Wilco Sun Doing Yeomen's Work on Georgetown Electric Fund

The Wilco Sun is doing the work that one expects from a robust newspaper. The front page article of the December 1 edition provides insight on the continuing losses of the electric fund, another $11.1M  last fiscal year.

Three electric rate in­creases this year were not enough to offset Georgetown’s $11.1 mil­lion over-budget cost of wholesale electricity for 2019, bringing the four-year over-budget total to $38 mil­lion. 

At the November 24 council meeting the scram­ble to find cash to cover the expense and replenish reserves was revealed as the council approved an amendment to the original 2019 budget to record the move of $4.4 million from other city departments into the electric department. 

Additionally, the electric department sold $722,000 worth of Renewable Ener­gy Credits (RECs) 

The city is allocated one REC for each megawatthour of electricity pro­duced by its wind and solar contracts. 

RECs can be sold for cash or can be used to offset the city’s use of fossil-fuel gen­erated electricity.Previously, the city had used its RECs to offset its fossil-fuel electricity, allow­ing it to say Georgetown was 100 percent renewable.

“The sale of the RECs does affect Georgetown’s status as a 100 percent re­newable electric utility,” City Manager David Mor­gan said. “Right now it is more important that we sta­bilize the utility’s finances than maintain our renew­able energy status.”

The budget move is the most recent attempt to deal with budget shortfalls that began in 2016.

In fiscal 2019 the city budgeted $44.5 million for electricity but spent $55.6 million.

The fiscal year begins Oc­tober 1 each year.

In 2019, the city moved cash from other depart­ments by having the elec­tric department “sell” as­sets to them.

• The water department bought the electric depart­ment’s share of the West­side Service Center: $2.6 million,• The fleet department bought the electric depart­ment’s land on FM 1460: $482,000• The IT department bought the electric de­partment’s fiber network: $645,000. 

The city also increased payments from the South Georgetown Tax Increment Reinvestment Zone fund to the electric department: $85,000 and reduced the electric department’s pay­ment into the general fund: $500,000. 

The electric department also sold scrap metal for an extra $10,340. 

The moves allow fiscal 2019 to end with reserves of more than $6 million, up from less than $2 million the year before. The city says its goal is to eventually have reserves of $19 mil­lion. 

The increased cost of wholesale electricity is the result of selling excess con­tracted electricity at a loss on the open market, com­pounded by high conges­tion pricing on the electric grid in the Panhandle and West Texas. Electricity gen­eration at the Buckthorn Westex solar farm has fall­en considerably below its expected level. 

The city expects to spend $59.5 million on electricity next year.

Staff is working to improve the utility’s fi­nancial condition by selling assets, increasing electric rates, decreasing expenses and completing a manage­ment assessment. Based on the assessment, the city is updating its risk policy and retaining a new team to manage the city’s electric contracts.

Georgetown is negoti­ating with Shell Energy North America and Tenas­ka Power Services to man­age the city’s energy port­folio, with a final contract expected to go to the council in December. 

Daniel Bethapudi was hired to manage the electric utility in October. “I am focused on ensur­ing our electric utility is safe, reliable and cost-com­petitive,” he said. “It is a top priority of mine to reduce our customer’s electric rates, but my immediate concern is to ensure that our community’s electric utility is financially stable.”

The financial engineering is also known as "putting lipstick on a pig", so that in the future the City plans on showing you how fiscally responsible they are by comparing the revised $numbers with their planned expenditures. They think we will forget, but we will not.