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The Problem: Electric Price Increases <br />Just as other commodity prices are expected to increase over coming years, electric prices in <br />Texas and the United States are also expected to rise. Unpredictable electnc prices andpo tential <br />price spikes may create municipal budget challenges as cities strive to balance the need for <br />electncity with the need for city services. <br />A Responsible Solution: Long-Term, Competitive Prices <br />1. Taxpayer Beneflt <br />Local taxpayers win as cities largely insulate themselves from potential energy price increases. <br />2. Leveraging Our Buying Power <br />The Cities Aggregation Power Pro1 ect (CAPP) and the South Texas Aggregation Project (STAP) <br />are bringing togefher more than 150 cities to obtain more favorable competitrve energy pncing for <br />municipal elecVic use than if we acted independently. <br />3. Budget Certainty <br />This 24-year energy contract with Luminant will help provide greater municipal budget certainty. <br />4. Competitive Energy Prices Locked-In <br />This is a"bulk" energy purchase. We simply get a better price by purchasing a large amount of <br />electricity over 24 years. The energy price portion of the contract will limit future energy pnce <br />increases to 3% per year to provide more budget predictability for CAPP/STAP members. <br />5. Energy Price Protection <br />Energy prices are volatile. For example, each time a hurricane nears the Gulf of Mexico, natural <br />R as prices jump as production shuts down. In turn, energy prices usually increase as this important <br />uel cost nses. With this contract, cities will be largely insulated from these mcreases. 0 <br />.41ahiliJV fn EnerXti` Coa7s ta 7exas Lifie.ti <br />U, <br />