The city will implement a $0.0135 per kilowatt-hour increase to the power cost adjustment, or PCA, portion of customers’ bills, setting the new PCA at $0.0175 per kWh. The increase will continue until September.
An average utility customer using 949 kWhs of electricity per month will see a $12.82 increase, according to the city.
A separate increase of $4.80 to the base rate for electricity customers began Jan. 1. City officials said the base rate increase was necessary to cover growing operating costs for electric service.
City Council members were told in November the city’s electric fund would end fiscal year 2017-18 with $6.84 million less in revenue than initially projected.
When the city entered two long-term contracts with solar and wind energy producers, officials chose to buy more energy than Georgetown needed in the present in order to lock in fixed rates from the producers and plan ahead for future city growth with the intention of selling excess energy to buyers on the wholesale market.
However, projections that showed increases in electricity prices did not materialize.
Jim Briggs, the city’s general manager of utilities, told council members Jan. 22 that the fundamentals of the state’s energy market have changed significantly since the long-term energy contracts were first negotiated: a 20-year contract with EDF Renewable Energy’s Spinning Spur 3 wind farm began in 2015, and a 25-year deal with Clearway Energy’s Buckthorn solar plant began in 2018.
Officials are now trying to find ways to reduce the amount of energy the city is obligated to purchase, including by renegotiating its long-term contracts.
City Manager David Morgan said the power cost adjustment increase on electric customers’ bills would help avoid a similar situation to 2018 from happening this year. Morgan described the drop in energy prices and subsequent loss of projected revenue from electricity sales as a “worst-case scenario” for the city’s utility.
City officials have posted an FAQ online with additional information.