September 7 , 2005 News Media Release

Fuel Charge Increase Coming

Austin Energy will increase its fuel charge by between 8-13% effective with electric bills received this January 2006 . The precise amount of the increase will be firmed up by this December.

A residential customer using 1,000 kilowatt-hours (kWh) of electricity each month on average would see their electric bill increase by $2.24 - $3.63 a month.

Because the fuel charge is about one-third of the electric bill, the overall increase on a residential bill of 1,000 kWh per month would be between a 2.6 and 4.2% increase. Austin Energy's last fuel charge increase was January 2004. Even with the fuel charge increase this January 2006, Austin Energy's fuel charge will remain among the lowest in the state, among large cities.

There are two basic charges on an Austin Energy electric bill.

1. The energy charge or base electric rate which pays for Austin Energy operations. The energy charge will not change and has not changed since 1994.
2. The second charge is the fuel charge . It is the fuel charge that will be increasing this coming January. The fuel charge is a dollar-for-dollar recovery of the cost of fuel for the power generated. There is no profit included in the fuel charge.

Reasons for the Fuel Charge Increase

Natural Gas Prices. The biggest reason for the increase in the fuel charge is natural gas prices which have increased by almost 70% since January 2004 and are holding at record high levels. Escalating crude oil prices are also part of the problem. They spur trading in speculative energy funds, affecting natural gas prices even when gas supplies and storage are relatively stable.

Railroad Deliveries of Coal. In addition, railroad capacity has been tight resulting in a slowdown of coal deliveries to the Fayette Power Project (FPP) located in LaGrange. Austin Energy owns 600 megawatts (MW) of generation at the FPP. Inadequate coal supplies require using more natural gas-fired generation which on a fuel-cost basis is about fives time more expensive than coal. The slowdown affecting coal deliveries began more than a year ago and is expected to continue into the foreseeable future. 

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