Georgetown moves forward with two companies for electric energy portfolio management

2

Georgetown City Council moved forward in contract negotiations with two companies for its electric energy portfolio managed services Aug. 27.

The council voted to continue contract negotiations with Shell Energy North America and Tenaska Power Services for the management services. The two were among three finalists for the services. The third company was Boston Energy Trading and Marketing LLC.

The city was seeking consultant services to improve its energy portfolio management by offloading excess power; reporting energy positions, exposure and risk; forecasting and budgeting power costs; and monitoring Electric Reliability Council of Texas, or ERCOT, transmission.

“We issued this [request for proposal, or RFP]because we felt we needed to outsource to improve our capabilities,” Georgetown City Manager David Morgan said.

The city issued a RFP in February with bids due in March. Twelve companies bid for the contract. Morgan said after committee interviews, the three finalists were decided to be presented to council.

City staff will negotiate a contract for electric energy portfolio managed services with the two companies and bring the contracts to the City Council for approval.

In November, the city found its 2017-18 electric fund budget $6.84 million short at $1.97 million instead of the projected $8.81 million. This was due to the city over-purchasing power and selling the excess back to the market at a loss after energy prices dropped.

The city has since tried to mitigate the issue by outsourcing various services to different third-party vendors.

In other business

City Council granted the contract for the Old Town Northeast Sidewalk project in the amount of $855,000 to Choice Builders LLC of Temple. The project will provide Americans with Disabilities Act-compliant sidewalk along Seventh Street from the Southwestern University area to Myrtle Street.

Share this story
2 comments
COMMENT
  1. Incorrect statement on the Georgetown Utility electric contract mess. The City has tried to ‘mitigate’ the cost by increasing electric rates twice, not by ‘outsourcing various services.’ The outsourcing to experts is what the City should have done BEFORE entering into these contracts with no (as in ‘zero’) risk management in place. The city leaders have committed malfeasance, and are trying to soft pedal this unbelievable mess.

    Each month of 2019 our electricity bill is now over 20% more than it was under the rates in effect in November 2018 (based on using current usage and last year’s and this year’s rates).

    Mike Weis

  2. Mr. Weis is spot on. To be more specific:

    The fully allocated cost of 500 kWh increased 20.99 percent, while the price of 1,000 kWh is up 20.49 percent, and that for 2,000 kWh is 20.17 percent higher.

    What can a GUS customer do about the rate changes? Not much! Cut back or move! No market alternatives for GUS’s customers! The Price of Monopoly!

    How much would Georgetown’s residents pay for electric energy if the market were open to competition? Round Rock Zip Code 78665, which is in the close by deregulated market, shows a possibility. There customers can choose from 45 different service plans offered by 32 Retail Energy Providers (REPs) with prices below GUS’s strike price.

    As of the end of March 2019, the price of 500 kWh in Georgetown was 16.96 cents, while the median price in Zip Code 78665 was 10.9 cents. GUS’s price was 14.4 cents for 1,000 kWh; the price in Zip Code 78665 was 10.4 cents. The price of 2,000 kWh from GUS was 13.2 cents compared to a median of 10.1 cents in Zip Code 78665. All prices are fully allocated, which means the monthly customer service charge is rolled into the price.

    The median price for Zip Code 78665 was calculated from the 45 price points below GUS’s rate. It assumes that in a competitive market most people would not pay more for electric energy than what they could buy it for in Georgetown.

    The annual savings for 500 kWh bought at the median price would be $360.90. For 1,000 kWh it would be $484.20; for 2,000 kWh it would be $742.80. The annual savings for the lowest priced plan in each category would be $432.90, $604.20, and $958.80.

    If the savings for 1,000 kWh were invested monthly in an S&P 500 Index Fund, at the end of ten years the balances for the median and the low-price spreads would be approximately $7,025 and $8,766. At the end of 30 years, they would be $$49,513 and $61,784.

    GUS’s captive customers should be able to choose an electric service plan that meets their needs; not the needs of the city council. Tell your council person to open the market to competition. Let the people decide what is best for their situation.

    Will it happen? Only if hundred if not thousands of GUS’s captive customers make it clear to the council that they want choice, or they will get start the process of recalling the mayor and the council. Unfortunately, given the apathy in the community, I am not hopeful.

    GUS is a poster child of why government should not own or operate a commercial activity, i.e. electric utilities, gas utilities, airports, passenger railroads, etc. Incompetence is a descriptive word that best describes government on its best day.

Leave A Reply

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.
Back to top