08-B CAPP endorsing certain legislative changes

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AGENDA INFORMATION SHEET DESCRIPTION: A Resolution Endorsing CAPP's 2007 Legislative Agenda. PURPOSE: The City of Paris is a member of Cities Aggregation Power Project, Inc. ("CAPP"). The CAPP Board of Directors has voted to authorize certain legislative efforts on behalf of its members during the 80th Texas Legislative Session. CAPP will capitalize on the presence its members established in the last two legislative sessions to apprise legislators of CAPP Cities' perspective on electric issues and to recommend legislative action. BACKGROUND: Together with its sister aggregation group, the South Texas Aggregation Project ("STAP"), CAPP is one of the largest electric aggregation groups in Texas. CAPP and STAP have more than 140 member cities. CAPP has served as a vehicle to increase cities' ability to navigate the deregulated market and bargain for the best rates and contract terms. CAPP members enjoy the benefits of favorable contractual terms and negotiated commodity rate that has produced savings for its members for the past five years averaging 20 percent compared to what members would have paid according to the Price to Beat rates. As an active market participant, CAPP is in the unique position to identify problems that have developed in the deregulated marketplace. In order to ensure the Texas retail electric market is a truly competitive market with low prices throughout Texas, CAPP has created a legislative agenda that aims to encourage competition by limiting market power, eliminating cost shifting, and creating competitive options for all customers. Several changes should be made to the deregulation statute (SB 7) to better protect cities' budgets, enhance cities' ability to protect their citizens, and increase competition among retail providers. The following changes are proposed by the CAPP Board: · To institute limits upon the ownership and control of generation within functional markets (ERCOT zones) and require further Commission action to mitigate market control. This change will address market power concerns and promote greater competition. This objective is a principal component of the comprehensive electric legislative package filed by Chairman Fraser and Chairman King (SB 483 and HB 1190). · To authorize "opt-out" 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. Currently, the statute permits citizen aggregation projects, but requires all customers to affirmatively "opt-in" to the aggregation group. This has created a significant disincentive to create citizen aggregation projects. Changing citizen aggregation from opt-in to opt-out will enhance the opportunities for rural residential customers to benefit from deregulation and benefit the entire state by increasing competition (SB 1401 and HB 3498). · To ensure that a modest amount (15 percent of installed capacity) of low-cost baseload generation capacity is made available for sale to competitive Retail ....._".. ...4."1" 1""....."..~ ......