San Marcos Mercury | Local News from San Marcos and Hays County, Texas

March 24th, 2010
City tables 25-year energy deal with LCRA


Lower Colorado River Authority (LCRA) Chief Executive Officer Tom Mason speaks to the San Marcos City Council, while LCRA executive Dan Kuehn listens

Associate Editor

In an effort to satisfy public concerns about transparency, the San Marcos City Council tabled approval of a 25-year agreement with the Lower Colorado River Authority (LCRA) as the city utility company’s energy provider Tuesday. Which isn’t to say the contract will ever be made public.

Instead, the city will conduct a public information session, enabling citizens to raise questions and address concerns. The date of the meeting has not been determined.

A city resolution calling for approval of the wholesale power agreement with the LCRA said the agreement “is exempt from public disclosure and shall not be released or otherwise made public” because disclosure would provide advantage to competitors or prospective competitors of the San Marcos Electric Utility (SMEU).

San Marcos Director of Public Services Tom Taggart said LCRA has asked that the details remain confidential because 11 of its 43 customers have yet to sign new contracts. Taggart said the 52-page agreement will never be made public.

The agreement calls for the approval of an amended and restated agreement with the LCRA for a term to expire on June 25, 2041. LCRA has been the sole provider of electricity for San Marcos since the purchase of the distribution system. Though the existing contract between San Marcos and LCRA expires June 25, 2016, the city has to notify LCRA whether it wants to extend or opt out of the contract five years before the expiration date.

In 1999 the Texas Legislature passed legislation allowing for deregulation, enabling cities to obtain bids from different retailers. In 2001 the San Marcos City Council passed a resolution aimed at staying regulated and in business with LCRA, according to City Attorney Michael Cosentino.

After Councilmember Kim Porterfield asked city staff why there hasn’t been an effort to seek other retailers, Taggart said, “mainly, we have not been advised by council to do so.”

Taggart said the city has received one bid from another source and dealings “haven’t progressed very far on that.” Taggart would not release the name of the other retailer, citing a confidentiality agreement.

City Public Services Assistant Director Kyle Dicke said that once a city opts to deregulate and cannot reregulate, it is subject to buying electricity from areas like Dallas, Fort Worth, Waco, and Corpus Christi.

Taggart said most cities find that deregulation is often more costly, adding that LCRA has only had one rate increase in the last 19 years. The existing LCRA rate is approximately $0.08 per kilowatt hour.

Dan Kuehn, Executive Manager of Wholesale Power Services for LCRA, said cities tend not to deregulate because the competition costs more money.

Taggart said city staff decided to take on negotiations a year before the 2011 deadline out of an abundance of “caution,” because, he said, they were unaware of how long dealings would continue and he didn’t want to be limited with time.

LCRA Chief Executive Officer Thomas G. Mason said the LCRA is prepared to carry out the contract, should the city approve it. He said LCRA is looking into new methods of producing electricity, ranging from solar to nuclear, so it can meet the needs of all customers as the Central Texas population continues to swell.

LCRA’s power generation portfolio includes two traditional natural gas-fired power plants, one coal-fired plant, a combined-cycle gas-fired plant, six hydroelectric dams and long-term purchase contracts from three West Texas wind farms.

Under the current proposal, San Marcos has the option to purchase up to 35 percent of its energy from non-LCRA sources. The city also would be enabled to aggregate with other cities and cooperatives for a bigger purchasing power.

LCRA would financially reward San Marcos for savings from efficiency and rebate programs, and any LCRA acquisition of facilities within San Marcos would not result in loss of property tax revenue for the city. LCRA also has agreed to not purchase the Hays Energy Power Plant, and language is included for any future generation sites.

Councilmember Chris Jones added the amendment Tuesday asking for the public information session. The city council will take up the LCRA agreement for a vote at its next meeting.

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0 thoughts on “City tables 25-year energy deal with LCRA

  1. “[T]he agreement “is exempt from public disclosure and shall not be released or otherwise made public” because disclosure would provide advantage to competitors or prospective competitors of the San Marcos Electric Utility (SMEU).”

    Who are those competitors? As a resident, if I seek to power my home with a provider other than SMEU, who can I call? NOBODY, I must buy from SMEU. The agreement is to remain secret because LCRA would like to continue to price discriminate among its buyers, and we will not know until after signature if that works in our favor or disfavor.

  2. While this secrecy bothers me – Houston de-regulated a few years back. Electric rates have skyrocketed since amongst all the providers. It certainly hasn’t brought the decrease in prices due to competition as was promised the citizens of Houston.

  3. Who is going to be brave enough to submit a Freedom of Information request to view the contract and any correspondence between the City of San Marcos and any other entity that has approached the city about supplying power. I would also like to see if there has been any attempt by the City to contact other power providers. I think the Attorney General is going to have trouble backing the city on this one. He may do so but only because LCRA is a political and economic force that is not to be screwed with. The landfills around Central Texas is full of once promising politicians who have tried to buck LCRA. They play rough and they never forget or forgive.

  4. It’s not a matter of bravery, but of determination and resolve.

    Who has the time and energy to hold our elected officials accountable for acting in the best interest of the public, who elected them?

    It is pitiful that this question even needs to be asked.

    The issue certainly needs to be addressed, nonetheless.

  5. Unfortunately, any FOIA request would probably take too long to be useful. That is assuming the LCRA isn’t able to get an exception, which it seems they would be likely to try. Depending on what the request is for and how hard someone wants to fight against it a FOIA request can take years. At the same time, you lose every battle you don’t fight. Anyone want to join me in filing a request?

  6. The applicable law is the Texas Public Information Act (TPIA), but the LCRA has gotten good at shielding themselves under the “competitive matters” exception. This would be something to bring up with Rep. Rose and have the State Legislature look at, but unfortunately that is some ways down the road.

  7. To clear up confusion, Section 551.086 of the Texas Government Code allows municipally owned utilities to discuss matters pertaining to wholesale power supply in executive closed session. A contract with a wholesale power supply, like LCRA, falls under that allowance in the Texas Government Code. Additionally, to date, all Open Records Requests to see wholesale power supply contracts have been denied by the Attorney General because they do represent confidential information to both the supplier and the municipally owned utility and are protected as such under the above referenced Section 551.086.

  8. Mr. Phelps, the question then becomes is it “allowed” or “required”? If it is the former, allowed, it may be done, but it would not have to be done so that the City could release the information. The old may’shall situation.

  9. FYI, the public information session will be Monday, March 29, from 7:00 to 8:30 p.m. in the San Marcos Activity Center, Room 1. Alas, I have a family commitment that evening, so I can’t personally be there. I hope we have a good citizen turnout, and that somebody takes good notes and shares them with the rest of us!

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