2005-143-RES APPROVING CITIES AGGREGATIONPOWER PROJECTS LETTER OF INTENT TO ENTER INTO NEG. FOR A CAPACITY CONTRACT WITH THE OWNER OF COAL )INCLUDING TEXAS LIGNITE) FOR CAPP MEMBERS OF
RESOLUTION NO. 2005-143
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS,
PARIS, TEXAS, APPROVING CITIES AGGREGATION POWER
PROJECT'S LETTER OF INTENT TO ENTER INTO NEGOTIATIONS FOR
A CAPACITY CONTRACT WITH THE OWNER OF COAL (INCLUDING
TEXAS LIGNITE) GENERATION TO SUPPLY THE BASE LOAD
ELECTRIC POWER NEEDS (APPROXIMATELY 55%-60% OF TOTAL
ENERGY NEEDS) FOR CAPP MEMBERS OVER A to-YEAR PERIOD;
MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE
SUBJECT; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Paris ("City") is a member of Cities Aggregation Power Project, Inc.
("CAPP") and said membership has resulted in average annual energy savings over 20% off of the
Public Utility Commission ("PUC") approved price to beat; and,
WHEREAS, all retail power bids from various Retail Electric Providers (REPs) in the
deregulated electric retail market have been directly linked to natural gas futures prices; and,
WHEREAS, natural gas prices have been extremely volatile and have caused substantial
increases in the price of electricity paid by the City; and,
WHEREAS, CAPP is in the process of negotiating a 10-year capacity supply contract for
the city's base load electric needs (approximately 55% of the city's total electric energy needs) for
a fixed price that should provide considerable economic benefit and greater price stability in
comparison to traditional energy contracts with REPs; and,
WHEREAS, coal-fired capacity in Texas available to retail load is scarce and the situation
giving rise to the Letter of Intent reflects a unique opportunity for CAPP members to increase
savings and reduce electric price volatility; and,
WHEREAS, the owner of the coal capacity needs a letter of intent and desires completion
of a contract by December 31,2005; NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS,
TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby in all things
approved.
Section 2. That the efforts of the CAPP Board to secure coal capacity for the City of Paris'
base load electric capacity needs for a fixed price for a I O-year period commencing in the 4th quarter
of 2007 are hereby ratified.
Section 3. That the city of Paris endorses the CAPP Board committing to a letter of intent
to contract for coal capacity with the understanding that: 1) CAPP will provide proof of economic
benefIt-of coal capacity and energy from a coal and gas mix in comparison to exclusive reliance on
energy priced on 100% gas generation coupled with a conservative forecast of natural gas prices; 2)
the City of Paris will have an opportunity to review and approve or reject a 10-year contractual
agreement to supply all the city's power needs; and 3) CAPP will issue bonds to secure funding of
amounts necessary to prepay the capacity portion of the coal supply contract.
Section 4. That this resolution shall be effective from and after its date of passage.
PASSED AND APPROVED this 12th day of December, 2005.
C)
/
\/ C __x"-1'
ATTEST:
~
I
APPROVED AS TO FORM:
~r;
;-Dr "., f~
-\A
D. Lestock, Assistant City Attorney