Between recording sessions in KUTX's music studio a while back, sound engineer Jake Perlman brought up something decidedly un-rock-and-roll: his gas bill.
The first few months of the year, Perlman said, he paid about double what he had paid during the same months the previous year � despite using less gas at times.
“I could not make heads or tails over why the gas bill was so high all of a sudden," he said.
Darrell Kirkland reached out to KUT News with the same problem: "I've never heard of a utility, at least for my bill, actually doubling it."
People have been voicing the same complaints in online forums like and .
“Why the increase?� they ask. "Will rates keep going up?�
The answers to both questions are not likely to please the askers.
A rate hike long in the making
The story of Austin's most recent gas rate increase starts last year. That’s when Texas Gas Service, the for-profit utility that provides gas to Austin, told City Council and state regulators it needed to make more money.
The utility said the need was based on a few reasons: to invest in new infrastructure and maintain its current gas delivery system, and to guarantee shareholders a return on investment.
“Then there’s the impacts of inflation that we’ve all experienced over the past several years,� Stacey McTaggart, its rates and regulatory director, told council members.
At the time, the utility said it expected to collect an estimated $25.8 million in added revenue annually from the rate changes.
It said it expected customers' bills to rise “under 15%" on average. Others predicted bills would go up much more than that.
Over the summer, Austin and a coalition of cities served by Texas Gas pushed back against the proposal. Critics accused the utility of, essentially, fleecing a customer base that has no other option for where it gets gas.
Months of negotiations followed.
In the end, the cities agreed to a somewhat scaled-back "settlement" deal that still included rate increases, but made commercial and industrial customers share the burden with residential payers.
In Austin, City Council members fumed over the higher rates, voting against them at City Hall. But the city did not formally challenge them at the Railroad Commission of Texas, the state regulator with authority over gas rates.
Why?
Council Member Ryan Alter said Railroad commissioners had sided with Texas Gas Service in similar rate negotiations in the past, and City Council was confident the utility would prevail again.
“We decided that we would not support the proposal,� Alter said. “But [we recognized] that if we broke away and had a whole separate rate case before the Railroad Commission, we were most likely going to get a worse result for customers than what was on the table.�
The rates were approved by the Railroad Commission in November and went into effect at the beginning of the year.
That’s when customers started noticing.
All those little line items add up
When people see a sharp increase in their bills, they often take a closer look. In the case of gas bills, there is a lot to look at. Each one comes with a list of different fees and charges that add up to your monthly payment.
Since the rate hike went into effect, Austinites are noticing how some of those line items have jumped in cost.
One charge that was up significantly this winter is the “cost of gas� charge. That's because natural gas commodity prices were higher this year than last, and those costs are passed through directly to the ratepayer.
Another big driver in the current higher bills is something listed as a “delivery charge.� This seems to be a kind of a catchall for a lot of different things.
KUT reached out to Texas Gas Service and sought independent analysis from longtime utility attorney Alfredo Herrera. Both said the delivery charge includes payments for operating and managing the utility system, covering the cost of depreciation of utility assets and covering some tax expenses.
Texas Gas Service profits also come from the “delivery charge.�
Investing in the infrastructure and maintenance and bringing in more profit were all things the utility wanted to raise rates to do, so it’s no surprise that this line item has increased.
But, Herrera said, the “delivery charge� is a strange place to pack all those different expenses.
“Maybe they call it a delivery charge because they are delivering the gas? I don't know why they call it a delivery charge,� he said after taking a look at some recent bills. “That is a very odd nomenclature, at least odd to me.�
Of course, to many ratepayers, the name is less important than the charge itself.
'Gold plating'?
“If it’s too high, it's too high no matter where you get it from,� Paul Robbins, a local environmentalist and consumer advocate, said when asked about the delivery charge increase.
As a member of Austin’s Resource Management Commission, Robbins has long questioned Texas Gas' rate structure and frequent rate hikes.
, the gas company raised its operating expenses 63% between 2019 and 2023 over the last four years, while its customer base increased by only 5% in that same timeframe.
“I cannot make sense of it. It’s like, are they building a bridge to nowhere?� he said. “Are they padding? Are they gold plating things so that they can claim an expense and then claim a capital return on an expense that may not be needed?�
“The question has never been put to rest for me,� he said.
Texas Gas Service denied KUT’s request for an interview, but a spokesperson did answer questions by email.
In that exchange, Safeena Khanmohamed reiterated the need to raise rates to keep the gas system reliable and highlighted different options customers have in how they pay.
“Residential Customers can choose between small or large residential rates based on usage and lifestyle,� Khanmohamed wrote. “Small Residential Customers pay a higher volumetric delivery rate and a lower customer charge. Large Residential Customers pay a lower volumetric delivery rate and a higher customer charge.�
Herrera said because less of a “large residential� customer’s bill comes from gas usage and more from fixed charges, a customer who uses a lot of gas may be able to lower their monthly bill by choosing to be charged under the “large residential� tier.
Likewise, a person who uses less gas may be able to pay less by opting to be charged as a “small residential� customer.
“I don't know how that's worked out, whether in practice it actually works for customers or not,� Herrera said, “but that's the theory behind it.�
Finally, the utility pointed to the higher commodity prices for natural gas this year, reflected in the “cost of gas� charge as another reason for higher bills.
But that’s not likely to quell customer discontent over prices, especially since rates are set to go up again.
More rate hikes on the way
In February, after the rate hikes approved last year went into effect, Texas Gas Service announced its intention to raise rates again.
This rate increase is allowed under a state "Gas Reliability Infrastructure Program," also called a GRIP program, which lets utilities increase bills to recoup losses on system investment without the same degree of public involvement.
“No sooner has the ink gone dry on the last increase when they have asked for this new [Gas Reliability Infrastructure Program] increase."Paul Robbins, environmentalist and consumer advocate
Texas Gas Service says customers should expect to see those higher rates in their bills in June, further upsetting critics and ratepayers.
“No sooner has the ink gone dry on the last increase when they have asked for this new GRIP increase,� Robbins said.
In the short run, Robbins believes the higher rates are here to stay.
In the long run, he said, the city needs to explore partnering with a different for-profit gas utility to get a better deal. Alternatively, the city could take over local gas service outright and run it like it does the electric and water utilities.
That's an idea Council Member Alter and others have been talking about as well.
“That’s not something that would be easy or that I’m even here to say we’re ready to do or willing to do,� he said. “But you do see San Antonio has their own gas utility, and of everybody in the state whose rates have not seen this dramatic increase it’s San Antonio’s.�
But, he said, any major change in the way Austin gets its gas would have to wait until 2026 when the city's long-term contract with Texas Gas Service is set to expire.
