13 - GEXA Energy Invoice Ancillary ChargesItem No. 13
Memorandum
TO: Mayor, Mayor Pro Tem & City Council
FROM: Grayson Path, City Manager
SUBJECT: GEXA ENERGY INVOICE
ANCILLARY CHARGES
DATE: June 14, 2021
The City of Paris has received an invoice from GEXA Energy, our municipal retail electrical
provider through our Texas Coalition of Affordable Power (TCAP) Commercial Electricity
Service Agreement (CESA), for additional costs that resulted from the February winter storm. As
provided in the attached invoice, this winter storm resulted in some of the highest energy and
ancillary service charges ever experienced by electric consumers in Electric Reliability Council of
Texas (ERCOT).
During the February winter storm, power generators throughout the State of Texas failed to
activate for one reason or another. ERCOT foresaw a shortage of power and therefore went to the
backup generation throughout the state and instructed them to turn on to provide power. When
selling power in to the grid, you basically bid your price. In this situation of an emergency,
ERCOT told everyone to provide and so generation was able to name their own price. Where we
normally see prices in the $30-$40/MWh range, prices soared to $25,000/MWh. This was a typical
supply and demand situation where entities were able to make a massive profit knowing that power
was in demand. Unfortunately, this comes at the expense of the tax payers.
The TCAP has been attempting to convince the Legislature to go back and "reprice" the power
that was sold during that storm, but other than the Lt. Governor, there has been no willingness by
the Governor or Legislature to pass any of the various bills that would have accomplished this.
What occurred was legal, though we might question whether it was ethical or right given Texas
Tax Payers all over the State are now paying millions of dollars in additional costs when it did not
cost that to produce the power.
GEXA Energy is the retail electrical provider for 100+ TCAP communities. They are not the ones
who produced these prices, they are simply the middle entity that purchases our power and
provides it to us. They were given a bill of $32 million on behalf of all its TCAP communities
which they have paid but now need all the TCAP communities to pay them back — they are floating
us during this time. They have taken the total bill and applied it to each of the communities based
on their usage during that winter storm.
STATUS OF ISSUE:
The City of Paris has been given a bill of $450,005.34. This is our portion of the roughly $32
million paid by GEXA Energy. After speaking with TCAP and their legal representation Lloyd
Gosselink Rochelle & Townsend, this is an official bill that must be paid. Without legislation that
would go back and reprice what was charged in February 2021, this is truly our costs from that
storm.
The GEXA letter states that the contents of the letter is confidential, but after speaking with TCAP
and LGRT, we have been able to make this letter available tonight by simply redacting the $/kWh
charge found in the three tables as that is proprietary information in our CESA.
GEXA Energy has provided us with two payment options in their letter.
1. Pay the full amount of $450,005.34 upfront.
2. Pay a monthly Charge of $24,224.65 from June 2021 — December 2022 (2.2% interest
rate).
3. Pay a monthly Charge of $6,763.48 from June 2021 — December 2028 (8.7% interest rate).
BUDGET:
The City of Paris did not budget for such a massive expense. Even making the listed payments
would have significant consequences to our budget given our legislative -mandated caps on raising
revenue to provide services. Paying from our reserves would also hurt our operations. But, the
City did receive the $1,393,150.00 in Coronavirus Aid, Relief, and Economic Security (CARES)
Act Funding in 2020. The City has performed all necessary documentation and reporting so that
the conditions have been satisfied making this funding available to any desired municipal purpose,
the balance being approximately $1.1 million. Therefore, these funds are available to cover this
GEXA Invoice. The 2.2% and 8.7% will add tens to hundreds of thousands of dollars to the final
bill if not paid up front. According to TCAP and LGRT, if the legislature were to eventually come
back and reprice the winter storm power events of February 2021, GEXA Energy has agreed to
reimburse each City their share of the repricing. Therefore, we would have no risk of paying it all
upfront vs. holding out and hoping something might happen later.
