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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: I~, C~CRETARY