Texas Gas Service (TGS) has filed for a third rate increase in about a year, impacting its customers in Austin and neighboring areas.
This new proposal, which aims to raise $41.1 million in revenue, represents approximately a seven percent increase system-wide when gas costs are included and nearly a ten percent rise when they are excluded.
The Austin City Council is expected to approve a 90-day delay of this proposal on Thursday, although the city holds limited authority to block the increase.
Unlike Austin Energy and Austin Water, the city does not own its gas utility, meaning it cannot control its rates.
The final decision rests with the Texas Railroad Commission, which typically favors industry positions during rate cases.
TGS started its rate case last summer, justifying the increase by citing the need to fund infrastructure and maintain its gas delivery system.
Austin and surrounding cities challenged TGS’s previous hikes; however, higher bills went into effect in January following the initial rate increase.
In February, TGS implemented another increase under the state’s Gas Reliability Infrastructure Program (GRIP) to recover recent capital costs.
That hike was also delayed but ultimately took effect over the summer.
Under the latest proposal from TGS, smaller residential customers will see their monthly fixed customer charge rise from $21.36 to $29.50, while larger residential customers will experience an increase from $33.36 to $39.50.
Commercial customers are facing increases of approximately 10 to 12 percent.
The proposed consolidation of service areas aims to create a uniform rate structure across the Central-Gulf area, which includes Austin, and the West North and Rio Grande Valley service areas.
A TGS spokesperson defended the consolidation, claiming it would enhance efficiency.
“Right now, customers in different areas pay different rates for the same service,” she stated. “By consolidating into a single statewide rate, our customers will benefit from efficiencies and the sharing of expenses across a larger customer base.”
During a discussion on the proposal with Austin’s Resource Management Commission (RMC), Thomas Brocato, Outside Counsel for the city, mentioned that the Railroad Commission tends to accommodate utilities pleasantly.
He pointed out that average gas usage varies across service areas due to climate differences and variations in population density.
Considering the adjustment in customer charges, the consolidation, and local gas consumption patterns, TGS has predicted changes in average monthly bills as follows:
– Small residential customers would see an increase of approximately $4, bringing their average bill to around $48.82 per month.
– Large residential customers are expected to experience a decrease of about $3, resulting in an average bill of $74.30.
– Small commercial customers could see a rise of approximately $7.
– Large commercial customers might experience a significant decrease of around $63.
Despite the utility’s projections, some advocates have raised concerns about their accuracy in the past.
TGS claims to have invested $117 million in the Central-Gulf Service Area since the previous rate case, citing inflationary pressures and supply chain challenges as contributing factors to the rising operating costs.
Moreover, the proposal includes changes to income-based assistance programs.
TGS plans to expand its “Share the Warmth” program, which relies on voluntary customer donations matched by the utility, to help fund a collection of changes that will now be supported by billing increases.
Brocato commented that it remains unclear whether TGS intends to contribute shareholder funds to the program.
Instead, ratepayers are being asked to fund the costs associated with the management of this donation program and other initiatives aimed at outreach and assistance.
In total, Texas Gas Service is asking for $2.284 million from customers to help manage Share the Warmth.
Additionally, TGS seeks $570,000 from ratepayers to support a pilot program that will provide discounts to approximately 30,000 qualifying customers.
The utility’s spokesperson emphasized that the filing aims to extend support for customers struggling with their bills, introducing a low-income rate that is 25 percent lower than the proposed small residential rate, along with a reduced volumetric delivery charge.
The response to the proposal has not been favorable so far amidst a backdrop of rising rates.
Most of TGS’s customers lack alternatives for gas service, limiting their options in the face of increasing costs.
The Resource Management Commission shared informal feedback with city staff regarding the filing last week, voicing their frustration about the predicted increases, the service area consolidation, and how the changes to income-based programs would be funded through higher costs.
“There appears to be no upside for the city of Austin and our gas ratepayers from this consolidation,” Commissioner Alison Silverstein remarked.
Vice Chair Paul Robbins has long advocated for greater oversight of Austin’s gas system, expressing his skepticism about the approval process.
“Any rate increase is almost pre-approved,” he stated in reference to the favorable stance of the Railroad Commission towards utilities.
Robbins believes that the majority of any rate case will be approved, creating a situation where there is little room for the city or customers to contest it.
Silverstein later pointed out that it is atypical for TGS to request that ratepayers fund Share the Warmth without a clear commitment from shareholders to contribute as well.
“It’s unusual for them to burden ratepayers without offering a commitment from owners to provide additional support,” she added.
Robbins concluded the RMC meeting by presenting some of his critical observations on TGS, highlighting issues such as inflated fuel costs, additional taxes, and perceived greenwashing of energy conservation and renewable energy initiatives.
He noted that TGS serves approximately 94 percent of gas customers within Austin’s city limits and highlighted that if the proposed increases are approved, rates will have soared by 132 percent since 2016.
As Austin prepares to respond to this latest proposal, its options appear limited to merely delaying the decision, monitoring the issue, and appealing, knowing that utilities like TGS have a strong influence with the Railroad Commission.
Austin and the other cities impacted by the proposal have until August 19 to intervene as a response to this filing.
The City Council is slated to vote on the proposed 90-day delay, during which Austin plans to collaborate with external consultants and other cities to assess potential next steps.
Looking ahead, Austin’s contract with Texas Gas expires in October 2026, prompting discussions among some advocates about exploring new private gas providers or considering municipal ownership of the gas system, similar to what the city has established with its electric and water utilities.
“This is a 20-year agreement, a once-in-a-generation opportunity to push for long-needed reforms,” Robbins concluded.
image source from：austinmonitor
