Bottom line drives Georgetown’s switch to solar, wind power

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In Georgetown’s four-year-long process to become the largest U.S. city to purchase all of its energy needs from renewable sources, Mayor Dale Ross said the city had two major goals in mind: eliminate price volatility and seek minimal regulation.

“This is a long-term pocketbook issue,” Ross said. “It’s a win for economics and a win for the environment.”

The city’s shift to renewables is primarily focused on financial benefits. But the change has brought national and international attention to Georgetown at the same time that Texas, which is heavily fueled and funded by its oil and gas industries, is now the fifth leading state in renewable energy growth since 2008, according to a July report from the Environment Texas Research & Policy Center. The report ranks Texas first in wind and fifth in solar electricity growth between 2008-17.

“It shows that if you incentivize clean energy, the community values that and chooses that,” said Bay Scoggin, energy associate for the Environment Texas Research & Policy Center.

Many cities have smaller goals when it comes to renewable energy. Austin has the goal of reaching
55 percent renewable energy by 2025. Georgetown ran on 4.2 percent renewable energy in 2014 before its change to fully renewable sources, according to city data.

“This is a result of a lot of good work, vision [and]policy decisions,” Ross said. “It’s rewarding this day has come.”

Price stability

The city has contracts through Georgetown Utility Systems that include guaranteed rates with solar and wind producers to purchase 144-150 megawatt-hours from each for the next 20-25 years. The contracts do not allow rates to be disclosed, according to city officials. Texas law considers energy rates to be trade secrets and exempts their disclosures through open records requests.

Having a set rate means as inflation has the potential to hike up prices, GUS customers will see minimal difference on their bill because the rate cannot change, said Chris Foster, manager of resource planning and integration for the city of Georgetown. This is also the case if the price was to drop­­­—the cost to residents will remain the same. If there is a difference, it is due to other factors on the bill such as amount used or additional fixed rates potentially established by future city councils, he said.

Having a set rate allows for stability, Foster said, adding that rates can spike and plummet even at different times of the year. Currently, wind is the cheapest source of energy available to the city, and solar is purchased at the same price as energy derived from fossil fuels, Foster said.

Foster also said the city anticipates wind and solar energy will face less federal regulations than fossil-fuel energy sources, a factor that could lead to additional cost savings.

How it works

Georgetown has contracted with NRG Energy Inc. for solar and EDF Renewable Energy for wind. Energy generated by both the solar and wind farms is put into a statewide electrical grid, which is operated by the Electric Reliability Council of Texas. GUS then pulls energy off of the state electrical grid to meet customers’ needs, Foster said.

NRG Energy’s Buckthorn solar plant is located in West Texas. Georgetown has contracted 150 MWh of capacity until 2043. This means in one hour, 150 MW could be produced, Foster said.

The farm’s solar panels are strategically placed to collect the most energy possible, as the panels track the sun moving east to west.

Solar energy can only be collected when the sun is out, so in partnering with EDF Renewable Energy’s Spinning Spur 3 wind farm, located near Amarillo, the city’s energy needs can also be met at night, when wind tends to pick up, Foster said.

Georgetown has contracted 144 MWh of capacity from the wind farm until 2035.

While the combined capacity is 294 MWh, Foster said at any given time Georgetown is only taking about 180 MWh off the electrical grid, as the plants do not operate at the same time of the day.

“Buckthorn will produce the most energy in the heat of the day, where Spinning Spur 3 is at its weakest,” Foster added.

Georgetown had a peak load of 145 MWh in 2017, or in one hour the city used a max of 145 MW of energy, according to the city. But this, too, varies with weather, Foster said. For example, when the temperatures hit triple-digits in July, the city’s peak load was 170 MWh.

The city did not contribute any money toward constructing the solar and wind farms. Instead, the farms used Georgetown’s promise to buy renewable energy as collateral to secure construction loans, Foster said.

Kaiba White, energy policy and outreach specialist for Public Citizen, a nonprofit consumer rights advocate, said Georgetown’s milestone could inspire similar changes elsewhere.

