06-D-CAPP Bylaws and Articles - Laserfiche WebLink

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AGENDA INFORMATION SHEET SUBJECT: Consider approving the Articles of Incorporation and Bylaws of Cities Aggregation Power Project, Inc., and authorizing the City of Paris to accept membership in said corporation. BACKGROUND: As a consequence of legislation adopted by the Texas Legislature during the 1999 session, the retail electric market is scheduled to be deregulated effective January 1, 2002. While residential and small commercial customers who decide to stay with the affiliated retail electric provider of the incumbent utility will have some price protection and relative price stability for not more than five (5) years from a legislatively mandated "price to beat," municipalities will need to protect their budgets by becoming knowledgeable of power markets and their own electrical load. Aggregation, the process of cities joining together in a consortium effort to purchase bulk power, makes it possible for cities to enter the electric power marketplace with greater clout. Combined buying power is expected to lead to price breaks and may allow for bulk purchases in the cheaper, wholesale market. In November 2000, a meeting of cities, sponsored by the Texas Coalition of Cities for Utility Issues (TCCFUI) and the North Central Texas Council of Governments, was held to discuss the role of aggregation in a deregulated retail electric environment. In cooperation with the NCTCOG, the Steering Committee of Cities served by TXU (of which the City of Paris is a member) investigated the matter further and formed a committee to draft articles of incorporation and bylaws for the creation of a political subdivision corporation to facilitate aggregation of the electric load of municipal facilities. The creation of such a corporation is authorized by the same legislation which authorized deregulation. On Thursday, February 1, 2001, representatives of various cities met at NCTCOG's offices and approved finalization of documents to create Cities Aggregation Power Project, Inc. (CAPP). DESCRIPTION: As a political subdivision corporation the aggregation project will be controlled by a nine person board to be elected by member cities. Membership is open to any city which passes a resolution approving the articles of incorporation and bylaws and pays an initial fee of one-half of one percent of the city's cost of electricity during calendar year 2000. The initial fee will be credited back to member cities in future administrative fees that may be assessed after 2003. Board selection and other votes by members after 2003 will be based upon each city's proportionate share of the total aggregated load. The cities that have initiated CAPP have approved a time line and strategic plan that should maximize knowledge of wholesale and retail markets well before January 1, 2002. A decision should be made before the summer of 2001 on whether it will be practical and beneficial to aggregate municipal load from around the state or whether it will be preferable to negotiate distinctly unique regional electric power contracts. In either situation, cities from around the state should benefit from participation in CAPP. To enable the City of Paris to participate in this consortium of cities aimed at ultimately lowering total electric costs for the City's use of power for city functions, and to be in a position to do so following deregulation of power, the City of Paris needs to approve a resolution which in turn approves the