R-2614-4-07RESOLUTION NO. 2614-4-07(R)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ENDORSING CERTAIN LEGISLATIVE CHANGES TO
SENATE BILL 7 SUPPORTED BY THE CITIES AGGREGATION POWER
PROJECT, INC. (CAPP); AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Allen, Texas, hereinafter referred to as the City, has historically been active in the
process of regulation of electric utilities; and,
WHEREAS, the City is a member of the Cities Aggregation Power Project, Inc. (CAPP) and, as such,
made a decision to join with more than 95 other cities to switch its municipal electric accounts from its
incumbent provider to a retail electric provider; and,
WHEREAS, CAPP's experience with the deregulated market and contracts with several different retail
electric providers have indicated that the Texas electric retail market has failed to develop into a truly
competitive market as envisioned by the Texas Legislature, in part because congestion zones within the
ERCOT market have allowed certain market players to control enough generation capacity within a given
zone to exercise market power to the detriment of customers and non-affiliated retail electric providers; and,
WHEREAS, retail electric price competition has not successfully reached residential customers in Texas
communities with populations less than 50,000; and,
WHEREAS, Texas municipalities and customers currently pay generators prices for "baseload" electric
' energy needs that are inflated well beyond their actual costs because the power is priced as if it were produced
by high-priced natural gas -fueled plants, even though it is actually produced at a much lower cost by lignite,
coal and nuclear plants; and,
WHEREAS, power generators are receiving windfall profits, and energy costs for Texas businesses and
consumers are needlessly inflated because of a mechanism known as the "uniform -price auctioq" which pays
every generator the highest price ERCOT is required to accept to meet demand regardless of what portion of
the purchase required that price; and,
WHEREAS, CAPP recognizes the importance of diversifying its energy portfolio and is investigating
opportunities to add long tern power contracts to ensure more price stability, but current provisions of the
Local Government Code may make the contracting process unnecessarily cumbersome; and,
WHEREAS, the City endorses efforts proposed by CAPP to modify the electric deregulation legislation to
enhance competition, implement the original intent of SB 7 and reduce costs to the City and its residents.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, THAT:
SECTION 1. The following legislative reforms endorsed by CAPP to limit market power, create effective
citizen aggregation, and be supported by the City:
• Limit the ownership and control of generation within functional markets (ERCOT zones) and require
further Commission action to mitigate market control (SB 493 and HB 1190).
' • Authorize citizen aggregation projects that will permit cities and towns with populations of less than
50,000 to aggregate the load of all of their residents that have not specifically asked to be excluded
from the aggregation project to enhance the opportunities for rural residential customers to benefit
from deregulation and benefit the entire state by increasing competition (SB 1401 and HB 3498).
' • Ensure that a modest amount (15 percent of installed capacity) of low-cost base load generation
capacity is made available for sale to Competitive Retail Electric Providers at their variable cost plus
ten percent (H113348).
• Declare the current "uniform pricing system" in the balancing energy market unreasonable and direct
the Public Utility Commission to adopt rules that will provide for a pricing system that does not
produce windfall profits for generators and needlessly inflate energy cost to Texas businesses and
consumers (HB 3349).
• Remove unnecessary administrative obstacles in the Local Government Code that prevent cities from
taking full advantage of electric competition (SB 787 and HB 1749).
SECTION 2. A copy of this Resolution shall be sent to the elected lawmakers representing the City's
interests in the Texas House and Senate and to the Chairman and Legal Counsel of the Cities Aggregation
Power Project.
SECTION 3. This Resolution shall take effect immediately upon its passage.
DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS ON THIS THE 10111 DAY OF APRIL, 2007.
APPROVED:
XY3,�') Zf-�
Stephen terrell, MAYOR
APPROVED AS TO FORM: ATTEST: Q�
Peter G. Smith, CITY ATTORNEY She ey B. Geo C, CFFY SE TARY
Resolution No. 26144-07(R), Page 2