“Georgetown did it,” White said. “And municipal power utilities leaders need to step it up because the bar is now 100 percent, and anything less is not leading.”

Handling population growth

Georgetown continues to be one of the fastest-growing cities in the country, ranking sixth among cities with populations of 50,000 or more, according to U.S. Census data released in May.

The amount of energy GUS is purchasing today is the amount needed for its current customer base and should meet the demand for at least the next five years, Foster said.

Future contracts beyond the five years would need Georgetown City Council approval, Foster added.

Excess energy Georgetown brings in can be put back on the electrical grid and sold for profit, Foster said.

“There’s still a lot of room to grow and time to plan,” Foster said. “We can incrementally grow as the population grows.”

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  1. Paul J. Smith, Jr.

    Outlined below are some points Mayor Ross does not mention when touting Georgetown Utilities Systems (GUS) all renewable electric energy program:

    Approximately 85 percent of Texans can choose an electric service plan that meets their needs. But not the residents of Georgetown! No choice! They get the one size fits all plan that GUS serves up. Although it could have opened the local market to competition when the electric utility market in Texas was deregulated, the council decided not to do so.

    GUS’s customers pay some of the highest electric rates in the area. The fully allocated cost of 500 kWh of residential electric energy from GUS is 13.98 cents per kWh. Round Rock residents in Zip Code 78665, as one example among many, can select from numerous electric services plans the one that best meets their needs. If they restrict their choices to the three highest tiers of retailers as rated by their customers, their potential cost, based on a sample of rates, ranges from 4.8 cents per kWh to 13.9 cents per kWh. For 9.3 cents per kWh they can buy a “green electric energy”; for 13.9 cents per kWh they can get free power on the weekends. They decide what is best for their needs! Not the needs of local politicians! These rates, which were taken from Powertochoose.org, change daily, but the bottom line is clear. GUS’s customers pay more for electric energy than most people in the competitive markets surrounding Georgetown.

    GUS put together a selective comparative analysis of what its customers pay for 1,000 kWh per month compared to what like kind users outside of Georgetown pay. Of the 42 providers included in the survey, which was put together arbitrarily as opposed to using statistical sampling, GUS’ customers pay more for electric energy than 24 of the providers charges. Moreover, GUS proposes to raise the rates its captive customers pay, which could push its rates to the highest quintile – top 20 percent – of the distribution.

    Using the population mean for analysis purposes is short sighted. The researchers should have used a frequency distribution to show how different classes of user’s fare under GUS vs. other retail providers. A substantial portion of the Georgetown population lives in Sun City or in one of the many apartment communities in the service area. In many instances their use of electric energy is less than 1,000 kWh per month, i.e. 500 kWh per month, 750, etc. Their cost per kWh is substantially higher than the cost for 1,000 kWh because the demand charge – $20 per month – is spread over fewer energy units. GUS’s low volume users subsidize the high-volume users, in part because of the demand charge, and in part because they cannot shop for an alternative service plan.

    GUS pays no taxes; it uses tax free municipal financing to expand its system; and it buys power from subsidized renewable energy sources. It is heavily subsidized!

    Electric energy cannot be segregated for transmission and distribution. Accordingly, approximately 82 percent of the power flowing through GU’s meters in 2017 was generated by coal, natural gas, and/or nuclear. The power flowing to GU’s customers will be 100 percent renewable only when the Texas Grid is 100 percent renewable. And that is a long way down the road.

    Natural gas has become the go to fuel for electric generation. Over the last decade its price has dropped from nearly $14 an MCF to approximately $3.00 an MCF. Moreover, as of last week the price for a December 2018 futures contract at the Henry Hub was approximately $3.01. It changes hourly. Natural gas prices are likely to remain low and could trend even lower. If the trend continues, it could undercut GUS’s decision to put all of its eggs in the renewable basket. Over the long run, GUS’s customers could pay considerably more for electric energy than would be the case if GUS did not sign 20 and 25-year contracts for renewable energy. Its refusal to reveal what it is paying per MGW for renewable energy is unconscionable. Moreover, no sophisticated financial planner attempts to forecast the price of a commodity for 20 to 25 years. The assumption that the renewable energy will cost GUS’s less in the long run than if it had a better balance of fuel mix – wind and solar can be considered a fuel – is nearly impossible to prove. It is a typical claim made by politicians that will be long gone before the period is up.

