Georgetown city officials have made an expensive mess, and now they’re suing to try to get themselves out of it.
This week, the City of Georgetown filed a lawsuit against Buckthorn Westex, their solar energy provider, in an attempt to break free from an ill-advised, 25-year contract that has become a costly disaster for residents.
The city is seeking $1 million in damages and full cancellation of the contract, alleging that Buckthorn breached at least three sections of their power contract and withheld information about the long-term performance of a West Texas solar plant. However, the real story and issue behind the lawsuit is a failed gamble made by city hall.
The story began in 2012 when 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 25 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: Mayor Ross was lavished with national news headlines, magazine stories, and even a spot in one of Al Gore’s environmental movies.
“It’s a win for economics and a win for the environment,” Ross declared last August.
But after the confetti fell and Ross left the shiny movie set, he arrived in Georgetown to a disastrous reality. He and city officials quickly realized they had overspent for far too much energy—they burned $26 million over budget in just the last three years, to be exact. They had to unload extra energy for a $7 million loss.
Even worse, the prices for other forms of energy (such as natural gas) became much cheaper than Ross’ green energy contract, but because the mayor locked citizens into a long-term fixed price, Georgetown residents were forced to pay more even though prices everywhere else had fallen.
“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.”
City officials scrambled to cover their disastrous gamble by forcing residents to pay higher electricity bills, tacking on roughly $100 to the average city resident’s bill over just the past several months.
Still more, the city’s bond utility rating got downgraded because of the fiasco, and they got sued for not disclosing public documents related to the energy contracts. To top it off, citizens still have over two decades left to endure, and pay for, the mayor’s horrible deal.
Now, with the city’s lawsuit, officials are trying to escape the prison they once happily locked themselves—and residents—into, but that attempt could yield nothing. Buckthorn Westex released a statement on the lawsuit:
Buckthorn strongly disputes all claims in the Complaint made by the City of Georgetown. Buckthorn has and will continue to honor all terms of its contractual agreement with the City and any claims to the contrary are inaccurate. Just two days before filing its lawsuit, the City agreed to formal mediation. Rather than working in good faith, Georgetown elected to pursue litigation in a clear attempt to terminate its contractual obligations. Buckthorn is eager to present the facts in the legal process.
In the meantime, Georgetown citizens will continue paying higher electricity bills because of their city officials’ gamble.
But, on the bright side, at least they’ll be able to see their mayor in a movie.