13 - GEXA Energy Invoice Ancillary Charges

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Item No. 13 Memorandum TO: Mayor, Mayor Pro Tem & City Council FROM: Grayson Path, City Manager SUBJECT: GEXA ENERGY INVOICE ANCILLARY CHARGES DATE: June 14, 2021 The City of Paris has received an invoice from GEXA Energy, our municipal retail electrical provider through our Texas Coalition of Affordable Power (TCAP) Commercial Electricity Service Agreement (CESA), for additional costs that resulted from the February winter storm. As provided in the attached invoice, this winter storm resulted in some of the highest energy and ancillary service charges ever experienced by electric consumers in Electric Reliability Council of Texas (ERCOT). During the February winter storm, power generators throughout the State of Texas failed to activate for one reason or another. ERCOT foresaw a shortage of power and therefore went to the backup generation throughout the state and instructed them to turn on to provide power. When selling power in to the grid, you basically bid your price. In this situation of an emergency, ERCOT told everyone to provide and so generation was able to name their own price. Where we normally see prices in the $30-$40/MWh range, prices soared to $25,000/MWh. This was a typical supply and demand situation where entities were able to make a massive profit knowing that power was in demand. Unfortunately, this comes at the expense of the tax payers. The TCAP has been attempting to convince the Legislature to go back and "reprice" the power that was sold during that storm, but other than the Lt. Governor, there has been no willingness by the Governor or Legislature to pass any of the various bills that would have accomplished this. What occurred was legal, though we might question whether it was ethical or right given Texas Tax Payers all over the State are now paying millions of dollars in additional costs when it did not cost that to produce the power.