A TALE OF 2 CITIES: DENTON UP FRONT, B'VILLE CLAMS UP

(Ed.'s Note: There's something instructive comparing the behavior of city officials and administrations of other cities and that of Brownsville. Both Denton and Brownsville have their own utility and both were billed millions for using very expensive power during the height of the freeze by the inept Electric Reliability Council of Texas. 

But while Denton has been up front with the public about its problems with the council, Brownsville has kept the size of its bill under wraps and has not told the ratepayers how it will pay for it, or not. Only the city commission can raise rates by ordinance, so bills will not raise until a vote is taken. 

But judging the extreme secrecy that surrounded the Tenaska Plant to Nowhere fiasco, the Brownsville Public Utility Board  – and the city commission and administration, with the exception of commissioner Ben Neece who walked out in protest – instead chose to huddle behind close doors away from the public to discuss the problem hiding in executive session and keep ratepayers in the dark. 

We know they bought and sold electricity to ERCOT while our residents were left without heat and lights during the brutal cold. We have a right to know and we need to know now. After all, it will be the rate and tax payers who will foot the bill.)  

DENTON

FOX4 

March 9

Denton has its own power system with an annual budget of about $230 million. But it was hit with a $207 million bill for just a few days of using very expensive power during the height of the deep freeze.

According to city documents, the average price of energy per megawatt-hour in February 2020 was $23.73. But during the rotating outages that began around the state, the price increased to between $2,400 and $9,000 per megawatt-hour.

Denton Municipal Electric had to take out an emergency loan to pay part of the bill.

Now the city wants a court order against the Electric Reliability Council of Texas, which is demanding to be paid.

Lawyers for the city claim ERCCOT is illegally passing on the cost of power during the outages to cities.

BROWNSVILLE

FOX4

February 24

DENTON, Texas - The city of Denton is one of several in Texas with its own electric utility and it took a real hit during the winter storm with unexpectedly high costs.

Denton City Council members voted Tuesday to allow the city’s electric provider to borrow up to $300 million in the aftermath of last week’s storm.

Denton Municipal Electric reportedly spend $207 million from Tuesday to Friday that week to buy electricity from the Electric Reliability Council of Texas. Its annual budget is about $231.4 million.

According to city documents, the average price of energy per megawatt-hour in February 2020 was $23.73. But during the rotating outages that began around the state last week, the price increased to between $2,400 and $9,000 per megawatt-hour.

"It obviously presented a cash-flow issue for us because that’s more that we’ve obviously paid in any given year. In fact, in one day we had a bill from ERCOT that was in excess of our entire purchase power budget for a previous year. So just to put it in context the magnitude of what we’re looking at from a cash-flow perspective," said Denton Assistant City Manager David Gaines.

Gaines said the city was able to secure $100 million in funds to pay some of the costs. Taking on additional debt may be the city’s only option to cover the remaining costs.

"The short-term financing option is the route that we went to ensure that we can meet those cash-flow obligations and provide that service to our residents," he said.

Over the next few months, the city plans to look at options for recovering the costs but insists increased costs for customers is not imminent. Denton Municipal Electric rates are fixed and determined by council members.

"Obviously if there is no other mechanism we would pay those back with long-term debt. But there’s obviously a number of conversations happening on the state and federal level and we can see how those play out and other conversations with ERCOT themselves. So we’re going to pursue every avenue that we have to address these costs but it’s definitely a significant concern for us," Gaines said.

Other cities with their own electric utility such as Garland and Austin are likely having the same conversations.

"I can’t address their specific financials and I’m not privy to exactly the situation they are in but I think anyone that’s in the market that had to purchase from the ERCOT market last week experienced the same prices that we did. So I imagine similar conversations are happening everywhere," Gaines said.