HomeMy WebLinkAboutResolution No. 05 20 CAPP CoalRESOLUTION NO. 05-20
A RESOLUTION OF THE CITY OF UNIVERSITY PARK, 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 1 O-YEAR PERIOD..
WHEREAS, the City of University Park, Texas (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 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 is 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 and desires
completion of a contract by December 31, 2005;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF UNIVERSITY PARK, TEXAS:
1. The efforts of the CAPP Board to secure coal capacity for the City of University
Park's base load electric capacity needs for a fixed price for a 10-year period commencing in the
4th quarter of 2007 are hereby ratified.
2. The City of University Park endorses the CAPP 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 University Park 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)
CAPP will issue bonds to secure funding of amounts necessary to prepay the capacity portion of
the coal supply contract.
Signed this 17th day of October, 2005, at a regular meeting of the City Council of the City
of University Park, Texas.
APPROVED:
APPROVED AS TO FORM:
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