The City of Georgetown issued a notice June 28 to the Lower Colorado River Authority that said the Georgetown Utility System considers LCRA to be in breach of its wholesale power agreement.
City Council authorized the notice alleging the authority charged higher rates to electric utility customers that did not extend wholesale power agreements, according to a news release from the city. City Council gave notice to LCRA in June 2011 that it would not extend its agreement with LCRA past 2016.
According to the news release, the letter says, “It appears that LCRA is charging Georgetown punitive rates to punish Georgetown for not signing” the extension of the agreement.
Assistant City Manager Jim Briggs said the city has had a different pricing structure since it gave notice in June 2011 that it would not extend its contract.
“Because of that difference, we are challenging the uniform rate clause provision as far as application of the rate structure and calculation of costs applied to various customers,” he said.
A news release from LCRA on June 28 said the authority is “disappointed that some who chose not to renew their contracts” claim the authority is in breach of those contracts.
“LCRA received notice Thursday from seven of its wholesale power customers alleging that LCRA is in breach of its contract with them, claiming LCRA is offering a lower price to its long-term customers. LCRA charges the same rate to all its customers,” the release said.
“This issue is not a new one,” said LCRA General Manager Becky Motal in a statement. “It has been an ongoing point of dispute since contract negotiations began several years ago. The 10 customers that elected to terminate their contracts in 2016 had the same opportunity as the 33 utilities that chose to stay with LCRA. The utilities alleging breach of contract appear to be cherry-picking one aspect of a detailed, complex agreement.”
According to the city’s release, the notice also states that LCRA has not complied with other provisions of the contract and has exceeded its authority under state statutes.
“Our electric customers—their price and what they have to pay—are the catalyst for the actions that we are taking. We are doing this in the best interest of our customers,” Briggs said.
LCRA has 30 days to fix the breach, he said.
“Per the letter, we’ve given them an opportunity to cure the breach. So they have their opportunity to do that, and we will wait for the response to our letter relative to that,” Briggs said. “If what they do is not a cure, in that particular case, then we have some other options available to us per the contract, and we will have to make that decision at that time.”
If the contract resolution cannot be reached, Briggs said City Council could discuss further measures up to and including termination of the contract in executive session.
Briggs said the city has agreements in place with multiple providers, including American Electric Power Co. Inc. and JP Morgan Commodities, to provide power after the LCRA contract expires in 2016.
The city’s contract with LCRA, which was signed in 1987, has a uniform rate clause obligating LCRA to offer the same rates and pricing structure to all of its wholesale electric customers throughout the term of the wholesale agreement, according to the release.
The breach of contract notice was also sent by several other utilities, including Fayette Electric Cooperative Inc., Central Texas Electric Cooperative, the City of Seguin, Kerrville Public Utility Board, the City of Boerne and San Bernard Electric Cooperative Inc.
All seven utilities had previously petitioned LCRA for fair treatment and market access but had not been successful, according to the release.
“Whenever we see something we think is unfair or improper in the way we are being billed that has to be passed to our customer, we should challenge that, and we should do it aggressively,” Briggs said. “That’s exactly what we are doing on behalf of our customers and ratepayers.”