09-F Electric Supply Agreement - Laserfiche WebLink

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AGENDA INFORMATION SHEET PROJECT: Adoption of the attached resolution authorizing the City Manager to sign an electric supply contract for 2003 (and possibly 2004) pursuant to recommendation of the Board of Directors of Cities Aggregation Power Project (CAPP), of which the City of Paris is a member. BACKGROUND: At its July meeting, the CAPP Board of Directors, consisting exclusively of city representatives, authorized negotiations for a 2003 electric power supply contract to commence with the current Retail Electric Provider (REP) serving CAPP's load in 2002. Specifically, the CAPP REP has been informed that, upon the REP fulfilling two conditions prior to October 11, 2002, its current contract with CAPP members will be extended. First, the REP must substantially solve all billing problems and second, provide a delivered commodity price below the current commodity price. If those two conditions are not met, CAPP will release a request for proposal on October 14, 2002, to REPs who are believed to be able to serve CAPP's load. Regardless of whether the CAPP Board endorses the current or a different REP for 2003, CAPP member cities will need to take immediate action to accept or reject the contract. Electricity prices tend to track prices for natural gas which can be volatile, and therefore, REPs maintain that any given offer will only be open for a 24 hour period. The attached resolution is a necessary step in positioning the City to capture the price that CAPP is able to achieve from its negotiations with REPs. The model resolution was approved for distribution to members by the CAPP Board at its August 8, 2002, meeting. The approved resolution should be returned to Mary Bunkley with the Arlington City Attorney's office before September 30, 2002. While the current CAPP REP has had some billing problems, the conclusion of CAPP's consultants and counsel is that all REPs are experiencing similar problems. On the other hand, discussions with non- CAPP member cities leads to the conclusion that CAPP has an extremely favorable contract (i. e., risk and penalty avoidance, simplicity) from the perspective of cities. Additionally, the CAPP REP has committed to an account-by-account verification for CAPP members that the Board's advisors believe is unique in the competitive marketplace. DESCRIPTION: The proposed resolution would authorize the City Manager or his designee to ratify the 2003 contract between CAPP and its approved REP and approve a power supply agreement for a period of 12 to 24 months. The City of Paris adopted a similar resolution last year associated with the approval of the current CAPP agreement. RECOMMENDED ACTION: Consider approval of the proposed resolution. STAFF CONTACT: City Attorney Larry W. Schenk; City Manager Michael E. Malone COUNCII, DATE: Consider for approval at City Council's September 9, 2002, regular Council meeting. ADDITIONAL MATERIALS: See proposed resolution and accompanying correspondence from Geoffrey Gay, CAPP legal counsel.