Georgetown Identifies Actions to Mitigate Electric Loss

In the January 6, 2019 edition of the Wilco Sun a number of actions are identified that the City is taking to address the impact of the electric fund losses.

The city will trim $4.6M from the electric fund budget by:
1. cut new construction projects by $1.7M
2. re-prioritize projects
3. defer equipment replacement
4. defer filling non-critical staff positions
5. reduce training that requires travel

The City has also lowered the funds that were planned to be transferred from the electric fund to the general fund by $1.2M This funding is to be replaced by an equivalent amount from the economic stability reserve fund, one of several reserve funds that the City maintains.

The total reduction in the electric fund for 2019 is $(5,866,231) according to City budget documents.

The City also identified potential savings through the negotiation of the existing contracts with EDF Energy and Clearway Energy.

• reduce the amount of electricity it is contracted to buy,

• adjust the price, 

• sell a portion of the energy to a third party,

• lengthen the time of the contracts in exchange for a lower cost to give the city more time to grow into the supply it has contracted to buy,

• adjust the contract terms to buy less energy in the beginning and more at the end, and

• pay a lower price now and a higher price later.

All of these are highly unlikely in our opinion without incurring a substantial cost to the City.

Lengthening the contracts period is extremely ill-advised as the length of the existing contracts at a fixed price is the root of the current losses.