HomeMy Public PortalAboutResolution No. 241-05 10-11-2005 • RESOLUTION N0.241-OS
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 10-YEAR
PERIOD
WHEREAS, the City of Richland Hills ("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 heat; 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, LAPP is in the process of ne otiatin a 10- ear ca acit su 1
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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 LAPP
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
RICHLAND HILLS, TEXAS THAT:
1. The efforts of the CAPP Board to secure coal capacity for the City of
Richland Hills' base load electric needs for a fixed price fora 10-year
period commencing in the 4`h quarter of 2007 are hereby ratified.
2. The City of Richland Hills endorses the LAPP 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 Richland Hills 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) LAPP will issue bonds to secure
funding of amounts necessary to prepay the capacity portion of the cual
supply contract.
Signed this 11 `h day of October 2005.
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