We will note that the City of Paris is expecting to receive another $5.4 million in American Rescue
Plan funding this year which will help get us back on track with some of our initial plans for the
CARES Funding (ex: generators).
OPTIONS:
1. Pay the full amount of $450,005.34 upfront using former CARES Funding.
2. Pay a monthly Charge of $24,224.65 from June 2021 — December 2022.
3. Pay a monthly Charge of $6,763.48 from June 2021— December 2028.
RECOMMENDATION:
1. Pay the full amount of $450,005.34 upfront using former CARES Funding.
May',-, 11021
Gene Anderson
Tnterim City Nfianaget
City Of Paris
903 -
Paris, 'I.',K, -5461
Dear Gene Anderson:
v/
Xd
Ge " 11""'111I'll,
vou nixy be aware -, Febr,,2xy v. -inter stone event h,,,,s resulted in some ofthe highest Energy
and kncillaxy Service charges ever experienced by -Jecrric consumers in ERC(-,'TAs a member of the'rexas
Coalition for Affordable Power 0' that is served lav'IVAP's Retail '- tecrn.c;ty Provider. Gcxa Faergy,
City Of Palu`q crieiFv coct,,, rtm=ed stable througliout the -,xi ter storm. I lowever, the stor.in's impact resulted
in higher than anticipated Ancillary Scnrices costs that axe billed to you under the "lin dRary Ser6ccs and Nodal
Basis Adjustment" specified in the Commercial Flectarim, Sen ice Agieernerit <` CESA"' between; City- Of Paris
and Ckxa Lnergy, LP executed by C;tv Of Paris <)n 3/8/2016.
The total additional cost of thc Arch wi SeiN-ices and Nodal Basis Adjusunc-ir owed by City Of Paris ("Storm
Recovery Aniount") is specified below. (-,cxa %,adues its relationship with City Of Paris and understands that
the =inediate- payment of such amount may present uneVected fmancial hardsbT 'I'lierefoire, per Gexa's
e-,nstiing agreetrientwith TCAPjCAP bas authorized G"a to recover the Storm Recovery Amount through a
mond-ily sui&arge, over tLc rernainijg term of the current CESA, whicli runs through December 2022, 1
Default Option -
Monthly
Payments through
2022
storro'Rec(i-very
Amount Mondily
Stare -rare,
Due Date
,\Ionthly, stuting -,x,ith itivoice
fox June 2021 usage and
continuing tbroagh December
10212
Monthly Charge $ 1
Estimated
Equivalent Monthly
$/k'Wh Charge 7
Gexa -also understands that different 'J.GkIl mem enc may desire additional payn'tent options based on cadr.
member's unique situation. In consideration tbereof., Gexa has worked closely, vath TCAP to create the
following alternate pawnent options
FRFRRMZURRIIW��
am -01=1
the hignest montmy cmarees. Atso, piease note, R criarges Muwn e7ille CUTUVIVillul 71A.Fe dpiat*
upon invQ4�p-
2 Note: The Estimated Equivalent Monthly $/kWh Charge is an estimate of the monthly charge spread over City Of Paris's total
average monthly energy usage for all monthly bills, This metric is shown for illustration purposes only.
Gexa Energy, LP All fights reserved. FUC;'Ced,Cate *10V
24455 State Highway 249, Suite 200, Houston, TX 77070
Em
Ahernatc Pavmeut Ontion 1: Pay ti,c 5Porra Re< �m,outit in full "ir -Nkfa, 31, "'021
Alternate Payment
Estimated
Option I – Lump Sum
Due Date
Total Amount
Equivalent Monthly
Storm. Re(
i
$/kWh Charge 2
Total o,, exy
fimount
�lonthir. stqrcLqg with
S456,005.34
Storm Recovery Aniomit
invoice for June 2021
$6,763.48
AltcWate Payment QtAi 2- If Citv Of Pans has siLmed 4 new Corrunercial Flectrm(n
icity Seonce Agreet
tiara
with Gcxa for TC.P's Str,,ttct,nc 1-kciging Program conlir-co-cing januar) 2023 (0,- "SHP CaSA."), authorise
tac I
xa recover the Storm Re.,°covcry Amount Lhroug
Y"U"vi'!
