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DRAFT fattomeylresowrk\current\ CAPP - Letter ofIntent Coal Generation Res December 2, 2005 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, APPROVING 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 to-YEAR PERIOD; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Paris ("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's 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 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 PARIS, PARIS, TEXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things approved.