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Dallas, other North Texas cities, are fighting Oncor’s proposed rate hike

Oncor crews work to restore power to homes in Euless, Texas, Thursday, Feb. 18, 2021. (AP Photo/Michael Ainsworth)
Michael Ainsworth
Oncor crews work in February to restore power to homes in Euless.

The City of Dallas is fighting a rate increase proposed by electricity provider Oncor. The city council voted unanimously to challenge a rate hike that would increase Oncor’s revenues about $251 million per year and increase electric bills for millions of people across most of North Texas.

The increase would amount to an 11.2% increase for average residential customers, adding about $6.02 to their monthly bills, according to a presentation made by Dallas’ Manager of Regulatory Affairs Nick Fehrenbach to a council committee last week. It would increase the city’s streetlighting rates by 1.6%.

Consultants hired by a group of 169 cities in Oncor’s service area recommended opposing the rate increases, Fehrenbach said.

“If we approve the rates as requested, Oncor would be earning more than their allowed rate of return under state law,” he said.

The vote by the full council on Wednesday was accompanied by a venting of frustration at recurring outages in some areas and issues with customer service from the electricity distribution company. Council members did not spend time discussing the relative merits of opposing the rate hike before voting.

Oncor doesn’t sell electricity directly, but it builds and maintains the power lines, transformers and other infrastructure used to move electricity produced by powerplants, wind turbines and solar farms into homes and businesses.

It’s the largest energy delivery company in Texas and one of the largest utilities in the U.S., and the bulk of its customers live in North-Central Texas. It also powers much of the Midland-Odessa region.

In May, Oncor applied to the Public Utility Commission of Texas to raise rates on the 3.8 million customers the company serves in Texas.

“As a result of Oncor's significant investments, … the Company's increased costs…and the need to recover its regulatory asset balances, the Company's existing rates are inadequate,” the company wrote in its filing. “For Oncor to recover its reasonable cost of service and provide an opportunity for the Company to earn a reasonable return, Oncor's present revenues should be increased by approximately $251 million, or approximately 4.5% over Oncor's current annualized revenues.”

Since then, Dallas and other cities have been negotiating with the company to find a compromise on rates. The negotiations are being led by the Steering Committee of Cities Served by Oncor. The steering committee is made up of 169 cities that rely on Oncor for electricity service, including Fort Worth, Arlington and Plano as well as Midland, Odessa, Waco, and Tyler.

The process for a distribution utility like Oncor to raise rates is governed by a complex series of deadlines and rules and overseen by the Public Utility Commission of Texas.

Walmart, Kroger and Google have all filed to intervene and request information, as has the University of Texas System and the U.S. Department of Defense, since Fort Hood in Killeen would be affected by the rate increase. Not all have challenged the rate hike, and many have requested more information from Oncor.

Dallas and other cities are formally opposing the rate now because they’re up against a deadline where Oncor’s proposed rates would go into effect on their own if cities took no action. In previous years, Oncor and the cities have worked out a compromise on rates before hitting that administrative deadline.

Last week, Fehrenbach said the cities were still negotiating with Oncor even as they were organizing to formally oppose the rate hike.

“If we can reach a settlement, we will present that settlement to the PUC and ask them to adopt those rates, and the PUC will most likely concur with that,” he told council members.

Got a tip? Christopher Connelly is KERA's One Crisis Away Reporter, exploring life on the financial edge. Email Christopher can follow Christopher on Twitter @hithisischris.

KERA News is made possible through the generosity of our members. If you find this reporting valuable, considermaking a tax-deductible gifttoday. Thank you.

Christopher Connelly is a reporter covering issues related to financial instability and poverty for KERA’s One Crisis Away series. In 2015, he joined KERA to report on Fort Worth and Tarrant County. From Fort Worth, he also focused on politics and criminal justice stories.