25 Long range plan to stabilize future electrical costs

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CITY COUNCIL AGENDA ITEM BRIEFING SHEET Submittal Date: Originating Department: Presented By: Agenda Item No.: 12/OS/08 Council Date: City Manager Gene Anderson 25. 12/08/08 RECOMMENDED MOTION: POLICY ISSUE(S): Long range plan to stabilize future electrical costs. BACKGROUND: The City of Paris has been a member of the Cities Aggregation Power Project (CAPP) since 2002 and purchased our electriciry from them at significant savings compared to using a regular retail electric provider. Estimated savings in the first five years was $1,777,162 based on comparing actual City expense to the "price to beat" xate. CAPP has been working for over a year trying to secure a long-term contract to achieve maxirnum savings for member cities and pxovide a stabilized price for budgeting purposes. This long term contract would cover only the City's base load needs which xepresent about 60% of the total Ciry electrical consumption. The remaiiung electrical needs would be provided under a separate agreement similar to the CAPP agxeements used in the past. CAPP attorney Geoffrey Gay will give a presentation on the project. CAPP needs a commitment by December 17 if Paris wishes to participate. While it is likely that over the 24-year term of the proposed agreement the City will realize savings on electricity, the innovative financing mechanism and pledge of taxing authority to cover the debt portion of the project represent areas of risk. Paris' estimated maximum debt portion under the agreement would be $446,319 and would likely be less than that amount. This is not an additional expense that increases the budget. Additionally, while savings are expected, the volatility of the oil market and the 24-year term leaves open the possibility of minimal or no savings opportuniries. If Council wishes to pursue participarion in the long-term agreement but wants more time to digest the information, we will need to have a special meeting before December 17 to take action to commit. BOARD/COMMISSION RECOMMENDATION: EXHIBITS: Resolution; CAPP PowerPoint Presentation; CAPP Board Memo ACTION: BUDGET INFO: ❑ Financial Report ❑ Minute Order Expense $ ❑ Department Report Z Resolution Budgeted Amt. $ F~ Presentation ❑ Ordinance y'I'D Actual $ ❑ Public Hearing ❑ Other Acct. Name Acct. Number FISCAL NOTES: REVIEWED AND APPROVED BY: Z Administration Z Ciry Clerk ❑ Community Development ❑ EMS/IT Z Finance ❑ Fire ❑ Municipal Court Z Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities City of Paris Revised 2/04/08 - UO(a17~