16-15 - R TOWN OF PROSPER, TEXAS RESOLUTION NO. 16-15
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER,
TEXAS, 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 TOWN TO
ENTER INTO A CONTRACT FOR ELECTRICITY; AUTHORIZING THE TOWN
MANAGER OF THE TOWN OF PROSPER, TEXAS, TO EXECUTE AN
ELECTRIC SUPPLY AGREEMENT FOR DELIVERIES OF ELECTRICITY
EFFECTIVE JANUARY 1, 2018, COMMITTING TO BUDGET FOR ENERGY
PURCHASES IN 2018 THROUGH 2022 AND TO HONOR THE TOWN'S
COMMITMENTS TO PURCHASE POWER FOR ITS ELECTRICAL NEEDS IN
2018 THROUGH 2022 THROUGH TCAP.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE
TOWN OF PROSPER, TEXAS, THAT:
SECTION 1
The Town of Prosper, Texas, 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 170 members in the competitive retail market.
SECTION 2
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 Town negotiations with a Retail Electric
Provider (REP) would be unlikely to produce.
SECTION 3
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.
SECTION 4
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 reasonable commodity prices for delivered
electricity since 2002 resulting in stable budgets for electricity for members.
SECTION 5
Commodity prices for electricity experienced significant volatility between 2002 and
2009, with prices ranging from four cents to over thirteen 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 one cent per kWh.
SECTION 6
TCAP has become a forceful voice for consumer protections and market reform to
benefit the public as well as cities and other political subdivisions.
SECTION 7
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 Town employees of members who represent diversity in size and geography.
SECTION 8
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.
SECTION 9
Daily price changes require retail customers to execute a contract immediately upon
receipt of a favorable offer.
SECTION 10
Pursuant to Texas Local Government Code Section 252.022(x)(15) expenditures for
electricity are exempt from competitive bidding requirements.
SECTION 11
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 broke.
SECTION 12
TCAP intends to continue to contract with its current wholesale supplier, NextEra,
because the relationship 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.
SECTION 13
The Town 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 prices
under one of three different supply options:
Resolution No.16-15,Page 2
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;
Option 2 - fixed price for on-peak hours and variable spot market prices for off-peak
hours; or
Option 3 - block energy at a fixed price to cover the base load hours, a fixed price for
solar energy to cover mid-day peak hours (approximately 10% of total load) and variable spot
market prices for all remaining consumption.
SECTION 14
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.
SECTION 15
Wholesale suppliers demand assurance that TCAP will pay for all contracted load.
SECTION 16
The Town assures 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
2022 through TCAP:
1. The TCAP Board of Directors and its consultants and advisors are agents authorized
to negotiate for the Town'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.
2. The Town prefers to participate in supply Option 1 with the following understanding:
a) while supply Option 1 is a full-requirements, fixed-price option, Options 2 (fixed
price on-peak, variable spot prices for off-peak usage) and 3 (fixed price for base
load, fixed price for a portion of peak load, and variable spot market for remainder)
have variable price components and savings over Option 1 cannot be guaranteed,
and b) if there is insufficient desire among members to achieve a 50 MW threshold
for either Option 2 or 3, the member selecting the inadequately subscribed option will
be placed in the Option 1 category. If no option is selected, TCAP will assume that a
passed Resolution approves of Option 1.
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
Resolution No.16-15,Page 3
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 Town within 24 hours of
receipt of a contract that has been approved and recommended by the TCAP Board
of Directors: Town Manager, Harlan Jefferson.
4. The Town 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 Town'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.
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.
SECTION 17
DULY PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS, THIS THE 9T" DAY OF FEBRUARY, 2016.
Ray Smith, qayor
ATTE
R n at�Wiretary "
APPROVED AS TO FORM AND LEGALITY:
Terrence S. Welch, Town Attorney
Resolution No.16-15,Page 4