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

April 5th, 2010
City likely to approve controversial electric deal

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This comparison chart presented at last week’s public information session shows how San Marcos electric rates stack up against other local customers. Photo by Andy Sevilla. BY ANDY SEVILLA
Associate Editor

After an initial public discussion at a March city council meeting that drew criticism from angry residents and a subsequent informational session geared to address concerns, the San Marcos City Council is expected to pass a 25-year energy contract with the Lower Colorado River Authority (LCRA) Tuesday night.

San Marcos residents were in uproar about the lack of available contract details, in addition to the intentions of the city an the LCRA to not make the contract public. The agreement between San Marcos and LCRA will be released only if the Texas Attorney General’s office orders disclosure.

San Marcos Director of Public Services Tom Taggart said last week at a public informational session that keeping the details of the contract confidential is vital to keeping LCRA a viable competitor in the marketplace. Taggart said privately owned businesses need not release details of contracts, and the Texas Legislature put forth provisions extending that same leverage to the publicly-owned LCRA in 1999.

Taggart said providing confidentiality “levels the playing field.”

Dan Kuehn, Executive Manager of Wholesale Power Services for LCRA, said releasing contractual information would “undermine competitive strategies,” thereby presenting unfair advantage to privately-owned energy retailers.

Though contract language is confidential, Taggart said, LCRA has provided San Marcos with low rates and in comparison to other cities, Taggart said San Marcos fares well, adding that he’s “very convinced” other retailers cannot provide electricity at a lower cost.

“We don’t believe we can get a better deal anywhere else,” Taggart said.

In 1999, the Texas Legislature allowed municipalities to deregulate and allow energy retailers to compete for business. But, 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.

“The universal experience we’ve seen in Texas is that it’ll cost you more money (if you deregulate),” Taggart said. “ … That’s why this is something that city hasn’t sought. It just doesn’t make financial business sense for our citizens.”

Cost comparison statistics illustrate San Marcos receiving better energy rates than San Antonio, Seguin, Weimar, College Station, and Georgetown. San Marcos electric utility rates also are lower than those provided by electric co-operatives such as Bandera, Central Texas, Fayette, Bluebonnet, San Bernard and Pedernales. However, San Marcians pay higher rates than Greenville, Kerrville, New Braunfels, Fredericksburg, and (barely) Austin.

Greenville, Austin, San Antonio and College Station are not LCRA customers.

“We’re in a much better position, in comparison to other cities, to attract businesses that use power, because of our lower rates,” Taggart said.

The statistics prove that LCRA provides San Marcos with the lowest cost, Taggart said, but the city will not shy away from discussions with other retailers.

Among the provisions in the contract between San Marcos and LCRA:

* San Marcos is allowed to purchase up to 35 percent of its power from other sources, which is an increase from the existing 10 percent,
* Future renewable resources and environmental stewardship are emphasized,
* The city is allowed to purchase power from alternative or renewable power sources,
* Peak demand reduction and conservation programs are incentivized, and
* Smart grid technology and distributed generation are supported.

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.

The power agreement in place is set to expire on June 25, 2016.  A five-year lead time for the extension or denial of extension is required in the contract to allow adequate resource planning time for future LCRA generation facilities.

The 25-year extension, if passed by council, would require that LCRA deliver electricity to San Marcos through 2041.

LCRA has provided electric service to the City of San Marcos since 1939.  The city purchased the electric distribution system from LCRA in 1986 and assumed full operational duties in 1991.

LCRA has a total of 43 customers, including San Marcos. 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.

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0 thoughts on “City likely to approve controversial electric deal

  1. It seems the City of San Marcos has done a good job in negotiating a best currently possible wholesale power contract that provides flexibility for future developments. Although I could not attend the separate information session due to family commitments, several people in attendance spoke positively about the dialog and further information presented. Of course, what we know is based on what it has been decided to divulge to us, since the proposed contract is and will remain secret. In retrospect, I believe the most controversial elements here were (a) initially attempting to push this through without any citizen information sessions or dialog, and (b) the secrecy of the contract itself.

