19-A-1 - Atty's Report - CAPP - Laserfiche WebLink

Home Browse Search

AGENDA INFORMATION SHEET PROJECT: City Attorney Report on the proceedings of the first membership meeting of the Citizens Aggregate Power Project (CAPP) - Thursday, May 17, 2001 BACKGROUND: City Council will recall that at a prior City Council meeting the City formally approved the Bylaws and Articles of Incorporation and joined a consortium of cities incorporated as the Citizens Aggregate Power Project (CAPP). The purpose of this consortium of cities is to negotiate the most favorable price possible for electric service for city-owned and operated facilities following the January 1, 2002, date when retail electric service to everyone other than residential users will be deregulated. The concept is that cities, because of the nature of their power consumption both as to amount of consumption and stability of consumption, should as a group be in a position to obtain a favorable price from the new retail electrical power providers (REPs). The first membership meeting of the Citizens Aggregate Power Project (CAPP) was held in the City Attorney's office of the City of Arlington this past Thursday, May 17, 2001. During the course of the meeting, there were a number of important handouts, some of which are included herein. They include a copy of the request for qualifications (RFQ) which, with a few minor revisions not reflected in this draft, was approved by unanimous vote of the membership. The RFQ will be used in the process of seeking proposals from retail electric providers (REPs) seeking to be the providers of electric power to the CAPP participants. Also included in the RFQ is the schedule of events which will be followed during the course ofthe proposal process. Your attention is directed to that schedule found on page four of the RFQ. DESCRIPTION: During the course of the discussion, there were various important points that were brought out. These include the following: ► As reflected in the attached Exhibit 1 to the RFQ, there are five cities which provide 73% of the electric power consumption. The City of Dallas, as you would well imagine, provides roughly 5 1 % of the total CAPP consumption. Ft. Worth represents another 14%. As a consequence, there may have to be some special price structuring to retain these large cities in the project because of their major impact on the over-all consumption. Currently those same cities receive special price differentials from the power companies, so this would not be anything abnormal. ► The key components to this process in getting good bids for power will be how much consumption or demand can be delivered to a particular REP, and how stable the demand is; that is, is the demand fairly constant or does it have a series of peaks and valleys. Fortunately for cities, their demand in the aggregate as you can see in Exhibit No. 1 is rather significant and at the same time fairly consistent during a twenty-four hour period. This should place cities in an excellent position as an aggregate of cities to receive very favorable pricing. However, as was emphasized through the whole process, this is a whole new ball game for purchasing electric power in Texas and there are no certainties. ► Although the statute deregulating the purchase of power goes into effect January 1, 2002, there will probably be a transition period within which cities will transition from their current