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Texas city famed for 100% renewables has too much power, wants out of solar contract

Highlights

Georgetown alleges Buckthorn breached contract

Buckthorn says city had agreed to formal mediation

Houston — The City of Georgetown, Texas, known for its push to become one of the first cities in the US to rely 100% on renewable power, has been grappling with an excess of power and has now filed suit against one of its four suppliers in an attempt to cancel a 25-year solar supply contract.

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While the city is selling its excess power into the Electric Reliability Council of Texas market, it claims it is doing so at a lower price than it is paying for the power under its fixed-price PPA with Buckthorn Westex, which it signed in February 2015.

It claims that with the excess power, coupled with low wholesale power prices, it was forced to raise monthly electricity rates earlier this year by $12.82 for its roughly 25,000 ratepayers.

The 154-MW Buckthorn facility, which is owned by Clearway Energy, formerly known as NRG Yield, is located near Fort Stockton, Texas, and became operational July 1, 2018.

On the Georgetown Utility Systems website, the municipal utility alleged that Buckthorn had breached three sections of the PPA and had not disclosed contract amendments made in 2016. The municipal utility sent a notice about the breaches to Buckthorn on March 29.

On Tuesday, Georgetown City Manager David Morgan said in a statement that "since the solar farm became operational in 2018, the City became aware of several problems at the facility related to its operation and performance. These ongoing problems have resulted in financial losses for the City. Buckthorn was aware of some of these issues but did not disclose them during negotiations."

He said a confidentiality agreement prevented the city from disclosing specifics. "While the City will continue to seek an agreed resolution, at this time the City's best course of action is to preserve its rights by seeking damages and an order from the court allowing it to terminate the agreement," Morgan said.

The lawsuit was filed October 8 in District Court of Williamson County in Texas.

In a statement, Buckthorn said it "strongly disputes all claims in the complaint made by the City of Georgetown," but would continue to "honor terms of its agreement" with the city. Dallas-based Buckthorn said, "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."

TOO MUCH POWER

Georgetown also is under contract to purchase wind power from EDF's 144 MW Spinning Spur 3 wind farm near Amarillo. The wind power covers the bulk of the city's energy needs, while solar is needed during peak load.

A third contract with a small wind farm operated by American Electric Power which primarily covers a local university's needs. The city has a fourth contract for natural gas-fired power with trading firm Mercuria.

The Georgetown muni says its average residential customer uses 949kWh a month, and pays an average monthly bill of $132.32. It notes that a customer of TXU Energy in the nearby town of Round Rock pays $118.63, while an Austin Energy customer is paying $96.22.

City of Georgetown officials have generally acknowledged that initially they were not aiming at 100% renewables, but instead wanted adequate supplies of power at fixed prices to contain costs. The city, nonetheless, does not want to tarnish the reputation of renewables.

In a statement released earlier this year, Georgetown city manager David Morgan said, "This issue is not about the type of energy we have. It is about the amount of energy we have."

-- Jeffrey Ryser, jeffrey.ryser@spglobal.com

-- Edited by Rocco Canonica, newsdesk@spglobal.com