HomeMy WebLinkAboutResolution No. 07-06 Legislative Changes CAPP
RESOLUTION NO. 07-06
A RESOLUTION OF THE CITY OF UNIVERSITY PARK, TEXAS,
ENDORSING CERTAIN LEGISLATIVE CHANGES TO ENHANCE THE
COMPETITIVE ELECTRIC MARKET SUPPORTED BY CITIES
AGGREGATION POWER PROJECT, INC.
WHEREAS, the City of University Park, Texas (City) 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 populations less than 50,000; and
WHEREAS, Texas municipalities and customers currently pay generators prices for
"baseload" electric energy needs that are infl ated 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
WHEREAS, the City endorses efforts proposed by CAPP 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
UNIVERSITY PARK, 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 (ERCOT
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 CAPPo
PRESENTED AND PASSED on this 3rd day of April 2007, by a vote of 5 ayes and
o nays at a regular meeting of the City Council of the City. f Univ i P k, Texas.
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