18-B CAPP Board - Price Lock for 2007
Lloyd
" Gosselink
UUlIl A T TOR N E Y SAT LAW
816 Congress Avenue, Suite 1900
Austin, Texas 7870 I
Telephone: (512) 322-5800
Facsimile: (512) 472-0532
www.lglawfirm.com
Mr. Gay's Direct Line: (512) 322-5875
Email: ggay@lglawfim1.com
MEMORANDUM
TO:
CAPP Board & Members
FROM:
Geoffrey M. Gay
DATE:
September 19, 2006
RE:
Price Lock for 2007
The CAPP Board decided during a conference call last Thursday to lock-in energy prices
for six quarters commencing January 1, 2007. The blended energy price for the 12 months of
. 2007 will be $0.08132/kWh, inclusive of the DEBs' administrative fee of $0.00205/kWh. This
is better than previously projected prices, and Bill Starnes will send a memo in a few days that
will discuss the favorable impact on City budgets.
The gas prices for the first two quarters of 2008 were locked down. The electric energy
price would be slightly higher than the above-referenced 2007 price, but less than the average
. price experienced during 2006. However, it is too early to calculate the price that will be
experienced during 2008. It is expected that some' time during the next 12 months, CAPP will be
able to capture a further decline in the gas futures market for the second half of2008.
Hope you find this to be great news.
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Lloyd
A A T Q?N~~~l!r:~
816 Congress Avenue, Suite 1900
Austin, Texas 7870 I
Telephone: (512) 322-5800
Facsimile: (512) 472-0532
www.lglawflrm.com
Ms. Doyle's Direct Line: (512) 322-5820
Email: kdoyle@lglawfirm.com
MEMORANDUM
TO: CAPP Members
FROM: Geoffrey Gay
Kristen Doyle
DATE: September 27, 2006
RE: Price Lock for 2007
Last week, energy prices for the CAPP 2007 - 2008 power supply contract were locked-
in for six quarters commencing January 1,2007. The blended energy price for the 12 months of
2007 will be $0.08132/kWh, which includes the DEBS Retail Provider administrative fee. This
figure does not include the CAPP aggregation fee (currently $O.0013/kWh but not as yet set by
the Board for 2007) or non-bypassable transmission and distribution provider fees. The 2007
price is better than was previously anticipated, leading to a greater budget savings than projected
earlier this year. For forecasting purposes, savings off of calendar year 2006 electric service bills
(including non-bypassables) will average approximately 12.5 percent.
The process for formalizing the contract through the Commercial Electricity Service
Agreement (CESA) is explained below.
Commercial Electric Service Agreement
The CESA is the contract for retail electric service between an individual member and
DEBS. Based on the authority already extended by each CAPP member through resolutions
passed earlier this summer, CAPP Chairman Jay Doegey will execute individual amendments to
the existing CESAs for all CAPP members as soon as they are prepared, probably later today or
tomorrow.
Within the next two weeks, every member will receive a copy of the amendment of their
CESA extending retail service for 2007 - 2008 signed by Jay. Attached to the CESA will be a
current list of ESI-ID accounts which will be billed by DEBS starting with January meter reads
(along with any new account additions less than 1000 kw between now and the end ofthe year).
Each member should verify the ESI-ID account list and send corrections to the appropriate
DEBS account representative.
Please note that Section 7 of the CESA adds language to the existing Customer's
Representations and Warranties section which requires confirmation that your political
1813\00\2007powerresolutions\mmo060927
Lloyd Gosselink Blevins Rochelle & Townsend, Pc.
Page 2
September 27,2006
subdivision has complied with Section 2162, Texas Government Code and all applicable
contracts awarded by the Council on Competitive Government regarding the bidding or awarding
of this Agreement.
Section 2162 of the Texas Government Code requires state agencies (with the exception
of institutions of higher education and state university systems) to procure energy through
contracts awarded by the Council of Competitive Government (CCG). The CCG has awarded
LPB Energy Consulting (LPB) an exclusive contract to procure energy for state agencies through
2010. While state agencies are required to procure energy through the LPB contract, Section
2162 permits local governments to voluntarily elect to participate in the LPB contract.
It is extremely unlikely that any CAPP member has voluntarily elected to procure power
through the CCG and LPB. However, legal counsel for DEBS seeks this affirmative warranty
from all local governments with whom it contracts because LPB has informed DEBS that LPB
will move to dissolve any energy contract entered into by local governments that have opted into
the CCG process. We have agreed to accommodate DEBS' concern. If your political
subdivision has agreed to procure energy through the CCG, please inform our office
immediately.
2008 Prices
While the gas prices for the first two quarters of 2008 were locked down last week, it is
too early to calculate the price that will be experienced during 2008. The electric energy price
for the first two quarters of 2008 will be slightly higher than the above-referenced 2007 price,
but less than the average price experienced during 2006. It is expected that some time during the
next 12 months, CAPP will be able to capture a further decline in the gas futures market for the
second half of 2008, which will lower the overall 2008 electric contract costs.
Lloyd Gosselink Blevins Rochelle & Townsend, Pc.
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