R-3352-2-16RESOLUTION NO. 3352-2-16(R)
' A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, AUTHORIZING THE TEXAS COALITION FOR AFFORDABLE
POWER, INC. (TCAP), TO NEGOTIATE AN ELECTRIC SUPPLY AGREEMENT
FOR FIVE YEARS FOR DELIVERIES OF ELECTRICITY EFFECTIVE
JANUARY 1, 2018; AUTHORIZING TCAP TO ACT AS AN AGENT ON BEHALF
OF THE CITY TO ENTER INTO A CONTRACT FOR ELECTRICITY;
AUTHORIZING PETER H. VARGAS, CITY MANAGER, OR ERIC W. CANNON,
CHIEF FINANCIAL OFFICER, OR SHELLI M. SIEMER, ASSISTANT CITY
MANAGER, TO EXECUTE AN ELECTRIC SUPPLY AGREEMENT FOR
DELIVERIES OF ELECTRICITY EFFECTIVE JANUARY 1, 2018, COMMITTING
TO BUDGET FOR ENERGY PURCHASES IN 2018 THROUGH 2022, AND TO
HONOR THE CITY'S COMMITMENTS TO PURCHASE POWER FOR ITS
ELECTRICAL NEEDS IN 2018 THROUGH 2022 THROUGH TCAP; AND
PROVIDING EN EFFECTIVE DATE.
WHEREAS, the City of Allen, Texas (City) is a member of Texas Coalition For Affordable Power, Inc.
(TCAP), a non-profit, political subdivision corporation dedicated to securing electric power for its more than
170 members in the competitive retail market; and,
WHEREAS, TCAP has unique rights under Texas law to negotiate directly in the wholesale market and
' arrange separate contracts for power supply and retail services which provides TCAP leverage to achieve
contract provisions that single city negotiations with a Retail Electric Provider (REP) would be unlikely to
produce; and,
WHEREAS, TCAP's geographic diversity across all four ERCOT zones produces an aggregated peak load
that is lower than the total of individual peak loads of the individual TCAP members, allowing price benefits
in the wholesale market that are not likely to be available to any given TCAP member alone; and,
WHEREAS, TCAP and its predecessor organizations, Cities Aggregation Power Project, Inc. (CAPP) and
South Texas Aggregation Project, Inc. (STAP), negotiated favorable contract terms that resulted in rebates
from the wholesale supplier and reasonable commodity prices for delivered electricity since 2002 resulting in
stable budgets for electricity for members; and,
WHEREAS, commodity prices for electricity experienced significant volatility between 2002 and 2009, with
prices ranging from 4 cents to over 13 cents per kWh, causing CAPP and STAP members to welcome a five
year contractual commitment that came close to cutting the 2008 prices in half, with that contract being
extended until December 31, 2017, with a negotiated price reduction of about 1 cent per kWh; and,
WHEREAS, TCAP has become a forceful voice for consumer protections and market reform to benefit the
public and well as cities and other political subdivisions; and,
WHEREAS, TCAP is owned by its members and distributes monetary and other resources according to
relative load size of members and is controlled by a 15 member Board of Directors, all of whom must be city
employees of members who represent diversity in size and geography; and,
WHEREAS, wholesale power prices within the deregulated Texas market are largely determined by the
NYMEX gas futures prices for natural gas which are currently low and relatively stable, but which change
daily; and,
WHEREAS, daily price changes require retail customers to execute a contract immediately upon receipt of a
' favorable offer; and,
WHEREAS, pursuant to Texas Local Government Code Section 252.022(a)(15) expenditures for electricity
are exempt from competitive bidding requirements; and,
WHEREAS, on any given day, TCAP is able to capture a favorable wholesale price for any period of time,
comparable to or better than any given REP or broker; and,
WHEREAS, TCAP intends to continue to contract with its current wholesale supplier, NextEra, because the
relationship with NextEra is such that NextEra is willing, after it knows the size of a given load, to execute a
contract at or below prescribed price and terms; and,
WHEREAS, the City desires to execute a contract for electricity for the period beyond the expiration of its
current contract on December 31, 2017, that locks -in favorable wholesale prices under one of three different
supply options:
Option 1 - fixed-price, full -requirements at a price not to exceed 4.1 cents per kWh for the North and
West zones or 4.25 cents per kWh for the South and Houston zones;
