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Fuel Supply Management

BTU has the difficult task of anticipating and of managing the uncertainty of fuel prices in order to minimize delivered energy cost and price volatility to its customers. BTU manages fuel supply in four different ways:

Diversification

BTU’s energy comes from a variety of fuel sources. Currently, BTU has a partnership with Texas Municipal Power Agency (TMPA) for a share of the Gibbons Creek coal fired power plant located east of Bryan near Carlos. BTU also owns four active natural gas fired resources for a total of 227 megawatts and has the option to call upon an additional 50 megawatts of gas fired generation. This diversification not only allows for the low rates currently enjoyed by BTU customers, it also increases the stability of BTU’s rates.

Hedging

BTU staff conducts various studies for the long term procurement, or the financial hedging, of both energy and natural gas in order to keep fuel rates stable and competitive. BTU uses this analysis to purchase energy and natural gas for periods of up to 25 years. Through these purchases BTU is able to lock in stable fuel rates for its customers for long periods of time if it is economically viable to do so.

Planning

BTU staff, with occasional assistance from outside energy consultants, runs studies to determine projected electric load, fuel prices, power prices, emission prices, and costs associated with different types of power plants. These studies are generated from a risk-analytic perspective, using a resource planning model. These studies typically model the next 10 to 20 years and BTU uses the results as a road map to guide its procurement activities for generating assets. Building or purchasing the correct generating asset is yet another way BTU is planning for future fuel supply.

QSE

BTU operates a Qualified Scheduling Entity (QSE) that is staffed 24×7. A QSE is required and certified by the Electric Reliability Council of Texas (ERCOT) to submit energy and ancillary service schedules for each 15-minute period. The primary objective of the QSE is to provide the lowest energy cost to customers by purchasing and selling electric power and ancillary services, or dispatching BTU generation on an economic basis. Energy schedulers develop load forecasts using historical load and weather data to develop generation plans which optimize resources with purchase/sale opportunities. The optimization of BTU-owned generation and economic market transactions allow BTU to minimize fuel costs to customers.

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