Energy prices are surging again for Georgetown citizens, thanks to a foolish gamble by their city officials.
Starting in June, the average Georgetown resident will pay $6 more per month on their energy bill, a number that will actually rise closer to $10 in the summertime due to elevated power use. Add that to the $12 per month increase already tacked on in February, and the average city resident is set to pay hundreds more for electricity over the next few months.
Why the shocking prices? Ask city hall.
Back in 2012, Mayor Dale Ross and city officials concocted a plan to start buying all of the city’s power only from renewable energy: they signed long-term contracts with wind and solar companies, committing to pay a fixed price for the next 20 years in return for a massive load of energy. They went all-in on wind and solar, betting the move was going to be cheaper than the rest of the energy market.
Their deal sparked a parade of praise from progressives; after city officials inked the contract, environmentalists nationwide rejoiced and fawned over the city and its mayor.
“Texas City Leads The Way on Renewable Energy,” read an NPR headline. Smithsonian Magazine called Mayor Ross the “unlikeliest hero in the green revolution.” The mayor was lavished with TV interviews, news articles, magazine stories, and even a spot in one of Al Gore’s movies.
“It’s a win for economics and a win for the environment,” Ross declared last August.
Then reality struck.
After the confetti fell and Ross left the shiny movie set, he arrived in Georgetown and saw the disaster he and city officials set in motion. The city quickly realized they had overspent for far too much energy—they burned $26 million over just the last three years, to be exact. They had to unload extra energy for a $7 million loss.
Even worse, prices on the open market for other energy sources, such as natural gas, are now much cheaper than the contract price Ross signed residents up for.
“So we have to pay more because electricity has gotten cheaper. In case anyone missed that,” wrote a Georgetown resident on a January city Facebook post.
“When the contracts were executed, the City did not expect power prices to decline and remain low for years,” the city replied.
“So, it’s obvious we need new city personnel that can look at a situation and understand the necessity to consider multiple outcomes,” commented another resident.
“Fair comment,” the city wrote.
“Anybody looking at this [deal] from a financial standpoint could have foreseen these problems,” said Bill Peacock, vice president of research at the Texas Public Policy Foundation. “They went all-in on one thing, and it’s costing them big time. This doesn’t seem to be getting any better.”
Now, city officials have scrambled to cover their losses by forcing residents to pay higher electricity bills.
“Why did Georgetown buy so much extra electricity?” said Peacock. “It was because they wanted to be able to go and tell the world they were 100 percent renewable, and they needed enough to cover their cost at peak during the summer.”
To add to the city’s debacle, this week Standard & Poor’s downgraded the city’s combined water and electric utility bond rating from AA to AA-.
How will the city recover from their foolhardy gamble with citizens’ money? That remains to be seen. This week, a consulting firm presented a report to Georgetown City Council recommending the city apply more oversight and accountability in their decision-making, and hire an outside company to manage its electric contracts. The city is also searching for a new general manager of utilities.
While the mess continues at city hall, Georgetown citizens will continue paying higher bills for the bad gamble.
On the bright side, at least they’ll be able to see their mayor in a movie.