June 28, 2012, FREDERICKSBURG, TX – Central Texas Electric Cooperative, (CTEC) notified the Lower Colorado River Authority (LCRA) today that CTEC considers LCRA to be in breach of the Wholesale Power Agreement which is the basis for wholesale energy sales from LCRA to CTEC. The CTEC Board authorized a “Breach of Contract Notice” to the LCRA, citing LCRA’s deliberate discrimination related to access to the competitive power market. Those electric utilities that signed the extension of the Wholesale Power Agreement have access to the market, while those who did not extend have no access.
“Access to the competitive wholesale power market has provided CTEC’s members with significant cost savings over the years, and LCRA has eliminated this market access for CTEC and other wholesale customers that decided not to extend the LCRA contract to 2041,” according to CTEC General Manager/CEO Bob Loth. “One might conclude that those who did not re-sign with LCRA are being punished. Unfortunately, it is our members who lose at the heavy hand of LCRA.”
“We consider this a breach of a longstanding contract, and we believe it does not represent a uniform rate opportunity as provided for in our contract. Therefore, it is preventing us from lowering costs to our members,” said Loth.
The current contract between CTEC and LCRA, which was signed in 1987 and expires in June 2016, has a “uniform rate clause,” which obligates LCRA to offer the same rates and pricing alternatives to all of its wholesale electric customers throughout the term of the Agreement.
In the 1990’s, an LCRA Board of Directors policy allowed wholesale power customers the option to purchase a portion of their electricity on the deregulated wholesale market. The policy, which gave the customers greater pricing flexibility, was rescinded in 2011. Customers that elected to extend the LCRA contract to 2041 have the ability to access this competitive power supply market for a significant portion of their system’s energy requirements.
In addition, the notice states that LCRA has exceeded its authority under state statutes.
CTEC has worked with several other utilities including Fayette Electric Cooperative, San Bernard Electric Cooperative, City of Seguin, Kerrville Public Utility Board, City of Boerne and City of Georgetown to petition LCRA for fair treatment and market access, but have not been successful in this effort. These utilities also provided LCRA with official notice of the contract breach today. “In good faith, we had hoped LCRA would do the right thing on behalf of our members. LCRA has long touted itself as a community partner across Central Texas. LCRA now, once again, has the opportunity to do the right and fair thing for the people in Central Texas,” said Loth.