Consultants to help Georgetown, Texas with energy transition

04 March 2019 Consulting.us

Georgetown, Texas is seeking external consulting help with its energy situation. The city has requested proposals for a complete assessment of its energy management practices, as well as for ongoing managed services related to its energy portfolio.

Georgetown is approximately 30 miles north of Austin, and has a population of about 60,000. The city’s utility company opened its first power plant in 1911, which was coal- and diesel-fired, and ran until the 1940s. From 1942, the utility sourced power from the Lower Colorado River Authority, but nullified the relationship in 2012. It has since entered into contracts for 144MW of wind energy from Spinning Spur 3, and 150MW of solar from Buckthorn. The city also has a natural gas contract with Mercuria.

But Georgetown has experienced “significant budget variances” since approving these energy contracts, leading it to ask for external support in ensuring the “sustainability for future electric energy resource management functions.”

That’s administrative speak for, “We messed up on our contracts and we need help.”

Consultants to help Georgetown, Texas with energy transition

The city locked into a number of long-term, renewable energy contracts in 2012 based on what seemed at the time to be a good deal - but Georgetown didn’t expect oil and gas prices to fall as much as they have. In 2018, the city’s bill for solar and wind was $8.6 million more than anticipated, due to low oil and gas prices forcing the city to sell surplus renewable power for less than forecasted. The city attracted international attention when it started sourcing 100% of its power from renewables in 2017. That's good press, but it has resulted in budget shortfalls and rising energy bills for residents.

Georgetown is now trying to renegotiate quarter-century-long wind and solar contracts to try to get a better deal. But contracts are contracts, and why would the energy providers want to cut a worse deal for themselves now? The city had a poor risk management strategy, and a deficit in accurate forecasting of costs and demand. In addition to depressed energy prices from cheap oil and gas, consumer demand has been lower than projected due to conservation and energy-saving technology. Georgetown is now buying too much energy, and is selling off excess power at wholesale prices that it thought would be higher.

Georgetown has lost $21.8 million on wind and solar contracts from 2016-18, according to figures from the city manager.

The city has now made a request for proposals to consultants for a comprehensive review of the city’s management practices in buying and managing energy, as well for ongoing managed services related to its energy portfolio. The contract winners are expected to be announced in April.

Georgetown has a budget of $40,000 for the management assessment, while the energy portfolio consulting gig price will be based on submitted bids.

The winner of the energy portfolio management contract will provide ongoing strategy, power marketing, trading, and operations management, contract management, scheduling and settlement services, performance reporting, and regulatory and compliance services.

Meanwhile, the requests for proposals won’t affect Georgetown’s efforts to renegotiate its renewables contacts, which will be continue to be led by city management.

Related: Knowledge is power: University of Iowa seeks utilities partner


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