Consultant: Georgetown wise to seek third party to manage energy contracts

Georgetownu2019s energy contracts have the city buying more energy than needed to meet demand in present day.

Georgetownu2019s energy contracts have the city buying more energy than needed to meet demand in present day.

Georgetown should move forward in hiring a third party to manage its electric contracts and take steps to increase oversight and accountability in the city’s decision-making, according to an outside consultant’s report presented May 14 to City Council.

The city hired Schneider Engineering this spring to complete an assessment of the city’s electric resource management after several years of budget deficits tied to Georgetown’s contracts with wind and solar power producers.

City officials will host a public meeting at 6 p.m. May 20 to present the report’s findings and answer questions. The meeting will be in the Council & Court Building, 510 W. Ninth St., Georgetown.

Schneider estimated the assessment would cost about $30,000 to complete.

Steve Moffitt, a partner with Schneider, shared conclusions, key findings and recommendations with City Council during a May 14 policy workshop.

Among the Schneider report’s highlights is a recommendation for the city to hire a third party to manage Georgetown’s existing energy contracts, Moffitt told council members.

City officials have already made progress toward that goal, issuing a request for proposals in February seeking management services for its energy contracts. City Council will need to approve whichever outside firm is selected to take the job.

Georgetown officials are trying to reduce the excess amount of energy the city is obligated to buy through its contracts with wind and solar power producers. The situation caused a $6.84 million deficit in the city budget’s electric fund for fiscal year 2017-18.

Projected energy costs for Georgetown between 2016-18 were $26 million lower than what the city needed to meet its contractual obligations and provide electric service.

The power cost adjustment, or PCA, portion of customers’ bills increased Feb. 1 by $0.0135 per kilowatt-hour, setting the new rate at $0.0175 per kilowatt-hour until September. The increase will generate about $6 million to help offset cost overages should they occur again this year, according to the city.

Report's findings

Schneider’s report includes a variety of information on the city’s energy resources, including historical background and financial impacts as well as the city’s organizational structure and issues involving Texas’ wholesale energy market.

Moffitt told council members that having deeper expertise from outside energy consultants would help the city better manage its energy portfolio within the often-changing dynamics of the wholesale market.

In addition to hiring outside management, the report recommends the city establish oversight processes, including new reporting guidelines and contract valuation procedures. Georgetown should establish new measures to evaluate its energy contracts and make better use of the PCA to recoup costs associated with energy purchasing, the report states.

The report also recommends the city “leverage internal and external resources to increase oversight and accountability for decision-making regarding portfolio management.”

Schneider’s report states the city should develop a comprehensive risk management policy and consider creating a new oversight board for Georgetown Utility Systems, the city-owned utility.

City Council will start reviewing proposed agreements with a new energy portfolio manager this summer to begin the process of implementing new procedures based on the assessment, according to City Manager David Morgan.

Read the full assessment:


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