City of Austin Performance Report 2015-16

Power Supply Cost Average (Cents per Kilowatt Hour) 

Measure Description
This measure is the Austin Energy (AE) system annual average power supply cost, in cents per kilowatt hour, of electricity produced. The power supply cost is the cost of energy to supply AE’s customers and does not include the capital and operations and maintenance cost associated with delivering the energy.
Calculation Method
This measure is calculated by taking the cost of energy that AE buys from the electric market less the energy AE sells into the market from its generation divided by the total electric sales in kilowatt hours (kWh).
FY 2015-16 Results
The FY 2015-16 actual power supply cost average is 3.41 cents per kilowatt hour (kWh), a decrease of 0.09 cents per kWh from the prior year.

Assessment of Results
For FY 2015-16, total power supply expenses decreased by 1.0% compared to FY 2014-15. During FY 2015-16, Austin Energy-owned plants experienced excellent performance. AE generates power through its owned plants and purchase power agreements. AE then sells power into the Electric Reliability Council of Texas (ERCOT) market and must buy power to provide for AE’s customer load. The net effect of these transactions will cause a fluctuation up and down in the total power supply cost for the fiscal year. However, the biggest reason that the power supply cost decreased was due to the abundance of supply resulting from the fracking techniques used over the last couple of years. This has created lower wholesale market prices in ERCOT resulting in savings to the customer.
Next Steps
Prices of solar and wind have become increasingly attractive as more utility-scale projects are being built in the ERCOT grid. The balance of AE’s signed solar agreements totaling 438 megawatts is to come online in 2017 and 2018. It is expected that power supply costs will continue to decline slightly with long-term market prices forecasted to remain low. Additional purchases of renewable energy, which normally tend to raise the power supply cost, also continue to come down in price, lessening this effect over time. 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.