August Co-op Power Magazine Article
It is quite possible that you have already read San Bernard Electric Cooperative issued a “Notice of Breach” to the Lower Colorado River Authority (LCRA) as it pertains to our current wholesale power contract. As most of you are already aware, SBEC declined to renew the contract that would have locked us in with LCRA through the year 2041. The LCRA customers who extended their power contracts through 2041 are allowed to get a percentage of their power needs from sources other than LCRA (as defined in the new agreement). The wholesale customers who extended their contracts have avenues of cheaper wholesale power. LCRA will not allow the customers who did not sign the same option. In effect, we are being penalized for not signing. Currently we are not able to gain access to the “open wholesale market” until June 2016, when our contract runs out with LCRA. As it stands, LCRA is preventing the lowering of the wholesale power cost to our members and we feel that is just not right.
The contract that was submitted to us by LCRA at the time of renewal was an EXTENTION of our current contract and not a new contract. LCRA’s wholesale customers all currently operate under a contract that has a “uniform rate” clause in it. This “uniform rate” clause was to ensure that every wholesale power customer would receive the same rates and pricing throughout the terms of our agreement. In essence, we are not given access to cheaper wholesale power based on the lower natural gas prices that have been prevalent since 2008. On June 28th I met with LCRA informing them of the “Notice of Breach” of contract. Under the contract any wholesale customer who feels that there is cause can issue such breach. The breach consists of what I have basically outlined in the preceding paragraphs. The concern at hand is SBEC’s inability to seek other wholesale power opportunities outside LCRA, at the same time, LCRA allowing other customers to do so only because they extended an existing contract. We have met several times with LCRA management to avoid having to file a “Notice of Breach” but such talks proved to be non-productive.
Seven of LCRA’s wholesale customers gave notice on June 28th. Along with SBEC, Central Texas Electric Co-op and Fayette Electric Co-op also issued similar breaches. Municipal utilities consisting of Seguin, Boerne, Kerrville and Georgetown did the same. LCRA has 30 days to review the breach and issue a response. By the time you read this we will either have a remedy to the breach or further action has taken place.
SBEC management considered this step very carefully prior to taking action but it was you, our members, that we felt we needed to fight for. Electricity prices are high enough and to be denied ways of reducing them when other LCRA customers can enjoy that luxury is just wrong.
Until next time, take care.