09-F Electric Supply Agreement - Laserfiche WebLink

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DRAFTSTAFF REPORT Puruose The purpose of this report is to recommend adoption by the Mayor and City Council 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 is a member. Discussion 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 curcent 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 avcidance, 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. Recommendation The City's staff recommends that the Mayor and City Council 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.