City adjusts customer energy charge

Jan 22, 2019

The City of Georgetown will increase the power cost adjustment, or PCA, on customers’ electric bills starting Feb. 1. The PCA allows the City to recover costs associated with purchasing energy.

Customers will incur an increase of $0.0135 per kilowatt hour, resulting in a new PCA of $0.0175 per kilowatt hour through September. The average customer uses 949 kilowatt hours per month and will experience a $12.82 increase on their monthly bill.

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.

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.

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.

The current challenge is not related to renewable energy sources. While the City has received national recognition for its move to renewable energy, it was originally a decision driven by economic considerations to stabilize long-term power rates through fixed-price contracts while reducing any regulatory risks associated with fossil fuels.

The City executed its current energy contracts based on a 20-year forecast of continued City growth. Like most city-owned utilities, Georgetown contracted for more energy than it currently needs. Georgetown continues to be one of the fastest growing cities in Texas, and the City must be ready to serve demand from consumers and businesses. 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.

The PCA is one tool to ensure the financial stability of the electric fund as the City works to address its current financial arrangements.

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