New energy rate plan could reduce shock

AUSTIN (KXAN) - Three Austin City Council members rolled out a new plan on Monday that would cut Austin's Energy's proposed rate hike in half.

During a press conference, Bill Spelman, Sheryl Cole and Chris Riley said the sticker shock for customers won't be nearly as bad.

"This is a terrible time for a rate increase. Recovery has been slow and halting. Wages have not kept up with inflation. Many people are still looking for work and not finding it," said Spelman.

Under the new plan, the average customer's bill would go up about 8 percent. That would be an additional $8 on a $100 bill. That increase is half of what Austin Energy originally proposed.

The new plan also lowers the fixed fees included in each bill. Right now, residential customers are paying $6 each month in fixed fees. Austin Energy wanted to nearly quadruple them by raising them up to $22. The new plan would raise them to $10.

Austin Energy's plan would have raised energy bills by 40 percent for churches. The new plan would increase their bills by 20 percent.

The plan also gives all schools a 10 percent discount, and funnels an additional $6 million toward helping out low-income customers.

The move comes after months of debate and delay on implementing a rate hike that would get Austin Energy out of the hole. Officials originally said they were more than $120 million in the red.

After combing financial records, council members concluded $106 million would get them where they need to be.

The new plan would reduce the deficit and build reserves in two phases, and calls for a 5 percent "budget scrub" across the board for Austin Energy.

"I think what the council is saying -- we're challenging you, Austin Energy, to see if you can reduce some additional costs somewhere and you know, we're on that page," said Ed Clark, Austin Energy spokesman.

Councilwoman Cole said the budget reduction includes salaries, but Spelman quickly added that good talent comes at a price and salaries must remain competitive with other utilities.

The majority of the Austin City Council has to be on board with this plan, and things could change as discussion begins.

A vote on the new Austin Energy rate hike plan is set for June 7.