate increase battle that is playing out at the same time.  The consumer and citizen groups involved in that rate case are just now beginning to absorb the shock of the fuel charge increase.  Right now there are far more questions than answers.

Here is Austin Energy's explanation for the increase:

Austin Energy customers will see an increase in the Fuel Charge on their utility bills for 2012. The Fuel Charge is the dollar-for-dollar recovery of the cost of fuel used by AE power plants, purchased power costs, as well as costs related to state grid operations.

The Fuel Charge will increase from the current 3.10 cents to 3.61 cents per kilowatt-hour (kWh) of electric use effective with January electric bills. An average residential bill (1,000 kWh) will increase by $5.10. Customers who subscribe to the Austin Energy green power program (GreenChoice®) are not affected because they pay a green power rate that replaces the Fuel Charge on their electric bill.

The Fuel Charge increase for 2012 is due to additional fuel and purchase power needs this past summer during record heat and customer demand. In addition, an unplanned, multi-day outage at the Fayette Power Project in early August required the purchase of replacement power during peak demand periods with very high wholesale prices. South Texas Project Unit 2 has also experienced an unplanned outage that began in late November and is expected to last into early 2012.

This Fuel Charge increase is unrelated to the Austin Energy rate proposal. However, most of the January Fuel Charge increase was included as a placeholder in the overall rate proposal cost totals.

Last January the fuel charge was reduced by 15%. The new fuel charge is lower than the fuel charge required in three of the last four years.