Austin Utilities Extends Power Sales Contract

The City of Austin officially extended its power sales contract with SMMPA to 2050. This decision, made in July 2024, followed Austin Utilities’ work to conduct an extensive analysis of its future power supply options regarding the expiration of its current contract. The original power sales contract signed by Austin and SMMPA’s 16 other member utilities in the early 1980s was a long-term agreement set to expire on April 1, 2030.

In 2009, SMMPA looked to develop a power plant in Fairmont, Minnesota, that would add new power supply resources to its system. Ideally the project would use 30-year-financing, but only 21 years remained under the Agency’s then-current power sales contracts with its members. All members were offered the opportunity to extend their contract by 20 years from 2030 to 2050, but Austin declined at that time.

Over the last several years, the city began to work in earnest to determine its post-2030 power supply plans.  Austin Utilities explored two major alternatives when conducting its future power supply study: it could go alone and be responsible for its own power supply and transmission beyond 2030, or it could continue to be part of an agency like SMMPA.

Austin involved consulting firm 1898 & Co. to conduct an analysis of its power supply alternatives, and SMMPA served as an additional resource. “We were able to talk with their consultants and provide input into some of the costs that we thought Austin might incur if they were not with SMMPA,” explained Dave Geschwind, SMMPA Executive Director and CEO, “We wanted to make sure that Austin Utilities understood and could properly account for all of the services the Agency provides today and what Austin would have to start doing on their own if they chose not to extend the contract.”

Austin concluded through the results of its third-party analysis and RFIs received from other contending agencies that it should continue with an agency following 2030. SMMPA was determined the best choice, and Austin elected to extend its current power sales contract to 2050. While the economics between going alone and extending its contract with SMMPA appeared similar, it came down to qualitative issues such as finding staff with the same expertise the Agency offers today. These results were shared with the Austin Utilities Commission and approved by the city council.

“All of the Agency’s members are better served with Austin’s contract extension,” noted Geschwind, “Our members are going to be stronger working together.”

SMMPA thanks the city of Austin for inviting Agency input and participation in this decision and looks forward to our continued partnership.