Option 2 - fixed price for on -peak hours and variable spot market prices for off-peak hours;
Option 3 - block energy at a fixed price to cover the base load hours, a fixed price for solar energy to
cover mid-day peak hours (approximately 10% of total load) and variable spot market
prices for all remaining consumption; and
WHEREAS, TCAP will allow members six weeks from receipt of this resolution to consider whether to
participate in this second opportunity to contract for post -2017 electrical supply, and thereafter allow
NextEra until June 30, 2016 to contact for power for five years at a price not to exceed 4.1 cents per kWh in
the North and West zones and a price not to exceed 4.25 cents per kWh in the South and Houston zones for
Option 1, so long as the aggregated load for any of the three supply options reaches at least 50 megawatts;
and,
WHEREAS, wholesale suppliers demand assurance that TCAP will pay for all contracted load; and,
WHEREAS, the City needs to assure TCAP that it will sign a Commercial Electric Supply Agreement
(CESA) reflecting the contract extension and budget for energy purchases for the post -2017 period and honor
its commitment to purchase power for its electrical needs for 2018 through 2022 through TCAP.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, THAT:
SECTION 1. The TCAP Board of Directors and its consultants and advisors are agents authorized to
negotiate for the City's electricity needs as a member of TCAP for the period 2018 through 2022 at a price
not to exceed 4.1 cents per kWh for the North and West zones and a price not to exceed 4.25 cents per kWh in
the Houston and South zones for supply Option 1.
SECTION 2. The City prefers to participate in supply Option 1 (One) with the following understanding: a)
while supply Option 1 is a full -requirements, fixed-price option, Options 2 (fixed price on -peak, variable spot
prices for off-peak usage) and 3 (fixed price for base load, fixed price for a portion of peak load, and variable
spot market for remainder) have variable price components and savings over Option 1 cannot be guaranteed,
' and b) if there is insufficient desire among members to achieve a 50 MW threshold for either Option 2 or 3,
the member selecting the inadequately subscribed option will be placed in the Option 1 category. If no option
is selected, TCAP will assume that a passed Resolution approves of Option 1.
Resolution No. 3352-2-1601), Page 2
SECTION 3. Assuming this resolution is passed before February 25, 2016 and the combined load of TCAP
members passing this resolution exceeds 50 megawatts for the preferred Option and NextEra is able to
provide TCAP an opportunity prior to June 30, 2016 to contract for power to be delivered to members at a
price not to exceed 4.1 cents per kWh for the North and West zones and not to exceed 4.25 cents per kWh in
the Houston and South zones for supply Option 1 for the period January 1, 2018 through December 31, 2022,
any one of the following individuals is hereby authorized to sign an electric supply agreement for the City
within 24 hours of receipt of a contract that has been approved and recommended by the TCAP Board of
Directors: Peter H. Vargas, City Manager, or Eric W. Cannon, Chief Financial Officer, or Shelli M. Siemer,
Assistant City Manager.
SECTION 4. The City will commit to purchase power to meet all of its electricity needs eligible for
competition pursuant to the TCAP approved supply agreement and approve funds necessary to pay electricity
costs proportionate to the City's load under the supply agreement (whether wholesale or retail) arranged by
TCAP and signed by TCAP's Executive Director or President or other TCAP representatives authorized by
the TCAP Board.
SECTION 5. A copy of this resolution shall be sent to Jay Doegey, Executive Director, TCAP, 15455
Dallas Parkway, Suite 600, Addison, Texas 75001 and Geoffrey M. Gay, legal counsel to TCAP at 816
Congress Avenue, Suite 1900, Austin, Texas 78701.
SECTION 6. This resolution shall become effective immediately from and after its passage.
DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ON THIS THE 9ra DAY OF FEBRUARY 2016.
APPROVED:
Stephen Terrell, MAYOR
ATTEST:
Shelley B. Georg , TRMC, CITY SECRETARY
Resolution No. 3352-2-16(R), Page 3