  2. So we have over a year (until June 2011) to decide, but the final vote is going to be held tomorrow? What’s the rush?

  3. We were told that negotiations began with enough time to allow for thorough dialog, and that it was unknown exactly how long the contract dialog would take, but both parties desired to not be “rushed at the last minute” in case unforeseen elements came into play. Based on what was presented at last Monday’s information session, it appears there is no benefit to delaying the vote. Having said that, in terms of citizen involvement, I hope our city leaders move forward with establishing both electric utility and water/wastewater citizen advisory boards.

  4. This vote is to accept the proposed contract. The negotiations have been taking place apparently for some time. In hindsight, of course I wish we given opportunity for citizen dialog during the negotiations. Since the negotiations and the contract are (and will remain) secret, we have to rely on our COSM leaders (staff and council) to bargain hard for the things which are important to us, and to make the right decisions, both for present and the future. I’m glad we at least had the opportunity to ask questions during last week’s information session.

  5. “Since the negotiations and the contract are (and will remain) secret, we have to rely on our COSM leaders (staff and council) to bargain hard for the things which are important to us”

    Yeah, that’ll happen.

    Again !!

    Right.

    (WHY do we just let this continue year in, year out, folks?)

  6. Hey, be glad for what you got….from the chart above, PEC customers are paying the absolute highest rates of anyone in the survey. If you’re like me and live just outside the city, you’re wishing that you could be an LCRA customer and get that pricing right now.

  7. Tom Taggart and Kyle Dicke are just a phone call or email away. They are happy to directly answer any further questions customers of SMEU (and residents of San Marcos who are outside the SMEU coverage) have regarding the LCRA contract. The proposed agreement does provide flexibility to expand sustainable energy for San Marcos where economically feasible.

  8. Regarding the question of bringing in “competitive” electricity providers, DOE’s Energy Information Administration just released data allowing a 12-year comparison between deregulated and regulated states (through the full year 2009). Increases in retail electric prices were significantly greater in states with deregulated electric markets than in regulated states.

    For the upcoming (we hope) new electric utility advisory board, I believe one of the first topics should be for SMEU to explore bringing Property Assessed Clean Energy (“PACE”) programs to our community. From the ICLEI USA website, here is a just posted summary of why PACE makes so much sense for everybody involved:

    “The heart of the idea is to enable local governments to finance energy improvements within their community, removing the up-front cost barrier for homeowners and, potentially, local businesses interested in energy efficiency or even renewables like solar PV. The home or business owner would then repay the local government over time via a special line item on their property tax bill. The wonderful part is that, through such financing, home or business owners could instantly begin saving money on their utility bills — more than the yearly payment for the retrofit. Imagine paying nothing for an improvement to your home and saving more money than the project cost to finance. This is the economic reality of the cost of energy today versus the cost of installing energy efficiency improvements.”

  9. Hope there are folks out there that remember SM voted “non-deregulation” back before information had to remain secret because of “competitive issues” allowed people to hear the deal-making in real time. LCRA has been a great partner to date, and offers many forward-looking programs–even if only to avoid building new power plants to keep up with service demands. The current rebate programs will allow participants to avoid a good deal of inevitable cost increase, and surely hasten the ROI payback significantly.

    Dance in the sunshine, nature’s best disinfectant.

  10. Dano- agree. PEC is way too high. I wish we had a choice. My friend in Dallas shops for her electric company with about 10 different providers available.
    For a month’s use of 2000 kWh, I was charged $240.00 by PEC.

  11. We have a large home, so our usage is higher than average. We use about 3,500 kWh per month on average, and most of it goes to heating and cooling.

    My last four electric bills have been $475, $425, $380, and $350. I know it was cold, but that it simply insane. I looked back at bills from a couple years ago and similar usage to my $450 cost me somewhere in the $275 range back then….so it’s not just that PEC rates are high, but they’ve gotten significantly higher…..I guess they had to do something to pay all those legal fees to defend their previous board.

  12. By end of third quarter, 28 million Californians will live in a district with PACE (Property Assessed Clean Energy) financing. This is huge!

    I hope our leaders here in Texas can iron out the wrinkles and bring PACE options to utility customers. (See my earlier post for a brief explanation on PACE.)

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