Green energy puts Georgetown utility in the red, sends city to the courthouse

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After knowing for over a year that its gamble on solar energy was costing customers millions more than initially predicted, the City of Georgetown is suing its solar provider for $1 million in damages and an end to a 25-year contract.

But, as has been the case since the city signed up with Buckthorn Westex LLC in 2016, customers and taxpayers are not being provided details in the suit. The city’s refusal to make its contract with Buckthorn public is part of a separate lawsuit pending in Williamson County district court.

The city’s suit says the builder of the 1,250-acre solar plant outside of Fort Stockton in West Texas failed to disclose to the municipal utility in 2016 crucial information about the plant’s likely future performance.

“Buckthorn was deliberately silent when it had a duty to relay those facts,” the city alleges.

The suit also says Buckthorn Westex has been in breach of the contract, something City Attorney Charlie McNabb first reported to the company in late March. However, the lawsuit gives no hint as to how the company has allegedly breached contract provisions. 

The Texas Monitor requested a copy of the contract and details of the lawsuit from both  McNabb and City Manager David Morgan. In response, city communications manager Keith Hutchinson provided a statement.

“Unfortunately, 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.

“Because of confidentiality requirements in the agreement, the City is not able to disclose specifics regarding the problems at the solar farm or the terms of the agreement with Buckthorn. Both parties have been in talks regarding the issues, but these ongoing discussions have thus far failed to produce a resolution.

“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,” the statement said.

“This solar project has put tens of millions of dollars in costs on the backs of customers,” said Rob Henneke, an attorney for the conservative Texas Public Policy Foundation representing one of the customers in the contract disclosure lawsuit. “I think it’s interesting that even after filing suit against the company, the city still is not disclosing what their contract says.”

Calls to Buckthorn Westex’ parent company, Swinerton Renewable Energy in San Diego, Calif., were also not returned before this story posted. When informed of the new lawsuit, Buckthorn Westex issued a press statement saying it “strongly disputes all claims in the complaint made by the city of Georgetown.”

“Rather than working in good faith, Georgetown elected to pursue litigation in a clear attempt to terminate its contractual obligations,” the statement said. “Buckthorn has and will continue to honor all terms of its contractual agreement with the city and any claims to the contrary are inaccurate. Buckthorn is eager to present the facts in the legal process.”

Georgetown Utility Systems has twice been forced to increase monthly electricity rates for its roughly 25,000 customers since it determined that income from customers would again fall short of its energy costs by at least last year’s figure of $8.6 million.

In June, a $5.93 surcharge was added to each of those monthly bills, just four months after another $12.82 was tacked on to cover renewable energy costs, according to utility records.

Like Austin, which was forced to spend $460 million to buy its way out of a bad energy deal earlier this year, Georgetown went all in on renewable energy just before the fracking revolution and cheap natural gas overturned the international energy market.

Dale Ross took office as Georgetown mayor in 2014 talking about renewable energy. He told residents he had traveled internationally and returned convinced that Georgetown ought to generate all of its power from renewable energy.

In February 2015, Ross convinced the city council to sign a 25-year contract for energy at a fixed price with Buckthorn Westex, which included construction of the mile-long Fort Stockton solar plant that went online July 1, 2018.

Ross quickly became a favorite environmental spokesman. Former vice president Al Gore came to Georgetown in August 2016 to praise him. A year later, he was featured in Gore’s documentary “An Inconvenient Sequel: Truth to Power.”

But by the time Smithsonian Magazine published its piece in April 2018 titled “Is a Texas Town the Future of Renewable Energy?” Ross and other Georgetown officials were aware that  Buckthorn Westex was annually producing almost 150 million megawatt hours of renewable energy more than its customers could use but still had to pay for.

The fixed-cost agreement in a market that had plunged because of cheap and abundant natural gas meant Georgetown had to eat the cost, something Ross barely mentioned when he discussed the advantages of the Green New Deal with PBS’ Frontline in March.

Ross did not return a call for comment left by The Texas Monitor.

As part of its renewable program, the Georgetown utility announced it was installing solar panels atop its service center at a cost of $271,452. Terrill Putnam, a resident and customer, filed a Texas Public Information Act request to find out if, or when, the panels would pay for themselves.

The Texas Attorney General’s Office agreed that the city could withhold the information, claiming state public disclosure law allows a municipality to withhold information in a competitive market like energy.

Putnam’s recently amended lawsuit, filed in August 2018, claims Georgetown has produced nothing to support its competitive market claims.

The lawsuit touched off public demand for more transparency regarding Georgetown’s entire renewable energy program. The city has provided some information on costs of the program and losses due to changes in the energy market, but little else.

Henneke said TPPF believes the city has an obligation to disclose all information that would help utility customers understand what they are paying for.

He is particularly critical of how long it has taken the city to get out from under a contract that is almost certainly going to mean even higher monthly rates unless something can be changed.

Their lawsuit, Henneke said, “highlights that you get bad outcomes when you base your energy policy on virtue signaling rather than sound business practices.”

Mark Lisheron can be reached at [email protected].

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