incur. a nem w,,)rh!N surc@targe ior "j'ebruai,: 'T2 " Storm Recovu;-)" xhich V appear as a sCparaw line steres
on yoiir ele(,Ticnhill beguinirg wtti,, i-hernvoirc fir the J�Lae I -AT) I hillin1v period that v, -,1I conuinue .hrough
December 2028. Your rrionthl': Y,, 2021 Storm Recovery- 5 archxrge under Alternate r2yrrient Option
2 i,, outlined in the "Februan 20'l Storn, Reco,s ery kgrcement" (attachel`,)J'leasc note, Alternate Payment
Optiou 2 is ord.,,,available to TCAP Nferribers that have catered into a SHP CF'A
—A—Iternate P-aymen—t
Estimated
Option 2 --Monthly
Due Date
Monthly Charge $
Equivalent Monthly
Pavxrten�s thtq� 2028
i
$/kWh Ch�rg
�lonthir. stqrcLqg with
Storm Recovery Aniomit
invoice for June 2021
$6,763.48
Mon,hh, Surcbatge
usage and continw,'Uj-,"
--
roi!,oh �)eLtjiber 2028
_gl
--- ..........
Please nou, Gexal; Default and Alternatc, Payment Options have been dm sed in cr)njunctiou with. TCAP
speciffically for TCAP Nicnabers and are confidLdat City Of Paris is required to beep the contcn-s of this letter
and the assoiated. "February, ?6211 Storni Recovcry -�[,qccaient 'contt'c-qI4 Subject -,o Section C of d-1c,17'erms
and Conditions 4et forth in AtiachmentA ,f i,�ie CESA.
If City Of Paris e'lects Alternate Puyinesit Option 1 above° pxasc inform Gexa -ria email. a,
frien kxa as outlined in the CESS If
on or before '&^), 1, 20.'� , and remit pa,it to C
Civ, Of Paris elects Alternate P- nient ()ption 2 above, }lepse inform Gexa bv ha�:iag tlie attached February
Storm An inddvi&?a' %x ito, die, c,uth& Ay to bwd City Of Paris and returned
-A on am� do i.ot
on (>3
iar J,,�;�%, i" o,�, �a,,,,r� no
return the signed agreement indicating your election b) May 11, 20,.'ll, Gexa will recover the Storm Recovery
Amount through a monthly surcharge which will be in effect through December 2022, and this new
monthly surcharge shall appear as a separate line item on City Of Paris's electricity bill beginning with
the invoice for the June 2021 billing period.
If, at any dinc after Nlay 31,:"021, City Of Paris wishes to Pay dovm the balance of its February 2021 Storm
Recovery Amount, or wishes to extend its p,,avment of the Ftbruary 2021 Storm Recovery Amount over a
different term than the options outlined -,bovc., please contact (,exa at the email or phone numbei below to
discuss the amounc and tiraing of soy su-b payoff
x
1-866-86---322
Gene Anderson
Page 3
CONFIDENTIAL
Further, in the event that the Texas Legislature and the PUCT agree to reduce Anci—Dary Services costs
attributable to the February 2021 Storm, Gexa will make a corresponding reduction to any future monthly
payments to reflect such reduced costs and/or reimburse Citi, Of Paris for any over -collection of the principal
amount of these increased Ancillary Services charges.
Gexa Energy values City Of Paris's patronage as well as our long-standing relationship with TCAP. If there
are any questions or concerns, please let us know.
