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Item No. 17 memorandum TO: City Council John Godwin, City Manager FROM: Gene Anderson, Finance Director SUBJECT: ELECTRICITY CONTRACT DATE: February 5, 2016 BACKGROUND: The City of Paris has been a member of the Texas Coalition for Affordable Power (TCAP) or its predecessor since 2001. The goal of this coalition of 171 political subdivisions is to provide long term stable electrical pricing. In doing so, TCAP also advocates for cities before the Public Utilities Commission and analyzes rate requests by various energy providers. TCAP also negotiates with energy providers to reduce proposed rate increases to our citizens. Our current contract with TCAP expires December 31, 2017. Because TCAP is a non- profit organization, it periodically refunds surplus money not needed for operations. In the last 5 years, TCAP has refunded $95,858 to the City of Paris in the form of equity distributions and ancillary services refunds. STATUS OF ISSUE: In order to lock in what are historically low electrical rates, TCAP has negotiated a five year contract beginning January 1, 2018 and ending December 31, 2022. The exact cost of electricity under the contract will be established between now and June 30, 2016 but is most likely to be established in March. The electrical rate will not exceed a benchmark rate of 4.1 cents per kWh and will be the best market rate available at the time of selection. To participate in this contract, cities must pass a resolution prior to February 25, 2016. BUDGET: Coalition cities have benefited from pooling their electrical demand and negotiating rates over the long term which provide much needed budget stability for municipalities. RECOMMENDATION: Motion to approve the resolution authorizing the City of Paris to enter into a contract with TCAP to procure electricity for the City of Paris.