HomeMy Public PortalAboutResolution No. 298-07 05-22-2007 • RESOLUTION N0.298-07
A RESOLUTION OF THE CITY OF RICHLAND HILLS, TEXAS, ENDORSING
CERTAIN LEGISLATIVE CHANGES TO ENHANCE THE COMPETITIVE
ELECTRIC MARKET SUPPORTED BY CITIES AGGREGATION POWER PROJECT,
INC.
WHEREAS, the City of Richland Hills, Texas, has historically been active in the process of
regulation of electric utilities; and
WHEREAS, the City is a member of 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 has 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 population 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 for and energy costs for Texas
businesses and consumers are needlessly inflated because of a mechanism known
as the "uniform-price auction," 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 term power contracts to ensure more price
stability, but current provisions of the Local Government Code may make the
contracting process unnecessarily cumbersome; and
•
Resolution No. 298-07
Pg. 2
• WHEREAS, the City endorses efforts proposed by LAPP 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.
THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
RICHLAND HILLS, TEXAS, THAT:
I.
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 (ERGOT
zones) and require further Commission action to mitigate market control (SB 483
and HB 1190).
• Authorize citizen aggregation projects that will permit cities and towns with
populations 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
baseload generation capacity is made available for sale to Competitive Retail
Electric Providers at their variable cost plus ten percent (HB 3348).
• 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).
II.
A copy of the 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 CAPP.
PRESENTED AND PASSED on this 22°d day of May, 2007, by a vote of 5 ayes and 0
nays at a regular meeting of the City Council of the City of Richland Hills, Texas.
•
Resolution No. 298-07
pg. 3
•
ayor
ATTEST:
ity Secretary
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