Katy council authorizes electricity agreement to cover city facilities beginning April 2027; rate capped pending final contract

Katy City Council on Feb. 24 heard a market briefing from Michael Skelton, vice president at Tradition Energy, and authorized staff to move forward with procuring electricity for city facilities effective April 2027 for up to a 48‑month term at a not‑to‑exceed rate presented to council.

Skelton told the council the city’s current agreement (negotiated in 2018) locked in a very low rate that expires in 2027 and that market conditions have shifted. He summarized ERCOT market dynamics, saying the system has grown more reliant on renewables and battery resources and is “very sensitive to the weather,” and described the recommendation as a risk‑management approach to control budget exposure ahead of contract expiration. Skelton noted the city’s current rate is “just over 4¢” and discussed the tradeoffs of a shorter‑term contract that allows the city to average down in a falling market while protecting the budget if prices rise.

Council discussed the procurement approach and gave staff latitude to secure a contract at or below the presented 48‑month quote; Councilmember Gina Hicks moved the resolution, Mayor Pro Tem Chris Harris seconded, and council approved the motion. City staff said any final contract would still be brought back to council for execution and that legal review and the mayor’s signature would be required.

The resolution authorizes the city to execute an electricity agreement to begin April 2027 for a 48‑month term. During the presentation, staff and the consultant outlined risks facing the Texas grid including demand growth from industrial users and data centers, the changing generation mix, and supply‑chain uncertainties for new dispatchable plants. Council described the item as a budget and risk‑management decision and directed staff to return with contract documents for final approval and signature.