The Lower Colorado River Authority is honoring its wholesale power agreements with all its wholesale power customers and is disappointed that some who chose not to renew their contracts allege that LCRA is in breach of those agreements.
LCRA received notice Thursday from seven of its wholesale power customers alleging that LCRA is in breach of its contract with them, claiming LCRA is offering a lower price to its long-term customers. LCRA charges the same rate to all its customers. All of those customers that sent a letter of notice chose not to renew their wholesale power agreements, which end in 2016.
Last year, 33 utilities signed long-term contracts that continue until 2041. However, 10 wholesale power customers – including the seven who contend breach of contract – did not opt to renew their contracts and will leave LCRA in June 2016. In the renewed contracts, the long-term customers were granted the option to purchase a portion of their load from other power providers. The 2016 customers have asked for the ability to reduce their load requirements and, more recently asked for early termination of their contracts. LCRA offered all of its customers the option to reduce their load requirements over time as part of the negotiations to extend those contracts until 2041. The customers who are making this claim did not take that option.
“This issue is not a new one,” said LCRA General Manager Becky Motal. “It has been an ongoing point of dispute since contract negotiations began several years ago. The 10 customers that elected to terminate their contracts in 2016 had the same opportunity as the 33 utilities that chose to stay with LCRA. The utilities alleging breach of contract appear to be cherry picking one aspect of a detailed, complex agreement.”
LCRA is proud of its competitive pricing and intends to become even more competitive in providing wholesale power. In the recent Business Plan approved by LCRA’s Board of Directors, the fiscal year 2013 budget has a $40 million reduction in costs and a freeze in wholesale power rates until 2017. All customers – including those who sent the notice of breach of contract – will benefit from that freeze in nonfuel rates.
In addition, Motal said all customers received a 5 percent reduction in wholesale power rates beginning with their July bill. “We are competitive now and will become even more so,” she said. “LCRA has an existing contract with all its 43 customers and we are fully prepared to meet our obligations.”