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Texas City’s Renewable Energy Goal Hikes Electricity Prices

March 4, 2019

Georgetown, Texas’ plan to rely on 100 percent wind and solar power has resulted in skyrocketing electricity bills for consumers and the city’s budget suffering millions of dollars in losses in a few short years.

Georgetown, Texas’ plan to rely on 100 percent wind and solar power has resulted in skyrocketing electricity bills for consumers and the city’s budget suffering millions of dollars in losses in a few short years.

Electric power in Georgetown, a city of 71,000 residents, is supplied by a city-owned municipal utility. Under Texas’s electric power deregulation law, cities with municipal utilities are allowed to keep electric power companies out of their service area as long as they chose not to enter the competitive retail electric market.

Activists Praised Renewable Push

In 2012, Dale Ross, then a city councilman, successfully pushed Georgetown’s municipal utility to switch to 100 percent wind and solar power.

In a segment of former Vice President Al Gore’s movie An Inconvenient Sequel (2017), Ross told Gore the move to renewable power was not driven primarily by environmental concerns but instead by his responsibility to save his constituents money.

“I’m a conservative Republican, but our duty to our ratepayers is to provide them with the lowest possible utility costs,” Ross told Gore.

In addition to praise from Gore in the film, Ross’s action garnered him glowing worldwide media attention as a visionary municipal leader, including speaking invitations at numerous renewable energy conferences.

Ross, who became mayor of Georgetown in 2014, cemented the city’s move to 100 percent renewable electricity in 2016, signing 20- and 25-year agreements with wind and solar developers to provide all the city’s electric power.

Bill Comes Due

The cost savings Ross promised to Georgetown ratepayers and taxpayers have failed to materialize.

Even before Ross signed the long-term contracts with wind and solar power companies in 2016, residents had already begun to pay higher prices for their electricity than before the switch from fossil fuels to renewables.

Georgetown residents’ power bills have risen by $1,219 per household per year on average above what they paid in 2014, when Ross became mayor.

The city government suffers from higher energy costs as well. At $6.3 million, the city’s electricity costs were $3.5 million over budget in 2015, the year before Ross locked the municipal utility into the long-term contracts with wind and solar power producers. In 2017, the second year after Ross signed the long-term renewable power contracts, Georgetown’s electricity cost the city $9.5 million more than it had budgeted, rising to $10.5 million more than anticipated in 2018.

In total, Georgetown’s energy costs were $29.8 million higher than the city budgeted for between 2015 and 2018, leaving the city scrambling to bridge a budget gap.

Paying a High Price

In contrast to the he higher prices Georgetown’s residents and government are paying for electricity, people in most of the state have seen their electric power costs decrease over the past decade under Texas’s electric power restructuring which has allowed electric power providers to compete based on power sources and price.

In Texas, the continued availability of cheap and abundant natural gas, due in large part to fracking, has meant wind and solar power, even with substantial government subsidies, are often more expensive than electricity generated by coal and natural gas. Electricity prices in Texas are among the lowest in the nation, 18 percent below the national average in 2018, but cities with uncompetitive municipal utilities haven’t benefitted as much from lower prices.

Because wind and solar power are intermittent, Georgetown had to commit to buying more electricity from wind and solar generators than it could actually use on peak days or on days with low demand, in order to satisfy its claim to be run on 100 percent renewable power throughout the year.

This resulted in Georgetown being forced to sell the city’s surplus wind and solar power at a steep discount to Texas’ wholesale energy market during peak times.

In addition, despite the city’s claim to be using 100 percent renewable power, the intermittent nature of wind and solar power requires the city to draw electricity from the Texas grid, which derives most of its power from traditional fossil fuels. As a result, in less than peak periods of renewable power generation and demand, the city often does not use electricity from 100 percent renewable sources.

Green Lessons

Georgetown’s experience in committing to 100 percent renewable energy has lessons for the entire country about the viability of the Green New Deal proposed by progressive Democrats in in Washington, D.C., says Bill Peacock, vice president for research at the Texas Public Policy Foundation.

“While the city claims its problems are not related to its obsession with renewable energy, the exact opposite is the case,” said Peacock. “Georgetown consumers and taxpayers would not be out almost $30 million if the city had not been chasing this goal.

“The same thing will be true for our country if the federal government imposes the Green New Deal, proposed by Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA), on the nation, except in that case the cost will not be millions of dollars but trillions,” Peacock said.

Georgetown’s experience is the result of politicians following the self-serving advice of green lobbyists, says John Droz, a physicist and founder of Alliance for Wise Energy Decisions.

“This is exactly the type of situation guaranteed to happen when we go down a green fantasy technical road paved by the promises of lobbyists for the wind and solar industry,” Droz said.

Bonner R. Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow.

Author
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org