May 29, 2007 News Media Release

Fuel Charge Decreased June 1

Austin Energy lowered its fuel charge 9% effective June 1, 2007--about a $3.00 reduction in the monthly electric bill of a residential customer using 1,000 kilowatt-hours (kWh) of electricity per month. The fuel charge, which dropped from 3.34 cents per kWh to 3.04 cents per kWh, recovers the cost of fuel used to generate the electricity used by Austin Energy customers. It also recovers Austin Energy’s share of costs associated with the operation of the statewide electric grid. The fuel charge is a dollar-for-dollar recovery of these costs and includes no profit.

Reasons for the Decrease
The fuel charge decrease is due to a softening of natural gas prices as well as improved coal deliveries to the Fayette Power Project (FPP), of which Austin is part-owner. In recent years, the railroads have been unable to meet the normal coal delivery schedule to FPP. This required greater use of more expensive natural gas-fueled generation. Austin Energy has added a second rail carrier which will improve significantly our ability to maintain adequate coal supplies.

Base Rates Do Not Change
Austin Energy base electric rates, the charge on the electric bill (Energy Charge) that pays for power plants, the electric system, equipment and personnel will not change. Austin Energy base electric rates have not changed since 1994.

GreenChoice Not Affected
Customers subscribing to Austin Energy’s green power program, GreenChoice®, are not affected by changes in the fuel charge. Instead of a fuel charge, those customers pay a “GreenChoice charge” that stays fixed for the life of wind contracts.

Increase Projected for Next Year
Looking forward, a very favorable coal transportation contract will expire early next year, with the likelihood that its replacement will be considerably more expensive. As a result, Austin Energy projects the need to increase the fuel charge this coming January by 15–20%. The fuel charge can change every year, either up or down, as it is a dollar-for-dollar recovery of the actual fuel costs to generate the electricity used.

Fuel Charge Still among the Lowest
Austin Energy’s fuel charge remains among the lowest in the state. This is due to excellent fuel diversity of coal, nuclear, natural gas and green power as well as an Austin Energy hedging program that protects customers from sharp spikes in natural gas costs.

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