June 10, 2003 News Media Release

Austin Energy Fuel Charge Increasing in Steps, still among lowest in state

Austin Energy has implemented the second of a three-step increase in its fuel charge. The increases are the first in almost two years. They are necessary due to higher natural gas prices that have almost doubled from last year and due to the prolonged outage of Unit 1 of the South Texas Project (STP). Austin owns 16% of the STP.

Fuel is a separate charge on electric bills. It is a dollar-for-dollar pass through to each customer for the fuel needed to generate the electricity they used. Austin Energy's base electric rates will not change and have not increased since 1994.

To soften the impact of the additional fuel costs and to collect as much of the additional cost as possible during winter months when electric usage is lower-- the necessary fuel charge increase is being implemented in three steps. The first two steps were implemented on July 1, 2003 and November 1, 2003. The third step will occur January 1, 2004.

Step one: July 1, 2003

For electric bills received beginning July 1, 2003, the fuel charge increased from 1.774 cents/kilowatt-hour (kWh) to 2.004 cents per kWh. The average residential customer uses about 1,000 kWh per month. At that usage, a typical electric bill increased $2.30.

Step two: November 1, 2003

For electric bills received beginning November 1, 2003, the fuel charge increased from 2.004 cents per kWh to 2.265 cents per kWh. For a residential customer using 1,000 kWh per month this increased their monthly utility bill by $2.61.

Step three: January 1, 2004

The final step of the fuel charge increase will be implemented for electric bills received beginning January 1, 2004. The fuel charge will increase from 2.265 cents per kWh to 2.796 cents per kWh. This assumes that natural gas prices do not dramatically increase this winter. For a residential customer using 1,000 kWh per month, this step will increase their monthly utility bill by $5.31.

All three steps together, once implemented by January 1, 2004, will have increased a monthly utility bill for 1,000 kWh by $10.22 cents.

Key Factors
	Natural gas prices since January 2003 are about 60% higher than- a year ago.
	Power costs to replace Austin Energy's 200 megawatts (MW) from STP Unit 1 (out for four months) was about $6 million more per month that STP fuel costs. STP is among the lowest cost generating plant (on a fuel basis) in the country and is currently about 10 times cheaper than natural gas replacement generation.

Fuel Charge Still Among Lowest
Even after a three-step increase by January 1, 2004, AE's fuel charge will still be among the lowest in the State.

As a point of information here are the average fuel charges of the Investor Owned Utilities (IOUs):

It should be noted that customers who subscribe 100% to Austin Energy's GreenChoice^® Renewable Energy Program are not impacted by this fuel charge increase. They are paying a green power charge rather than a fuel charge on that portion of their usage subscribed to green power. The green power charge remains fixed for the term of our renewable energy contracts. This is one of the attractive features of our green power program - a fixed cost over a multi-year period.

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For more information, contact Ed Clark, Public Information.
Phone: (512) 322-6514
Pager: (512) 802-2000