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Controller's office warns Houston faces higher electricity costs as Reliant contract renewal raises rates
Summary
Deputy Controller Will Jones told the committee the city's $640M Reliant contract entered before Winter Storm Uri now faces a renewal rate about 90% higher than the prior fixed rate; staff estimate a possible $10–$20M FY27 gap and said long‑term procurement options are under review.
Deputy Director Will Jones of the Controller's Office laid out how changes in the Texas electricity market and contract renewals could affect Houston's budget during the upcoming budget cycle.
Jones told the committee that the city holds a $640 million contract with Reliant (initial five‑year term plus two one‑year options) that was entered into before Winter Storm Uri and that the administration is currently in a renewal option. "Under the renewal option, the rate did increase 90%," he said, and cautioned that the contract's remaining spend authority (about $110 million) may not fully cover FY2027 needs: "We're projected to spend $123,000,000 this year, so that $110,000,000 may not be enough," he said, estimating a potential gap of "$10 to $20,000,000."
Jones reviewed why Texas differs from other states—ERCOT manages roughly 90% of the state's load and Texas utilities face state (not federal) oversight—then described the components of the city's electricity cost: negotiated energy supply, transmission and distribution pass‑throughs, ERCOT charges and taxes. He said the city previously insulated some operations with fixed pricing (for general operations) but had street lights on a variable rate until an amendment locked streetlight pricing after Uri. He noted the city has spent about $530 million to date under the Reliant agreement and that replacement or procurement decisions will affect FY27 and beyond.
Councilmembers asked for clarity on the 100% renewable wording; Jones said the contract was structured using renewable energy credits and is certifiable as 100% renewable on paper. Asked whether the city will seek a new competitive procurement, Jones said state law does not require competitive bids for electricity contracts but the city typically runs an RFP to seek the best price; such procurement takes time because of Houston's complex electricity profile.
No formal action was taken at this meeting, but staff flagged the budget implications and the need to monitor the contract and potentially add spend authority if FY27 forecasts are realized.
