LCRA comes to terms with utility co-op

Settlement lets group purchase electricity from other suppliers.

The Lower Colorado River Authority, a wholesale electric provider, has reached a settlement with a utility that had threatened to terminate its contract.

As part of a preliminary settlement, the Guadalupe Valley Electric Cooperative, whose 70,000 customers in South Central Texas take 12 percent of the LCRA’s load, will continue to be a customer of the LCRA’s through 2016, when its contract was scheduled to end.

But effective immediately, the co-op, which serves 13 counties with headquarters in Gonzales, will be able to purchase as much as 15 percent of its needed electricity from alternative suppliers. That percentage will escalate upward as 2016 approaches, said coop general manager and Chief Executive Officer Darren Schauer.

The co-op, which had purchased 100 percent of its electricity from the LCRA, and other utilities had accused the authority of setting up a pricing structure that discriminated against them because they had not signed contract extensions in 2011 of long-term wholesale power agreements.

The LCRA had sued the co-op last month in Travis County district court after the co-op had declared that it would purchase a portion of its energy from other providers beginning Saturday. The suit, which LCRA spokeswoman Clara Tuma said would now be withdrawn, had asked a judge to stop the co-op from violating its contract.

Eight other utilities, including the city of Georgetown’s, ended their long-term contracts, which had been scheduled to run through 2016, in September. Those utilities made up 17 percent of the LCRA’s customer load and continue to be entangled with the river authority in suits and countersuits.

The river authority says those customers improperly ended their contracts.

“We were able to come to terms prior to having to terminate our contract,” said Schauer. “It was best for the LCRA and best for the GVEC not to have the courts hear the dispute.”

The contract disputes had gained the notice of Wall Street. In October, Fitch Ratings had low- ered the bond rating of the LCRA from A+ to A. The downgrade could make it harder for the river authority, a nonprofit utility, to borrow money. And last month Moody’s Investors Service downgraded LCRA’s debt outlook from stable to negative, citing the ongoing contract disputes.

No cash changed hands in the settlement between the LCRA and the co-op.