The City hosted a town hall in the Sun City ballroom. It was well attended with several hundred citizens.
Several observations are in order.
The million dollar losses by Georgetown Utility System (GUS) was the main topic addressed by the city manager David Morgan. Much time and graphics were employed to try and convince the audience that the city staff did not and could not see this debacle coming. It was asserted the 2016 loss was a one-time event, but then another loss was experienced in 2017. The 2017 loss was attributed to hurricane Harvey, another one-time loss. Also they concluded that ERCOT's power forecasts were unreliable. Therefore, they had no warning that the losses would continue into 2018 and beyond.
During the Q&A several retired experienced senior executives disagreed that the issue of declining fuel prices was not foreseeable and that mitigating strategies were available to the city.
The main strategy that several retired executives identified was that the city should have been hedging against gas price declines. In their view this is almost mandatory when you have signed 20 and 25 year contracts for wind and solar. Instead all the city was hedging were the Congestion Revenue Rights, CRRs, which only protect against congestion on the high voltage lines from West Texas.
Questions were asked if the contract losses were due to the fact that renewable energy was being purchased. The city response was that renewable had nothing to do with the losses. The losses were solely due to the long term nature of the contracts at fixed prices with no flexibility to adjust prices.
Watchdog would disagree somewhat with that characterization. The city staff was enthralled with the idea that renewable energy prices could be locked for 20 and 25 years, which was different than with fossil fuels. This caused them to not even consider the possibility that energy prices would decline as alternate fuel prices declined.
The city council is the body that should have stepped back and asked the obvious "what if" questions.They clearly did not do that.
The city manager indicated the charts used in the presentation would be available, but, so far no sign of them.
Transportation and development issues were discussed. The center of development currently is in the southeast corner of Georgetown.
Traffic issues were highlighted and some of the planned projects to mitigate congestion were identified. However, solutions in the Wolf Ranch area, like I35 and Hwy 29, are multiple years in the future as TxDot is primarily responsible.
The new water tower in Sun City was discussed as was the Berry Creek sewer line. Both these projects are in response to growth.
Affordable housing was identified as a potential problem area, but, it was not discussed. This is the next action that the city staff wants to be engaged in and it would be nothing more than another transfer of wealth scheme. Government has no role in affordable housing. The free market will provide the most cost effective solution.
Among other things Morgan and the others are attempting to lay the blame for the city's failed wind and solar contracts on ERCOT's price forecasts. The mayor, council, et.al, probably will never take responsibility for the failed contracts. They will use whatever scapegoats they can find for the shortcomings of the contracts. ERCOT is as good as any.
ReplyDeleteERCOT's forecasts are a starting point. But any trading group worth its salt will do its own analyses to see if they make sense.
I asked the Georgetown Records Management Department for the analyses that Georgetown Utility Systems did to assess the likely direction, under various scenarios. of alternatives price estimates over the period of the wind and solar contracts. The response was easy to understand. None!