Austin Energy explains rate buckets, PSA and general fund transfer during commission briefing

Rusty Manus, acting general manager at Austin Energy, presented a briefing explaining the different components of a customer bill and what each recovers. Manus said base rates cover distribution and operations and maintenance costs — "poles, wires, transformers" and personnel and fleet costs — while the power supply adjustment, or PSA, covers power-supply costs such as market purchases, purchased-power agreements, and fuel. He described the regulatory charge as largely for "wholesale transmission costs" that Austin Energy pays to transmission service providers in ERCOT, and the community benefit charge as a combination of service-area lighting, the energy efficiency service rate (EES) and the customer assistance program (CAP).

Manus told commissioners that some charges are treated as pass-throughs: "If you look at power supply, regulatory, and the community benefit charge, they're what we call pass through rates," meaning recoveries are adjusted to match costs and over/under collections are credited or charged back to customers. He said transmission-related revenues from Austin Energy's own transmission assets are recorded as "other revenue" on the utility's income statement and are not netted against the regulatory charge on customer bills.

Manus reviewed recent trends: over a five-year span, the PSA and regulatory charge rose by about a third, service-area lighting and EES roughly doubled, and CAP nearly tripled following program expansion. He said operations and maintenance (O&M) increased 35–40% and capital expenditures nearly doubled while base rates rose only about 10% over the same period. Manus said the proposed 5% base-rate increase for FY2026 is intended as an incremental step toward matching long-term cost recovery, but that even with that increase "there's still a $43,000,000 deficit."

Commissioners asked about the taxability of electricity and a local sales tax; Stephanie Kudelka, acting chief financial officer, said the 1% city sales tax is charged on residential electricity consumption where the city applies the tax. Commissioners asked about Austin Energy's participation in a PUC rulemaking about transmission-cost allocation; Tammy Cooper said the utility will participate through the Texas Public Power Association's comment process.

Why this matters: the briefing described which portions of customer bills are flexible pass-throughs and which recover long-term distribution and O&M costs, and it explained how transmission revenue and general fund transfers are treated in the utility's finances. Manus and staff emphasized that some recoveries are constrained by tariff rules and council policies and that staff will return with additional detail if commissioners request it.