The City of Georgetown is committed to keeping the community informed. This page provides information related to the City’s energy contracts and the current challenges facing the City related to increased costs for purchasing power. This page will be regularly updated as new information becomes available.
In 1910, Georgetown voters approved a bond to build the Georgetown Light and Water Works plant on Ninth Street. Over the last century, Georgetown Utility Systems continues to be a highly-reliable, community-owned and operated electric utility. It is owned by the people of Georgetown and it invests directly in the community.
Benefits of a community-owned utility
Since 2008, the electric fund has paid a return on investment to the city’s general fund of nearly $50 million.* These dollars directly offset any additional reliance on property taxes, sales taxes, or other revenues to operate core city services like the police, fire, library, and parks departments.
The community derives great value from having a citizen-owned electric utility. Not only are citizens the beneficiaries of Georgetown Utility Systems’ returns on investment, this ownership ensures coordination between water, wastewater, transportation, and development throughout the community. Further, employees of the utility live and work in the community they serve. Profits are retained in Georgetown for the betterment of the entire community.
* For context, the city’s general fund received more than $5 million on its return on investment from the electric department in 2017. This represents nearly 9% of general fund revenues for the year.
Over the past few years, the energy market in Texas experienced a fundamental change. Forecasts provided by the Electric Reliability Council of Texas, the State’s energy grid operator, have proven to be unreliable. What were perceived as anomalies in 2016 and 2017, such as reduced consumption, unpredictable pricing, and unusually cold weather, masked the true impact of a depressed global energy market. The effect of depressed energy prices became abundantly obvious in 2018.
At the same time, the utility is seeing a drop in consumer demand which is largely driven by conservation efforts, energy-saving technologies, and more energy-efficient new construction. Due to these two factors, the City ended the 2018 fiscal year with a $6.84 million shortfall in the electric fund, leaving a fund balance of $1.97 million.
In 2016, 2017, and 2018, the City addressed these ongoing challenges with one-time solutions, including adjusting how the City financed electric infrastructure projects, such as cash versus debt financing, adjusting the timing of projects, increasing the PCA on electric bills, and completing a rate study. All these efforts were intended to resolve what was previously perceived as one-time problems.
Suffice it to say, the City’s strategy to mitigate fluctuating costs associated with purchasing energy has not worked. The focus on ensuring adequate energy supply and mitigating high-prices overshadowed the short-term consequences of having a surplus of energy in a depressed market. The City did not mitigate the risks associated with clearing energy at low prices.
This year, recognizing a fundamental shift has occurred in the energy market, the priority for the City is to change the on-going financial obligations of the electric fund. This could involve reducing the energy Georgetown is obligated to purchase, selling a portion of the energy to a third-party, adjusting the terms of some of the financial obligations, or some combination of all these efforts. The City is also exploring options to better manage the energy portfolio day-to-day.
Importance to Georgetown’s future
Going forward, the electric fund is critical to helping achieve City Council’s vision – Georgetown: a caring community honoring our past and innovating for the future. Having a community-owned utility has proven incredibly valuable over the last 100 years. As the city works through this current challenge, we remain committed to ensuring this incredible institution remains viable and an asset to benefit the community for years to come.