If nothing changes at the state level, Georgetown is set to pay an estimated $44.8 million by April 1 to the Electric Reliability Council of Texas for energy purchased between Feb. 16-19.
During a March 2 special meeting, City Council approved the city’s plan which includes a revenue bond issued over 10 years. The city plans to use the existing power cost adjustment, or PCA, to help cover the cost of the bond as it is paid back over 10 years. The annual debt payment for the bond being issued is about $5.4 million, officials said.
This move will not increase customers' rates due to the storm over that period.
Officials warn that the PCA, which is currently set at $0.01375 per kilowatt hour, will not change due to the storm, but other factors that may occur in the future still have the potential to impact the rate. This decision does not guarantee the rate will remain the same during the entirety of the 10-year period, officials said.
If a customer sees a higher-than-normal electric bill, it is not due to a rate or cost increase, officials said, but rather due to increased use.
“Even with the mandated power outages from ERCOT, the heating and reheating a home consumes considerable energy and is likely to result in higher bills this month,” officials said.
What will the bond pay for?
The total $47.8 million is broken down into two separate costs: cost to purchase additional energy and cost for ancillary services, which are charges for reserve or on-demand power supply.
During the storm, Georgetown used about 16,000 megawatts of power.
In January, the price per megawatt hour was set at $20.79. During the storm, the price per megawatt hour hit the maximum set price of $9,000 per megawatt hour and remained at this price on the ERCOT market for 70 hours, said Daniel Bethapudi, city general manager for electric utility.
While 80% of the needed power was covered at the previous rate, the remaining 20% was subject to the price increases, Bethapudi said. Broken down, this means that about 13,000 of the total megawatt hours the city used were charged at the lower rate, but the approximately 3,000 additional hours was subjected to the $9,000 price tag. This brings the total to about $27 million for purchased energy.
After that, the city also need to pay for ancillary services, which Bethapudi estimated will be about $17.8 million. This brings the total to about $44.8 million.
By issuing the debt, city officials said they believe they will be able to cover the cost of the purchases over time without placing the burden on customers.
“Even as we got word on the exorbitant cost of energy while we were in the middle of the disaster, our focus was delivering electricity to our customers and controlling the variables we could,” Mayor Josh Schroeder said in a news release. “Another variable we have some control over is the burden placed on Georgetown electric customers as a result of this event, and the steps we took Tuesday will mitigate additional costs for our customers.”
The city also is pursuing a surety policy to cover an additional $6.4 million in reserves, which will be required to maintain debt service coverage ratios after the costs from the winter storm. The one-time, up-front payment for the policy will be made using existing revenue, the news release said.
These are only a portion of overall expenses the city will face due to the storm, officials said. But Georgetown Utilities is not the only provider facing financial burdens from the storm, as other entities across the state too continue to grapple with the charges.
“This is not just a Georgetown issue,” City Manager David Morgan told Community Impact Newspaper. “It's a statewide issue. You're going to find this in almost every aspect of the energy industry in Texas.”