AUSTIN, Texas — A battle is brewing over gas rates in Central Texas.
Texas Gas Service proposed a rate hike in June to customers in the Central Gulf-Service area, which includes Austin. The utility hopes to bring in $25.8 million in revenue with the increase.
It was supposed to go into effect on July 8; however, the city of Austin derailed that plan by suspending it on July 18. Austin joins a coalition of other cities that also passed resolutions delaying the increase.
"We should be focusing on how can we lower costs," Austin Councilmember Ryan Alter said. "How can we lower the environmental harms instead of how can we raise rates and increase profits for Texas Gas. They're going to increase residents' costs while they're going to decrease those costs for commercial and industrial users ... I just don't think that's the right approach."
Alter said Austin's attorneys are trying to reach an agreement with the utility, but if they can't reach one, it will be handed over to the Texas Railroad Commission for a final decision.
A Texas Gas Service spokesperson said the proposed new rate is designed for residential and commercial customers who can choose a rate plan that aligns with their needs.
The average bill is expected to increase by less than 15% for small and large usage customers. Small-usage customers would have a lower customer charge and a higher delivery rate, while large-usage customers would have a higher customer charge and a lower delivery rate, according to Texas Gas Service.
In August, city council hosted a public hearing where advocates were able to address their concerns over the proposed gas rates. No decision was made.
Advocates' arguments against the hike
Advocates against the rate hike say Texas Gas Service is simply after profit and the proposal will lead to a lack of conservation.
Shane Johnson, a clean energy organizer for the Sierra Club Lone Star Chapter, called the proposed rate hike wasteful and said that it is sending the wrong message to ratepayers.
"It's not based on what is fair or affordable to the people of Austin and Central Texas and many other areas that are undergoing massive rate hikes like this," Johnson said.
Luke Metzger with Environment Texas echoed Johnson's statement and noted the environmental impacts.
"Make sure that we're charging fair rates to customers but also looking at a future where we need to get off of fossil fuels completely in order to avoid the worst impacts of climate change," Metzger said.
Texas Gas Service's response
"Our top priority is maintaining a safe and reliable natural gas system for our customers. This requires upfront investments in the maintenance and operations of our natural gas system. The proposed rate adjustments, which would increase the average residential bill by less than 15% for both small and large usage customers, will allow Texas Gas Service to recoup an allowed portion of that investment and to continue providing the service Austinites have been able to depend on.
It’s not uncommon for Cities to challenge proposed rate increases. As a 100% regulated utility, we manage our business efficiently and are fully transparent with our regulators, the City of Austin and the Railroad Commission of Texas (RRC). Our rates are set through a rigorous review process conducted by the Cities we serve and the RRC, making sure any adjustments are fair and necessary to cover the costs of providing safe and reliable service.
We’ve heard our customers’ sentiments towards our rates and overall satisfaction through survey questionnaire data in 2024. Customers residing in Williamson, Hays, and Travis counties specifically said:
- Over 64% of respondents indicated high trust in their utility to set fair and reasonable rates.
- 90% of responses indicated positive overall satisfaction."
What's next?
Alter said the city has a franchise agreement with Texas Gas Service that is up for renewal in 2026. Depending on where the rate structure falls, Alter said the city may seek a different partnership.
"We want [Texas Gas Service] to be a good partner in this," Alter said. "Help us craft something that will be good for Austinites, for our environment."
A decision is expected in October.