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November 11th, 2008
Pedernales Electric outlines proposed LCRA contract to public, board

From Pedernales Electric Cooperative

Pedernales Electric’s Board met Monday, Nov. 10, to discuss the Cooperative’s ongoing wholesale power contract negotiations with the Lower Colorado River Authority. The contract has been a primary focus of PEC’s Board and management team since April.

PEC Deputy General Manager Paul Hilgers presented an overview of the proposed agreement, stressing that the presentation is “to give our members more opportunity to understand the decisions that are taking place at Pedernales Electric Cooperative.” Hilgers said an expert team composed of PEC staff, utility industry consultants and legal minds worked on the amended agreement in collaboration with the LCRA.

The new agreement, scheduled for approval at the PEC Board meeting on Nov. 17, will extend the relationship between the Cooperative and the LCRA through 2041. The contract will give PEC more flexibility, unprecedented access to LCRA information, and establish a more collaborative partnership on costs, rates and resource planning. The amended agreement revolves around five basic benefits to Cooperative members:

Progressive power provisions. The LCRA will cooperate with Pedernales Electric in the development and potential funding of conservation, demand-side management, energy efficiency, renewable energy and distributed energy programs.

Greater flexibility to purchase power from other suppliers. This tenet provides options for Pedernales Electric to purchase electricity from other sources, if the LCRA’s rates are less than competitive in the future. It also improves PEC’s ability to pursue additional renewable energy options.
Heightened transparency and information sharing on costs and rates. The LCRA will now share information about actions — primarily those affecting rates and the development or retirement of generation assets — with a Rates and Resources Council comprised of wholesale customers.
Greater influence and partnership with the LCRA. The Rates and Resources Council will have direct input on LCRA decisions affecting rates and resource planning.

Stabilizing factors. Solidifying a long-term contract mitigates risk and helps stabilize both organizations in the eyes of the financial community.

After the presentation, Hilgers answered questions from Directors and a member who took part in the member comments section of the meeting. The member addressing the Board commended them for their work on the contract, noting that it “appears to be a vast improvement over the current contract,” and addressed his main concerns regarding PEC’s and the LCRA’s commitment to renewable energy. The Board then adjourned to executive session to discuss the agreement in greater detail.

“This contract redefines the relationship between Pedernales Electric and the LCRA,” said PEC General Manager Juan Garza, “and signals a new era of partnership between the LCRA and its wholesale customers.

“The LCRA has traditionally provided competitive pricing due to its cost-based structure, which has always benefited our membership. This agreement strengthens the partnership between Pedernales Electric and the LCRA, making us both stronger organizations. We appreciate the opportunity to work with them on this historic agreement.”

PEC members have the opportunity to view the presentation outlining the contract online at, and to further comment on the proposed contract at the next Board meeting on Nov. 17. In addition, the Cooperative will discuss provisions to the contract at three governance and legislative leadership meetings throughout the service area.

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