City completes energy assessment

May 10, 2019

Schneider Engineering has completed its assessment of the City’s practices related to purchasing and managing energy. This assessment is one of many efforts to help improve the financial performance of the City’s energy portfolio.

“The purpose of this assessment is to help the City work through a process to better manage energy contracts,” City Manager David Morgan said. “I think this is a candid and thorough assessment of our current processes and a recognition of blind spots and shortcomings up to this point.”

“I am looking forward to bringing in new partners to help us improve the day-to-day management of our energy portfolio and putting in place policies and procedures that reduce our financial risks moving forward,” Morgan said.

The report highlights several key steps to improve the management of the electric utility. First, the report suggests securing new third-party energy management partners that more rapidly respond and react to changing market conditions and better ensure against market volatility. Along with bringing on new partners, the report recommends focusing internal and external resources on increasing the oversight and accountability for decision-making regarding portfolio management.

Second, the report suggests developing new measures to evaluate portfolio performance, as well as clarifying the process for how these measures are shared in meaningful ways to different audiences. Additionally, the report recommends making better use of the power cost adjustment, or PCA. The PCA allows the City to recover costs associated with purchasing energy.

Third, Schneider recommends developing and implementing a comprehensive risk management policy that sets boundaries on risk tolerances, financial obligations, and guides decision-making at all levels of the electric utility.

Finally, the assessment recommends studying alternative governance structures for the electric utility (e.g., a separate oversight board) and the implications of opting in to the competitive retail market to fully mitigate the City’s risks associated with operating the utility. This study should focus on understanding the financial implications for customers as well as the City, with a specific focus on how the existing long-term power supply contracts could be addressed when opting in to the retail market.

The assessment will be presented during the regularly scheduled City Council workshop on Tuesday, May 14, at 3 p.m. The City will also host a public meeting to present the findings and answer questions from the public on Monday, May 20, starting at 6 p.m. The town hall-style meeting will be in the Council and Court building, located at 510 W. Ninth St., as well as broadcast on Suddenlink Channel 10 and on

Schneider was selected to complete this assessment after a competitive bidding process. Prior to starting the assessment, Schneider presented its scope of work and project plan to City Council at its March 26 workshop meeting.

“This summer, the City Council will review agreements with new energy portfolio managers who will be better able to respond to the complicated and dynamic energy market, as well as provide more data and market insight to inform our decision making,” Morgan said. “Additionally, we will be working on a recruitment and staffing plan for the management of our electric utility to best meet these challenges moving forward.”

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