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STAFF REPORT REGARDING THE RESOLUTION ENDORSING CAPP'S 2009 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 81s' Texas Legislative Session. CAPP will capitalize on the presence its members established in the last three legislative sessions to apprise legislators of CAPP Cities' perspective on electric issues and to recommend legislative action. DISCUSSION In 1999, Texas lawmakers adopted Senate Bill 7, the state's electric deregulation law. The legislation expanded competition in the wholesale electricity market and opened the door to competition among electric retailers. Proponents of the legislation promised lower electric prices. Unfortunately, the reality has been otherwise. Although Texans paid electric prices well below the national average during the decade before Senate Bill 7 was passed, customers in deregulated parts of the state now pay prices above the national average. In fact, residential electric prices have increased by a greater percentage in Texas than in almost every other state - including every other deregulated state with retail competition. CAPP believes that many of the current problems that keep the market from achieving the promise of full competition stem from defects in the deregulated electricity market. For example, some generators are able to exercise monopoly-like control in large swaths of Texas. That has hindered healthy competition. Efforts to address market design issues by ERCOT have been misguided, mismanaged, gone over budget and fallen behind schedule. As an active market participant, CAPP is in the unique position to identify problems that have developed in the deregulated marketplace and provide a consumer's perspective to legislators interested in fixing those problems. Based upon this point of view, CAPP has created a legislative agenda that aims to transition the electric market from a deregulated market to a truly competitive one by limiting market power, eliminating cost shifting, and creating competitive options for all customers. The CAPP legislative agenda items reflect CAPP's desire for a truly healthy electric market where consumers can save and competition can flourish. Such a market - one where power remains affordable and reliable - will mean more economic development for Texas cities, and a better standard of living for our citizens. Legislative change is necessary 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: a U0U03-k