City issues $48M debt issuance, no rate change for customers
Updated, March 24: The City of Georgetown issued about $48 million in a 10-year bond to pay for the unbudgeted energy costs incurred due to February’s winter storm. City Council in a special-called meeting March 2 directed staff to pay the debt over 10 years from electric utility revenues at current rates. Council approved the bond at its regular meeting March 23.
“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. “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.”
As a result of the planned bond issuance, Georgetown electric customers will see no difference in their electric rates, despite the high energy costs during the storm. The City’s bill currently was due at the beginning of April 2021. Council and staff are committed to retiring this debt as soon as possible, while maintaining competitive rates for customers. Any changes to rates or the bond needed because of an amended bill will be brought before the council for discussion and direction.
At City Council direction, the City will use the existing power cost adjustment of $0.01375 per kilowatt hour to help cover the cost of the bond as it is paid back over 10 years. For the average residential customer, that amounts to about $10 a month. The current PCA generates about $6 million a year, which would cover the additional, annual debt payment of $5.3 million from the 10-year bond.
The City also is pursuing a surety policy to cover an additional $6.4 million in reserves, which may 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 paid for using existing revenues.
Customers might have seen higher-than-normal electric bills for February due to increased usage. Even with the mandated power outages from ERCOT, heating and reheating of a home consumes considerable energy and is likely to result in higher bills this month. The City has multiple options to help you pay your electric bill, such as funding assistance through partner agencies and in-house customer programs you may qualify for. People can contact Customer Care at 512-930-3640 or email@example.com to discuss options.
The City currently owes about $48 million for energy used Feb. 14 through 20. About $21 million of that is for about 3,000 megawatt hours. The remaining 13,000 megawatt hours the City used during the storm were generated by providers at contracted rates. Roughly $27 million of what the City owes is for ancillary services, which are charges for reserve or on-demand power supply by ERCOT that cost as much as $25,000 per megawatt hour during the event. For context, the City paid $710,000 in ancillary services in all of 2020. The remaining $21 million is for energy costs, which peaked at $9,000 per megawatt hour. Last month, the average cost per megawatt hour was $20.79. The $9,000 per megawatt hour maximum price was in effect in the ERCOT market for 70 hours from Feb. 16 to 19.
“We’re still hopeful PUCT and legislators find solutions that will help alleviate the financial burden being placed on utilities across the state,” Schroeder said. “I encourage you to reach out to your state representatives and trust we will be doing the same.”
How will the recent winter storm affect my electric bill?
Georgetown rates will not change, but you could see higher bills due to usage.
While it is true that the wholesale price of power increased exponentially for all Texas electric utilities during February’s extreme weather, City of Georgetown electric customers will see no difference in their electric rates at this time. At the direction of City Council, the City of Georgetown took out a loan of about $48 million, to be paid by electric revenue over 10 years, to cover our unbudgeted energy costs from the storm. Interest on the loan will total about $5 million at a 1.73 percent interest rate. Any changes will be communicated publicly through this webpage, other City communications channels, and the media.
If your electric bill was higher than normal for this time of year, it likely was due to how much energy you used during the storm. Heating your home during cold weather uses a significant amount of energy, even more so if you experienced outages and needed to reheat your home. We know some of those outages were in response to ERCOT’s load shed/rotation outage requirements to protect the statewide electric grid from collapsing. We have multiple options to help you pay your electric bill, such as funding assistance through partner agencies and in-house customer programs you may qualify for.
The rest of this page provides more detail on what happened and answers to frequently asked questions about the situation.
Virtual Town Hall about electric costs
Watch the recording of the March 11 town hall. The event featured presentations and Q&A from Georgetown Mayor Josh Schroeder, City Manager David Morgan, and electric general manager Daniel Bethapudi.
Please note: This information is about City of Georgetown electric customers only. If you are a customer of Pedernales Electric Cooperative or Oncor, you will need to review their information or make contact with them to determine how the storm will affect your bill. Here is a map of the different electric service providers in Georgetown if you aren’t certain.