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AGENDA INFORMATION SHEET PROJECT: Consider a resolution endorsing legislative changes proposed by the member cities of Cities Aggregation Power Project (CAPP). BACKGROUND: The City of Paris is a member of Cities Aggregation Power Project, Inc. ("CAPP"). Together with the South Texas Aggregation Project (" STAP"), CAPP is one of the largest electric aggregation groups in Texas. CAPP and STAP have approximately 120 member cities, representing 13,000 municipal accounts. Total electric consumption of the two groups is around 1.2 billion kWh annually. CAPP has served as a vehicle to increase cities' abilities to navigate the newly deregulated market and bargain for the best rates and contract terms. CAPP members enjoy the benefits of favorable contractual terms and a negotiated commodity rate that produces approximately 15 percent average savings compared to the current Price to Beat rates. Despite these double-digit savings, CAPP members have encountered obstacles, both cost and non-cost related, that have significantly decreased benefits promised with the restructuring of the Texas electric market. Major problems that have plagued cities and their citizens over the past year include: Delays in switching CAPP accounts to new providers Erroneous, duplicative, sporadic, or simply missed bills Declines in service quality Price increases for residential customers Market power abuses DESCRIPTION: The CAPP Board of Directors has voted to authorize certain legislative efforts on behalf of its members during the 78th Texas Legislative Session. CAPP's goal is to apprise legislators of CAPP Cities' perspective on issues arising as the result of the electric deregulation process and to recommend legislative action to address failures of the retail market. Several changes should be made to the deregulation statute to better protect cities' budgets, enhance cities' ability to protect their citizens, and increase competition among retail providers. The following changes will be proposed by the CAPP Board: To institute limits upon the ownership of generation within functional markets (ERCOT zones) and require further Commission action to mitigate market control. This change will address market power concerns and promote greater competition. To correct a discrepancy between the Public Utility Regulatory Act and the Local Government Code so that a political subdivision aggregator may control aggregation projects created to benefit citizens. This change will remove a significant disincentive for cities that are interested in bargaining for cheaper power for citizens. To authorize Opt-Out Aggregation Projects that will allow political subdivisions to aggregate the load of all of their residents that have not specifically elected to be excluded from the aggregation project. This change should remove a further disincentive to citizen aggregation projects and enhance opportunities for residential customers to benefit from deregulation.