Res 015-2016 2/2/2016Resolution No. _15-2016__
Resolution 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 ente r into a contract
for electricity; authorizing Darron Leiker, Jim Dockery or R. Kinley
Hegglund, Jr. to execute an electric supply agreement for deliveries
of electricity effective January 1, 2018 and 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
1. WHEREAS, the City of Wichita Falls, 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 1 70 members in the
competitive retail market; and,
2. 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 ,
3. 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,
4. 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 reasonabl e commodity prices for delivered electricity since 2002 resulting in stable
budgets for electricity for members; and ,
5. 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,
6. 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,
7. 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,
8. 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 ,
9. WHEREAS, daily price changes require retail customers to execute a
contract immediately upon receipt of a favorable offer; and ,
10. WHEREAS, pursuant to Texas Local Government Code Section
252.022(a)(15) expenditures for electricity are exempt from competitive bidding
requirements; and,
11. 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,
12. WHEREAS, TCAP intends to continue to contract with its current
wholesale supplier, NextEra, because the relat ionship 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,
13. 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 pri ces under the following supply 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; and
14. 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 ,
15. WHEREAS, wholesale suppliers demand assurance that TCAP will pay
for all contracted load; and,
16. 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 202 2 through TCAP.
NOW, T HEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS. 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 with the following
understanding: a) while supply Option 1 is a full-requirements, fixed-price option.
If no option is selected, TCAP will assume that a passed Resolution approves of
Option 1.
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: Darron Leiker, Jim Dockery or R. Kinley Hegglund, Jr.
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.
PASSED AND APPROVED this the 2nd day of February, 2016.
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MAYO R
ATTEST:
City Clerk