R-2441-9-05RESOLUTION NO. 2441-9-05(R)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, APPROVING THE 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 10 -YEAR PERIOD; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Allen ("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.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, THAT:
SECTION 1. The efforts of the CAPP Board to secure coal capacity for the City of Allen's base load
electric capacity needs for a fixed price for a 10 -year period commencing in the 0 quarter of 2007 are hereby
ratified.
SECTION 2. The City of Allen endorses the CAPP Board committing to a letter of intent to contract for
coal capacity with the understanding that: (a) 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; (b) the City of Allen will have an
opportunity to review and approve or reject a 10 -year contractual agreement to supply all the city's power
needs; and (c) CAPP will issue bonds to secure funding of amounts necessary to prepay the capacity portion
of the coal supply contract.
' SECTION 3. 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 27Th DAY OF SEPTEMBER 2005.
APPROVED:
-4�
Stephen TZrrell, Mayor
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ATTEST:
Shelley B. Geo TRIC, C SECRETARY
Resolution No. 2441-92441-9-05M, Page 2