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STAFF REPORT <br />The City of Paris is a member of the Cities Aggregation Power Project ("CAPP") <br />a non-profit political subdivision corporation aggregator. Created in 2001 in anticipation <br />of the deregulation of the Texas retail electric market, CAPP pools members' electric <br />power needs in order to negotiate lower, more stable prices through bulk purchasing. <br />CAPP is run by a voluntary 10 member Board of Directors, comprised entirely of city <br />employees and city officials. <br />CAPP and its sister political subdivision corporation aggregator, South Texas <br />Aggregation Project, Inc. ("STAP"), have more than 150 political subdivision members <br />that purchase in excess of one billion kWh annually. Together CAPP and STAP have <br />member savings that have surpassed $100 million since the Texas electric market <br />deregulated in 2002. Historic savings for the City of Paris due to its membership with <br />CAPP are as follows based comparing actual City cost vs. the price to beat rate. <br />1. <br />2002 <br />$160,156 <br />2. <br />2003 <br />$350,440 <br />3. <br />2004 <br />$592,988 <br />4. <br />2005 <br />$326,032 <br />5. <br />2006 <br />$347,546 <br />6. <br />2007 <br />not available <br />CAPP has entered into a Power Purchase Agreement ("PPA") with Luminant <br />Generation Company LLC, Big Brown Power Company, LLC and Oak Grove <br />Management Company, LLC (collectively, "Luminant") for approximately 50 MW of <br />baseload power from seven different units over a 24-year period. CAPP has entered into <br />the contract on behalf of all CAPP members and STAP members that are willing to be <br />allocated a portion of approximately 50 MW, corresponding to each participating <br />member's energy consumption as a percentage of all participating members' <br />consumption. <br />The attached ordinance commits the City to purchasing electric power to satisfy a <br />portion of its annual energy needs (approximately 60-70% initially and declining <br />thereafter if the City's consumption increases) through the CAPP PPA for 24 years and to <br />pay a capacity payment equal to its proportionate amount of the debt service obligation <br />associated with CAPP's prepayment of PPA capacity costs. The estimated annual <br />capacity payment for Paris would be $492,000. This is not an additional cost but <br />represents a shift of this portion of the electric bill from an operating expense to a <br />capacity related expense. The ordinance approves the Energy Sales Contract Between <br />CAPP and the City (the "Member Contract") and authorizes the City officers and <br />employees as may be appropriate to take all actions necessary to carry out the terms of <br />this ordinance and the Member Contract. <br />CAPP Lonti-Term Contract Background• <br />Although CAPP member savings are significant, the price volatilitv in the market <br />makes it difficult for CAPP members to accurately budget for power expenditures from <br />year to year. This is because power contract options made available to retail customers <br />r <br />06 <br />; <br />