HomeMy WebLinkAboutResolution No. 05-89
RESOLUTION NO. (J1Ii-g'1
APPROVAL OF CITIES AGGREGATION POWER PROJECT'S
LETTER OF INTENT TO ENTER INTO NEGOTIATIONS FOR
A CAPACITY CONTRACT WITH THE OWNER OF COAL
(INCLUDING TEXAS LIGNITE) GENERATION TO SUPPLY
THE BASE LOAD ELECTRIC POWER NEEDS
(APPROXIMATELY 55%-60% OF TOTAL ENERGY NEEDS)
FOR CAPP MEMBERS OVER A I 0- YEAR PERIOD
WHEREAS, the City of The Colony, Texas ("City") is a member of Cities Aggregation
Power Project, Inc. ("CAPP") and said membership has resulted in average annual energy
savings over 20% off of the Public Utility Commission ("PUC") approved price to beat; and
WHEREAS, all retail power bids from various Retail Electric Providers (REPs) in the
deregulated electric retail market have been directly linked to natural gas futures prices; and
WHEREAS, natural gas prices have been extremely volatile and have caused substantial
increases in the price of electricity paid by the City; and
WHEREAS, CAPP is in the process of negotiating a 10-year capacity supply contract for
the city's base load electric needs (approximately 55% of the city's total electric energy needs)
for a fixed price that should provide considerable economic benefit and greater price stability in
comparison to traditional energy contracts with REPs; and
WHEREAS, coal-fired capacity in Texas available to retail load is scarce and the
situation giving rise to the Letter of Intent reflects a unique opportunity for CAPP members to
increase savings and reduce electric price volatility; and
WHEREAS, the owner of the coal capacity needs a letter of intent by the end of
September 2005 and desires completion of a contract by December 31, 2005.
THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF THE
COLONY, TEXAS THAT:
1. The efforts of the CAPP Board to secure coal capacity for the City of The
Colony's base load electric capacity needs for a fixed price for a 10-year period commencing in
the 4th quarter of 2007 are hereby ratified.
2. The City of The Colony endorses the CAPP Board committing to a letter of intent
to contract for coal capacity with the understanding that: (1) CAPP will provide proof of
economic benefit of coal capacity and energy from a coal and gas mix in comparison to
exclusive reliance on energy priced on 100% gas generation coupled with a conservative forecast
of natural gas prices; (2) the City of The Colony will have an opportunity to review and approve
or reject a 10-year contractual agreement to supply all the city's power needs; and (3) CAPP will
issue bonds to secure funding of amounts necessary to prepay the capacity portion of the coal
supply contract.
Signed this 3rd day of October 2005.