Envision the proverbial frog in the pot of water that comes to a boil so slowly, the poor critter doesn’t realize he’s getting cooked.
I’m sorry to tell you we’re all the frogs, and the pot of water is sitting on a stove fueled by Texas Gas Service.
The private utility, which serves about 95% of the natural gas customers in Austin, has proposed a rate increase that would nearly double the residential customer rates from 2020, the last time Texas Gas went through a rate case.
Consider what that means for the typical household using, on average, 29.1 CCF (a CCF is 100 cubic feet) of natural gas per month. Under the 2020 rates, the flat monthly fee and gas usage costs for that customer came out to $25.49 a month, not including taxes, fees and fuel surcharges.
Since then, incremental adjustments have brought that part of the bill to $35.
Under the rate options Texas Gas proposed this summer, that part of the bill would reach about $45 a month.
Ever so gradually, the heat keeps rising.
Texas Gas says the increases are needed to cover its own expenses, including $342 million in improvements to its natural gas distribution system since 2019. The higher rates and other charges would bring Texas Gas an extra $25.8 million a year.
I recognize such a system requires maintenance and upgrades, especially to keep the gas service flowing when customers need it most. To this day, I can’t look at my gas fireplace without recalling, with gratitude, how it provided the only flickers of heat in our house during the devastating electrical outage of 2021's Winter Storm Uri.
But here’s the thing: At the same time that Texas Gas proposes raising rates on residential customers, it plans to lower the rates for commercial and industrial customers. While residential customers would see a 31% rate hike over what they’re paying today, longtime local utility watchdog Paul Robbins said, industrial customers would see a 34% decrease, while commercial customers would save 7% to 9%.
How is that fair?
“Currently, commercial customer rates are higher than the actual cost of serving those customers, which is why the proposed rates seek to lower commercial rates,” Safeena Walji, a Texas Gas Service spokesperson, told me.
Robbins has other concerns, too. A portion of the new revenue, about $5 million a year, would come from Texas Gas seeking to collect a higher rate of return — meaning, a larger profit.
“It's not just about the rates, but it's about how they're structured,” Robbins continued. Unlike Austin Energy, which charges progressively higher rates to customers who use more electricity, Texas Gas’ rates remain the same whether you use 10 CCF or 100 CCF of natural gas a month.
“I mean, if they're structured so that they're regressive, the more you use, the less you pay per unit, then they discourage conservation,” Robbins said. “They also hurt the poor who use less energy by virtue of the fact that they can't afford to use more.”
As part of this rate case, Texas Gas has provided two different rate options for residential customers:
- For smaller households, a flat monthly fee of $25.50, plus a charge of 69 cents per CCF of natural gas used
- For larger households, a flat monthly fee of $39, plus a charge of 23 cents per CCF of natural gas used
Customers could pick which rate structure they want, or Texas Gas would assign them the one that is most economical, based on their past usage.
When I crunched the numbers for a typical customer using 29.1 CCF per month, the two options were basically a wash: $45.58 vs. $45.69, not counting taxes, fees and fuel surcharges.
The city of Austin has a key role here. Since Austin granted the franchise for most of its natural gas customers to Texas Gas, any rate increase must come before the City Council for consideration (a public hearing is slated for Thursday). If Texas Gas doesn’t like the outcome (and many expect that will be the case), the utility would appeal the matter to the Texas Railroad Commission.
All told, Texas Gas hopes to have new rates in place by December.
Robbins sits on a city advisory board, the Resource Management Commission, which has opposed Texas Gas’ two different residential rate options. The panel instead recommended that only a quarter of the needed revenue come from the flat monthly fee (which would cut the current $25.47 charge in half), with the rest of the revenue covered by the fees based on usage. Additionally, the panel said Texas Gas should create three consumption tiers, so those who use more natural gas can be charged a higher rate for it.
Austinites who rely on natural gas for cooking meals and heating their homes need to know that service will be there for them. But it’s also essential the city watch out for residents’ interests, to ensure charges are substantiated and reasonable.
Costs inevitably rise. But the city needs to ensure customers can withstand the heat.
Grumet is the Statesman’s Metro columnist. Her column, ATX in Context, contains her opinions. Share yours via email at bgrumet@statesman.com or on X at @bgrumet. Find her previous work at statesman.com/opinion/columns.
If you go
As part of its regular meeting on Thursday, the Austin City Council will hold a public hearing to discuss Texas Gas Service's proposed rate increase (item 168 on the council agenda). The council meeting starts at 10 a.m. Thursday at City Hall, 301 W. Second St.