    If the council believes that it has implemented the optimum electric energy plan for GUS’s customers, it should have no fear in opening the Georgetown retail electric service market to competition. As soon as potential and existing customers realize what a good deal they are getting from GUS, they will shun the overtures of all comers!

    Even if an existing customer or potential customer of GUS could not get a better rate in the Texas Electric Service Market, they should have the opportunity to decide for themselves. Having the city council decide what is best for the “people” when 85 percent of their fellow Texans can choose an electric plan that suits their needs is government overreach.

    Hopefully you will do an investigative story on Georgetown’s 100 percent reliance on renewable electric energy and tell all sides of it. Most of the people that I know in Georgetown – I live in Sun City – don’t understand how GUS is manipulating them or the options that are available to the 85 percent of Texans who live in areas where they can choose an electric plan that best meets their needs.

  2. Great article by Ali Linan, and a good explanation of how the renewable generation entities feed power into the grid, and Georgetown draws down equivalent amounts at this end. Comments to the effect that the energy we actually use is mainly non-renewable are misleading and irrelevant. A kilowatt hour is the same thing, regardless of how it is generated. In theory Georgetown could have strung lines from the generation points back to the city at great cost and for no real purpose. Imagine the howls of protest that would have created!

    • Paul J. Smith, Jr.

      If you listen closely to the mayor’s claims regarding Georgetown Utilities System’s (Gus) 100 percent renewable electric energy, he rarely mentions, if at all, that the power flowing into GUS’s system is mixed, i.e. coal, natural gas, nuclear, wind, and solar. Or that wind and solar made up only 18 percent of the power used by GUS in 2017.

      Given the distances from the wind and solar farms, it is probable that the mix of power used by GUS was tilted toward nuclear, coal, and natural gas in 2017. Wheeling power more than 300 miles is not economically feasible. And the distances from the wind farm and solar farm to Georgetown are more than 300 miles.

      You are correct. GUS, which is a bit player that uses approximately 1 to 1.2 percent of the power generated in Texas, is committed to replace the power that it draws from the grid with wind and/or solar power. Provided they can generated. But this is not the impression that Mayor Ross has left in many if not most of his presentations. I doubt that he has a solid grasp of electric generation, transmission, and distribution.

      Unfortunately, the captive customers of GUS have no way of determining whether they are getting a good deal from the 100 percent renewable status of GUS. The terms and conditions of the contracts are not available for inspection.

      As it stands, GUS customers pay considerably more for electric energy than many of the people in nearby communities that are open to competition. Approximately 85 percent of Texans live in areas that are open to competition. They can shop for an electric plan that best meets their needs.

      So, as I have noted, if the council believes that it has constructed the best deal for the residents of Georgetown and the captive customers of Georgetown Utilities Systems, it should have no qualms about opening the market to competition. Let the people of Georgetown choose an electric plan that best suits their needs. And not the needs of local politicians!

      So, why won’t the city council open the local market to competition. One reason is because they transfer the surpluses from the Electric Fund to the General Fund, thereby enabling the council to set the property tax rate lower than it might otherwise be. In 2017 they transferred approximately $5.3 million from the Electric Fund to the General Fund. Why did they have a surplus in the Electric Fund? Because they are able to stick their customers, who have no choice, with some of the highest electric rates in central Texas.

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Ali Linan
Ali Linan began covering Georgetown for Community Impact Newspaper in 2018. Her reporting focuses on education and Williamson County. Ali hails from El Paso and graduated from Syracuse University in 2017.
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