Thank you,
I &
Brian Landrum
President, Gexa Energy GP, LLC
General Partner of Gexa Energy, LP
Gexa Energy. LP All rights reserved. DUCT Certificate #10027
20455 State Highway 249, Suite 200, Houston, TX 77070
February 2021 Storm Recovery Agreement
Reference is made to: (a) that certain Commercial Electricity Service Agreement entered into
between City Of Paris ("City") and Gexa Energy, LP ("Gexa") dated as of 3/8/2016 (the "CESA")
and (b) that certain letter from Gexa dated May 7, 2021 concerning Ancillary Services costs
resulting from the ERGOT February 2021 winter storm event (the "Winter Storm Letter").
Capitalized terms not otherwise defined herein have the meanings ascribed to them in the CESA.
This February 2021.Storm Recovery Agreement ("Winter Storm. Agreement") is made and
delivered pursuant to the CESA.
As referenced in the Winter Storm Letter, the total cost of Ancillary Services attributed to the
February 2021 Storm (the "Storm Recovery Amount") owed by City pursuant to the terms of the
CESA is set forth below:
Storm Recovery Amount: $450,005.34
City has executed a Commercial Electricity Service Agreement with Gexa for TCAP's Strategic
Hedging Program commencing January 2023 (the "SHP CESA"), and hereby authorizes Gexa to
invoice the Storm Recovery Amount through a monthly surcharge in effect through December
2028, pursuant to the terms of its current CESA and the SHP CESA. City will incur a new monthly
surcharge for "February 2021 Storm Recovery" as a separate billing line item beginning with the
invoice for the June 2021 billing period under the CESA, which shall continue through the invoice
for December 2028 usage under the SHP CESA. City's monthly "February 2021 Storm Recovery"
surcharge shall be $5,763.48.
By returning this election, you are confirming that this Winter Storm Agreement has been duly
and validly authorized, and represents the valid and binding obligation of City enforceable in
accordance with the terms hereof and the CESA and the SHP CESA. By returning this election,
you further acknowledge and agree that in the event of (i) any early termination of the CESA or
(ii) in the event that the SHP CESA terminates or expires prior to December 31, 2028, you shall
pay the remaining unpaid balance of the Storm Recovery Amount February 2021 Storm Recovery
charges, and such charges will shall be included on the final invoice charged from Gexa to City
for services provided under the CESA and/or the SHP CESA.
If City receives multiple monthly bills for different ESI IDs, the "February 2021 Storm Recovery"
surcharge will be added to the bill with the ESI ID that typically incurs the highest monthly
charges.
In the event that the Texas Legislature and the PUCT agree to reduce Ancillary Services costs
attributable to the February 2021 storm referred to in the Winter Storm Letter, Gexa will make a
corresponding reduction to any future monthly payments to reflect such reduced costs and/or
reimburse City for any over -collection of the principal amount of these increased Ancillary
Services charges.
1 of 2 ELGCTXTCAPSTORMRECOV050521
Gp/x/a,,",.'"' ...........
This Winter Storm Agreement is governed by the terms of the CESA and is thus confidential,
subject to Section C of the Terms and Conditions set forth in Attachment A of the CESA.
The CESA and SHP CESA shall remain unamended and shall continue to be, and shall remain, in
full force and effect in accordance with its terms. This Winter Storm Agreement shall be limited
precisely as provided for herein, and shall not be deemed to be a waiver of, amendment of, consent
to, or modification of, any other term or provision of the CESA.
This Winter Storm Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute but one contract.
This Winter Storm A2rcement shall be effective as of the date first above written.
This Winter Storm Agreement shall be governed by and construed in accordance with the Laws of
the State of Texas without regard to its principles of conflict of laws.
Should you have any questions or need additional information, please call Gexa at 1-866-867-
7322.
Sincerely,
GEXA ENERGY, LP
By Gexa Energy GP, LLC, its general partner
By:
Name:
Title:
ELECTION ACKNOWLEDGED AND AGREED:
City Of Paris
By:
Name:
Title:
2 of 2 ELGCTXTCAPS`fORMRECOV050521