Electric utility grows financial reserves, still below target
At its Nov. 26 meeting, City Council was briefed on several items related to the City’s electric utility. The utility is expected to end Fiscal Year 2018-19 with reserves of more than $6 million, which is up from last year’s balance of less than $2 million. The goal of the electric utility is to have reserves in excess of $19 million.
In addition to growing financial reserves, the City is working to contain costs for energy. The expected bill for all the City’s energy in 2020 is $59.5 million, up from $55.6 million in 2019, and $52.5 million in 2018. Several factors contribute to these increased costs, including the relatively low cost of energy on the open market throughout the year, the large amount of energy the City is obligated to purchase beyond what is needed to serve Georgetown electric customers, and challenges associated with the City’s energy providers generating and transmitting energy to the statewide grid.
In 2019 the City worked to improve the finances of the electric utility to account for increased energy costs. This included selling assets, increasing rates, decreasing expenses, and completing a management assessment. Based on that assessment, the City is finalizing a new risk policy and retaining a new team to manage the City’s energy contracts. The City is currently in negotiations with Shell Energy North America and Tenaska Power Services to manage the City’s energy portfolio, with a final contract expected to go to City Council for approval in December. Finally, the City hired a new general manager for its electric utility in October.
“I am focused on ensuring our electric utility is safe, reliable, and cost-competitive,” General Manager of Electric Daniel Bethapudi said. “It is a top priority of mine to reduce our customer’s electric rates, but my immediate concern is to ensure that our community’s electric utility is financially stable.”
Earlier this year, the City took advantage of an opportunity to sell renewable energy credits, or RECs, which resulted in more than $700,000 of additional revenue for the electric utility. These RECs traditionally are retired against energy usage and measure how much renewable energy an electric utility can claim.
“The sale of the RECs does affect Georgetown’s status as a 100 percent renewable electric utility,” City Manager David Morgan said. “Right now it is more important that we stabilize the utility’s finances than maintain our renewable energy status.”
The City’s policy for its energy portfolio is for 30 percent of Georgetown’s energy to come from renewable sources.
Background on Georgetown’s electric utility
In 1910, Georgetown voters approved a bond to build the Georgetown Light and Water Works plant on Ninth Street. Over the last century, Georgetown has developed and maintained a highly reliable, community-owned and -operated electric utility. It is owned by the residents of Georgetown and reinvests directly in the community.
Historically, the electric utility has paid a return on investment to the City’s general fund in excess of $5 million annually. These dollars directly offset additional reliance on property taxes, sales taxes, or other revenues to operate core services like the police, fire, library, and parks departments.
