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LCRA increases capital spending for 2023 by $261 million

LCRA Board of Directors

The Lower Colorado River Authority Board of Directors held its April regular meeting at the Dalchau Service Center on Montopolis Drive in Austin on Wednesday, March 22. The board usually meets at its headquarters on Lake Austin Boulevard. Before the meeting, members toured the facility. The service center is a green energy building built to house the authority’s engineering department. Screencaptured image

The Lower Colorado River Authority board increased capital spending by $261.3 million for the 2023 fiscal year in a series of votes on Wednesday, March 22. Directors held three meetings at the Dalchau Service Center on Montopolis Drive in Austin: the Energy Operations Committee, the Transmission Service Corporation board, and the regular board. 

During the TSC meeting, the board approved the first step in increasing that entity’s capital budget by about 54 percent of the original budget, from $488.7 million to $750 million. The increase was finalized with a second vote at the regular board meeting later that morning. 

The capital spending limit for the 2023 fiscal year was first set at  $488.7 million in May 2022. Of that increase, $20 million is for new projects, including interconnections as well as restoration of failed equipment after Winter Storm Mara on Jan. 31-Feb. 2, said Executive Vice President and Chief Operation Officer of Transmission Kristen Senechal.

“We have seen increases in construction materials cost due to the broader economy,” Senechal told the TSC board, which is made up of the same members as the Board of Directors. “The good story is the growth, the bad story here is the inflation.” 

At the regular board meeting following the TSC meeting, Chief Financial Officer Jim Travis introduced seven items for approval that also increased costs. Two are new contracts, the other five are contract changes.

The contract changes are for multi-year contracts and do not commit LCRA to the expenditure amounts.

“(The changes) instead provide us with the ability to spend up to that amount on current and future capital projects,” explained an LCRA spokesperson after the meeting. “Any dollars spent will be included in the capital project budget.”

New contracts were signed for $15 million to Pascor Atlantic Corp., which provides air-break switches for substation capital projects and general maintenance. The one-year contract grants an annual option to extend up to a total of five years. 

“Historical contract expenditures for this category of spending were $14.8 million under existing five-year contracts,” said Matt Chavez, vice president for the LCRA’s supply chain. “Total projected contract expenditures are forecast to increase from prior years due to the continued growth of the LCRA TSC capital plan.”

The Day and Zimmerman Group Inc. were granted a one-year, $50 million contract for general temporary staffing services with an annual option to extend up to five years. Historical contract expenditures were about $42 million. Job positions provided under the contract include basic craft and clerical or administrative. 

“The contract is not limited to only those types of positions,” Chavez said in his presentation. “Services also include administration of LCRA’s vendor management system, which will be used to manage temporary contracted resources.”

Contract changes include: 

  • Hubbell Power Systems Inc., $13.5 million, up from $8.5 million for air-break switches. The additional $5 million is to cover an additional five-year extension of the current contract. 
  • Dailey-Wells Communications Inc., $35.5 million, up from $20.5 million, an additional $15 million. The original contract was signed in 2019 for telecommunications infrastructure sites, portable radios, and ancillary equipment and services used by the LCRA and its more than 180 telecommunications customers. The LCRA is upgrading its system from narrowband to broadband, as per a new Federal Communications Commission regulation approved in 2020.
  • Techline Inc., $105 million, up from $59 million, an increase of $46 million. Also first approved in 2019, this contract is for transmission line hardware and electrical distribution materials. “Historical and projected future contract expenditures have increased due to the growth of the LCRA TSC overall capital plan and commodity price inflation,” Chavez said. “Staff is requesting board approval for an additional $46 million to support projected demand for the remainder of the contract term, which expires in October 2024.”
  • SIEMENS Energy Inc., $38 million, up from $27 million, an increase of $11 million for high-voltage circuit breakers for substations. The increase is due to higher demand and commodity price inflations, according to the presentation. The original contract was signed in 2019 and expires in 2024.
  • Hitachi Energy USA Inc., $29 million, up from $18 million, an increase of $11 million, also for high-voltage circuit breakers and substations. This 2019 contract also expires in 2024. 

CORRECTION: An earlier version of this story reported that $20 million of the $261.3 million increased capital spending for the 2023 fiscal year was for repairs after Winter Storm Mara. The $20 million also includes new projects. regrets the error.