RES 2016-05TOWN OF TROPHY CLUB, TEXAS
RESOLUTION NO. 2016-05
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF
TROPHY CLUB, 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 MAYOR TO EXECUTE AN ELECTRIC SUPPLY
AGREEMENT FOR DELIVERIES OF ELECTRICITY EFFECTIVE
JANUARY 1, 2018 AND 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.
1. WHEREAS, the Town of Trophy Club, Texas (Town) 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; and
2. WHEREAS, 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; and
3. WHEREAS, 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; and
4. WHEREAS, 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;
and
5. WHEREAS, commodity prices for electricity experienced significant volatility
between 2002 and 2009, with prices ranging from 4 cents to over 13 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 1 cent per kWh; and
6. WHEREAS, TCAP has become a forceful voice for consumer protections and
market reform to benefit the public and well as cities and other political subdivisions; and
7. WHEREAS, 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 city employees of members who represent diversity in size and
geography; and
8. WHEREAS, 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; and
9. WHEREAS, daily price changes require retail customers to execute a contract
immediately upon receipt of a favorable offer; and
10. WHEREAS, pursuant to Texas Local Government Code Section 252.022(a)(15)
expenditures for electricity are exempt from competitive bidding requirements; and
11. WHEREAS, 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 broker; and
RES 2016-05 Page 2 of 5
12. WHEREAS, 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; and
13. WHEREAS, 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:
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;
hours;
Option 2 - fixed price for on -peak hours and variable spot market prices for off-peak
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; and
14. WHEREAS, 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; and
15. WHEREAS, wholesale suppliers demand assurance that TCAP will pay for all
contracted load; and
16. WHEREAS, the Town needs to assure TCAP that it will sign a Commercial
Electric Supply Agreement (CESA) reflecting the contract extension and budget for energy
RES 2016-05 Page 3 of 5
purchases for the post -2017 period and honor its commitment to purchase power for its electrical
needs for 2018 through 2022 through TCAP,
THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN
OF Trophy Club, TEXAS:
Section 1.
That 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;
Section 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.
Section 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 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, the
Mayor 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.
Section 4.
That 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
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Executive Director or President or other TCAP representatives authorized by the TCAP
Board.
Section 5.
That 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.
PRESENTED AND PASSED on this the 23rd day of February, 2016, by a vote of
ayes and �_ nays at a regular meeting of the Town Council of Trophy Club,
Texas.
ATTEST:
Holly Fimbre , Town Secretary
Town of Trophy Club, Texas
APPROVED TO AS FORM:
�L 0-.,a d I ,,,�
Patricia A. Adams, Town Attorney
Town of Trophy Club, Texas
C. Nick Sanders, Mayor
Town of Trophy Club, Texas
[SEAL]
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