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Austin Energy looking at big jump in cost of turbine maintenance

Wednesday, September 18, 2013 by Michael Kanin

A change to the maintenance contract for the gas turbines that power Austin Energy’s Decker Creek and Sand Hill facilities could cost the utility as much as an additional $8.3 million over the final four years of three agreements. The amendment would affect deals the utility holds with General Electric, TransCanada Turbines, and Wood Group Pratt & Whitney.

 

The original deal, signed in December 2011, was for $16 million. The amendments appear necessary thanks to unanticipated levels of maintenance on the units.

 

Austin’s Electric Utility Commission declined to take action on the contract amendments Monday evening. Commissioner Varun Rai called for more specifics about the deal. “My only comment is to the extent that we can get more information ahead of time as to what the specifics were to the new amendments, especially when we are talking about 50 percent increases in a very short time frame,” he said.

 

The contract extensions had been slated for City Council approval on Oct. 3. It remained unclear whether Austin Energy officials would proceed with a request for approval on that date but  utility Chief Operating Officer Cheryl Mele told commissioners that Austin Energy could work with a delay.

 

Before the vote, Rai pointed to a lack of information provided to the commission as backup about the deal. “I would like to better understand what the differences are from the previous contract that was done about less than two years ago,” he said.

 

Mele told Rai and his colleagues that though the “scope of services is the same,” the utility will engage in more proactive maintenance with the amended agreements. “The dollars that we have spent underneath (the contract) have been in excess of what we anticipated when we put it in place,” Mele said. “What we are finding is that as these gas turbines are aging, we start them frequently and that is playing a factor into the damage that we are seeing to them, and the unexpected failures.”

 

Rai responded that he “find(s) it a little bit surprising that this was not anticipated two years ago.”

 

To that, Mele noted that the utility hadn’t “anticipated the large number of failures that we have experienced.” She said that the frequent turbine starts – dictated by grid needs – was giving the utility “a different result” than originally anticipated.

 

“We’re going to have to approach our maintenance differently than we thought (we would) two years ago,” Mele added.

 

When it came time to vote, Commissioner Clay Butler checked with Mele about whether holding off on an endorsement of the agreement would hurt the utility. Mele replied that it would not.

 

Still, instead of a request for postponement, commissioners simply took no action on the contract amendments. Council could, of course, still approve the agreements without an endorsement from commissioners.

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