City of Austin Performance Report 2014-15

Power Supply Cost Average

Measure Description
This measure is the system annual average power supply cost, in cents per kilowatt hour, of electricity produced. It reflects the success of Austin Energy (AE) in maintaining a stable power supply price year over year, which directly affects customer utility bills.
Calculation Method
The measure is calculated by taking the net cost of the power supply which  recovers fuel for generation, transportation, renewable purchase power agreements, purchase power to serve retail customers, Electric Reliability Council of Texas (ERCOT) fees, hedging and the balance from the previous period, divided by number of kilowatt hours (kWh) sold to retail customers.
FY 2014-15 Results
The FY 2014-15 actual power supply cost average is 3.50 cents per kilowatt hour (kWh), a decrease of 0.49 cents per kWh from the prior year.
Assessment of Results
For FY 2014-15, total power supply expenses decreased by 11.8% compared to FY 2013-14. During FY 2014-15, Austin Energy-owned plants experienced excellent performance. AE has a good mix of fuels in the generation portfolio such as natural gas, coal, nuclear, wind, solar and biomass. Total renewable energy capacity was 37.3%. The biggest overall factors that kept the power supply cost average lower were natural gas prices decreasing due to the abundance of supply resulting from the fracking techniques used in recent years. This resulted in lower wholesale market prices in ERCOT. AE generates power through its owned plants and purchase power agreements. AE then sells power into the ERCOT market and must buy power to provide for AE’s customer load. The net effect of these transactions will also cause a fluctuation up and down in the total power supply cost for the fiscal year.
Four wind turbines spinning on a sunny day.
Next Steps
As mentioned above, one of the primary fuel sources, natural gas continues to have favorable prices in the market. Prices of solar and wind have also become increasingly attractive as more utility-scale projects are being built in the ERCOT grid. During FY 2014-15, AE brought on-line 499 megawatts (MW) of wind purchase power agreements and has another 438 MW utility scale solar agreements to come on-line by the end of calendar year 2016. These contracts will keep AE on-track to meet the updated renewable goal of 55% by 2025. This will help keep AE as a national leader in renewable energy. AE will continually strive to get the best prices for fuel and energy resources to keep the Power Supply Adjustment stable since this directly affects customers’ bills.
Contact Information
For more information contact Khalil Shalabi, Vice President, Market Operations & Resource Planning at (512) 322‑6520.