Rumor Control

There have been several inaccurate or misleading statements made by news media or posted on social media related to the City’s energy contracts. Here are a few of the misconceptions the City would like to correct.

The City is not being open and transparent regarding its electric contracts.

It is important for customers to know that the City is contractually precluded from discussing certain competitive matters related to the operation of the electric utility. The release of certain information related to the wholesale cost of energy, or information that could enable a person to determine the wholesale cost of energy, would be a violation of our energy contracts. Releasing certain data exposes the City to possible legal action from the private companies with which the City contracts for energy.

The City has responded to questions from news media organizations, sent out news releases, provided information on the City website, and responded to questions on social media about the issue. The City has proactively met with members of the press to help educate and share information on this critical topic.

The City posts financial information on its website. The financial information meets the criteria for the State of Texas Transparency Stars program and is audited annually in the City’s Comprehensive Annual Financial Report. The City is awarded a certificate of achievement for excellence in financial reporting annually by the Government Finance Officers Association.

The City releases information to outside groups, but does not release certain information to its customers.

This claim centered on a presentation given by City staff at a conference at Texas A&M University. The entire presentation can be found here. The hourly load and resource forecasts chart does not represent actual data points from the City’s energy portfolio.  The chart includes representative data to illustrate generally how pairing a solar resource with a wind resource can create an energy supply mix that matches the City’s energy demand. The entire presentation given by staff was an educational seminar on energy contracts. It did not include competitive information.

The City lost $26 million.

The loss of $26 million reported by the media is inaccurate. It is true that between 2016 and 2018, the City incorrectly projected the cost of energy by a total $26 million. However, the City compensated for these missed projections with one-time solutions, including adjusting how the City financed electric infrastructure projects (i.e. cash vs. 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.

The City does not want to shortchange the severity of the current challenge. A more accurate characterization of the current position is to reference the change in fund balance. The electric fund is expected to end the year with a fund balance of $1.97 million, which is $6.84 million short of the projected balance for fiscal year 2018.

This problem occurred because the City contracted for renewable energy.

The crux of the current challenge hinges on the large amount of energy the City must sell on the market that is not currently consumed in Georgetown. Like most city-owned utilities, Georgetown contracted for more energy than it currently needs. Any energy that is not consumed by Georgetown customers must be sold into the energy market.

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.

It is not possible for the City to be 100 percent renewable.

The City has never claimed that the electrons produced in West Texas are the same electrons consumed in Georgetown. In fact, a commentary published by the Austin American Statesman on Aug. 11 states, “[t]he city did not set-out to influence other energy providers or shakeup the state grid. We know that Texas is reliant on traditional sources of energy. We know it is impossible to track an electron produced in West Texas all the way to Georgetown. However, we also know that state attributes all of wind farm and solar farm production with Georgetown.”

Texas operates an interconnected electric grid. Georgetown is credited with the energy it pays to put into the grid, regardless of where it is located. The City is credited with putting more renewable energy into the grid than it consumed. According to the state, Georgetown’s customers have been using and paying for all-renewable energy since April 2017.

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