The Denton City Council voted 6-0 Tuesday night to approve another round of utility rate increases that will go into effect in October, as part of a quarterly review process the council approved in March.
Council member Brian Beck was not in attendance for the vote Tuesday.
Based on an average monthly usage of 1,000 kilowatt-hours, the average Denton Municipal Electric residential customer will see their electric bill go up about $7 next month, to nearly $140, according to city officials, who cited rising energy costs in Texas.
That’s about a 5% increase in rates this time around, following an increase of about 20% in April.
Denton Municipal Electric's residential rates
Denton residents’ electric rate consists of two components:
- Base rate, made up of the facility charge (a fixed monthly rate) and usage charge (a fixed rate based on kilowatt-hours)
- Energy cost adjustment, a variable rate charged per kWh to recover costs associated with generation and fuel
CURRENT RESIDENTIAL RATES
Facility charge — Varies depending on the type of service a residential customer receives (most residents have single-phase service):
- Prepaid facility charge: $16.02
- Single-phase facility charge: $8.67
- Three-phase facility charge: $17.33
Usage charge — All residential customers pay the same amount for their two-tier usage rate. Tier 2 changes depending on the month of the year. Winter months are November-April and summer months are May-October:
- Tier 1 (first 600 kWh) charge: $0.0684
- Tier 2 (additional kWh in summer): $0.0684
- Tier 2 (additional kWh in winter): $0.0455
Energy cost adjustment (ECA) is applied to all kWh consumed: $0.0447
Transmission recovery cost factor (TCRF) is applied to all kWh consumed: $0.0135
SOURCE: Denton Municipal Electric, www.cityofdenton.com
DME General Manager Tony Puente and the electric utility’s finance department recommended raising the current energy cost adjustment (ECA) rate of 4.47 cents per kilowatt-hour to 5.15 cents per kWh, according to city spokespeople.
The April increase saw bills for residential customers with an average usage of 1,000 kWh rise from $106 to about $130 per month to address ERCOT market rate increases and increased transmission costs.
Another rate increase could occur in October.
“When we adjusted the ECA last time, we didn’t move it up all the way to where we thought the true cost would be in order to minimize the amount of rate shock immediately,” Terry Naulty, assistant general manager of DME, told the Public Utilities Board at its July 8 meeting. “So this level that we’re recommending here is a really good approximation of where we think a good baseline is going to be for at least the next 12 months.”
At the July 8 meeting, the Public Utilities Board also discussed proposed rate increases for solid waste (1.5%), water (3%) and wastewater (11%).
In an email Friday, Stuart Birdseye, a Denton Municipal Electric spokesperson, and Dustin Sternbeck, the city’s chief spokesperson, said DME was increasing rates “to maintain the financial integrity of the utility” due to the growth affecting the area.
The latest rate increase is part of a quarterly review that the council approved this year.
“While DME has seen significant load growth, DME must purchase the energy needed to serve these new customers and those purchases were made in the higher priced wholesale market,” Birdseye wrote. “As discussed in the Spring, statewide regulatory changes outside the control of DME have increased the cost of energy for all Texans, and this rate is one that will be reviewed quarterly and adjusted to reflect the costs to DME.”
Texas electric rates have increased 15% over the past two years, while neighboring states Louisiana and New Mexico saw decreases in rates, according to an April 22 presentation by the Texas Oil and Gas Association.
In Houston, electric rates increased 16% this year compared to last year, according to Houston Public Media, and in the Dallas-Fort Worth area, they went up 12.5%, according to the Bureau of Labor Statistics.
Besides growth, Texas’ electric grid has also been affected by spot prices that cause sudden swings in electricity prices due to a number of reasons, such as extreme weather. Power costs, for example, briefly surged by 1,600% in May due to a spring heat wave that was projected to drive a record demand.
In June, Pablo Vegas, president and CEO of the Electric Reliability Council of Texas, told state lawmakers in a Senate Business and Commerce Committee that last year, the hottest ever recorded, demand was a record-breaking 85 gigawatts, and peak usage will almost double to 150 gigawatts within six years, according to The Associated Press.
Part of the reason for this peak demand is due to the wave of high-energy-consuming data centers, especially those focused on crypto mining and artificial intelligence, that have been appearing around Texas in places such as Denton and Granbury.
Some data centers are requesting more power from the electric grid than what Lubbock, a city of 264,000 people, currently uses, the AP reported in June.
As Alison Silverstein, a former state and federal electric grid regulator, told NPR in late June, “We cannot grow the grid fast enough to keep up with demand, even before we had every crypto and data center and blah, blah, blah trying to move to Texas.”
DME and the Denton City Council moved forward with plans for another data center earlier this year.
CHRISTIAN McPHATE can be reached at 940-220-4299 and cmcphate@dentonrc.com.
