Texas city suing Clearway to escape solar contract

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The city of Georgetown, (Texas, not the South Carolina one), an hour north of Austin, has filed a lawsuit against Buckthorn Westex LLC, a subsidiary of Clearway, formerly NRG Yield Inc., alleging that the company breached at least three sections of the power contract related to the Buckthorn solar plant in West Texas.

Chief among the complaints is the allegation that the company withheld information relating to the long-term performance of the plant during contract amendment negotiations in 2016. As compensation, the company is seeking $1 million in damages and a cancellation of the 25-year contract.

In response to the suit, Buckthorn Westex gave pv magazine the following statement:

Buckthorn strongly disputes all claims in the Complaint made by the City of Georgetown.  Buckthorn has and will continue to honor all terms of its contractual agreement with the City and any claims to the contrary are inaccurate.  Just two days before filing its lawsuit, the City agreed to formal mediation.  Rather than working in good faith, Georgetown elected to pursue litigation in a clear attempt to terminate its contractual obligations. Buckthorn is eager to present the facts in the legal process.

The city first took action against Buckthorn Westex in March, when it filed a “notice of event of default” in relation to the project.

Outside of this case, the city of Georgetown has a strange renewable energy history. Since April 2017, the city has prided itself in having its entire electric demand met by renewable energy, the first in Texas to make such a claim. The vision of the city is the vision of Mayor Dale Ross, an active renewable energy advocate, who spent time in South America, China, Japan and England conducting interviews on the benefits and hardships of switching to 100% renewables prior to the city’s commitment. Ross has also appeared in three energy-related movies on the city’s behalf: “Happening: A Clean Energy Revolution,” “An Inconvenient Sequel: Truth to Power” done by former Vice President Al Gore and the anti-coal documentary “From the Ashes.”

What all of that excitement over renewables led to was the city contracting for more energy than it can use. Coupled with falling energy prices on the whole, especially outside of renewables, the city became faced with a $8.3 million loss from 2016 to 2018. In response to this loss, the city was forced to raise the electricity prices of its customers, rarely a good thing.

It appears that what we could have brewing in Central Texas is a case of he-said-she-said. It is entirely possible that when NRG Energy bought the Buckthorn project for $11 million in November of 2016, the company found things amiss, things that were kept under wraps during those contract amendment negotiations in the same year. It is also entirely possible that the city got in over its head in terms of energy contracted for in an effort to move to 100% renewables and is trying to cover some money lost without having to again raise customers’ bills.

Either way, it will be interesting to see how the case plays out. Losing its contract could be a death sentence for the Buckthorn project. Furthermore, the city of Georgetown states that it gets 822 MWh annually from renewable sources, with a customer demand of 678 MWh annually. This means that if the contract is terminated, the city will lose it’s 100% renewably-powered designation, a shortfall it is likely looking to avoid.

NOTE: This article was edited on 10/15/19 to include the statement given to pv magazine by Buckthorn Westex LLC