By Timothy Timmerman
Chair, LCRA Board of Directors
Even a casual reader of the Fiscal Year 2013 Business Plan just approved by the LCRA Board of Directors will recognize that there has been a lot of change at LCRA. Only two goals are outlined in the plan – freezing nonfuel rates for our wholesale power customers and finding 100,000 acre-feet of new water supplies in the next five years.
Only two goals, but ambitious and important ones that illustrate LCRA’s total commitment to be efficient, cost-conscious and a worthy steward of our vital energy and water resources. Getting started on this dynamic new path was a radical departure for a company that had changed its business model very little in recent decades. But bold action was necessary if LCRA is to be competitive in the deregulated electricity market in Texas. The Board and General Manager Becky Motal are committed to making the changes needed for LCRA to be lean and competitive and to effectively manage the Highland Lakes and Colorado River.
This effort began in 2010 with an advisory committee to help write a new Water Management Plan for the Highland Lakes. That revised plan was completed, approved by the Board and sent to the Texas Commission on Environmental Quality in less than two years, a major accomplishment for the committee, LCRA staff and the Board. It’s a plan that makes major changes in the way the Highland Lakes are managed, particularly in the devastating drought conditions we are experiencing in Central Texas.
In November 2010, the Board directed staff to develop a plan to divest the water and wastewater systems LCRA had accumulated over the years. It was costing LCRA millions of dollars each year to maintain those systems, diverting staff and resources from LCRA’s traditional missions. Just 16 months later, LCRA had either sold or had agreements to sell all but one of its utility systems – about 96 percent of those customers to be served by public entities. That’s money, staff time and focus that LCRA can devote to its core mission of delivering water and power.
The change in direction continued when the Board named Becky Motal general manager last summer. She immediately began a pivotal reorganization designed to streamline LCRA and reduce overhead to make us more competitive in the power markets. She and her executive team took a hard look at staffing levels and decided to offer a voluntary severance package to eligible employees. The result is a company that today has 314 fewer employees and nearly $40 million in budget reductions compared to a year ago.
All this has been accomplished without a decline in service or major problems in LCRA’s operations. It has been a truly amazing transformation in a very short time. But that’s what had to happen for LCRA to be competitive in Texas’s wholesale power market, which it must be. About two-thirds of LCRA’s revenue comes from selling power to cities and electric cooperatives. By freezing nonfuel rates for the next four years, we are providing our customers with a cost-effective plan we believe will allow LCRA to continue as their power provider.
Finding 100,000 acre-feet of new water supplies is equally important for LCRA and the region. The continuing drought’s effect on the water supply and our quality of life demand that LCRA address the problem head-on. Staff has already taken an initial step with a project to test gravel pits as temporary reservoirs to catch and retain excess river flows, which can then be used for irrigation. If successful, this effort could be an alternative to releasing stored water from lakes Travis and Buchanan for irrigating rice fields and supplying downstream industry.
The past year has been both exciting and invigorating for our Board because so much has been accomplished so quickly. But the urgency was necessary. LCRA must adjust to the realities of a deregulated market for electricity and the devastating effects of an exceptional drought on a fast-growing region.
I believe LCRA is on the right road, and that the general manager and her team are making the difficult choices necessary to ensure LCRA continues to be an efficient, cost-effective operation. As wrenching as a quick change in direction can be, I believe that it is the right path for LCRA and the entire lower Colorado River basin.
Timmerman has been an LCRA Board member since February 2008 and was appointed chairman by Gov. Rick Perry in January 2011.