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12-C Update on CAPP DAction CITY OF PARIS, TEXAS CITY COUNCIL AGENDA REQUEST MEETING DATE: I February 26,2007 D Discussion [8Jlnformation DRefer to: DESCRIPTION: Update and explanation of the City's participation in CAPP (Cities Aggregation Power Project). BACKGROUND INFORMATION: CAPP is a nonprofit political subdivision corporation dedicated to securing electric power at the lowest rate for its members. The corporation has 96 members. Paris has been a member since 2001 and is currently under contract through 2008. The current rate is .08132/kWh which includes administrative costs of .00205/kWh. 2005 estimated savings for the City of Paris under this contract were $326,032 or 16.31%. FISCAL AUTHORITY: BUDGETED: Yes Account #: "0308" in all departments. GRANT: Account #: BOND / C 0 Account #: Other: See attached for recommended funding LEGAL REVIEW: COMMENTS: MANAGER'S RECOMMENDATION: LETTER OF AGREEMENT d.oL ~' That this agre ment is made and entered into this day of , 2006 by and between the City of ~ c:U-U.D , a home rule municipality organize an xi sting under the laws of the State of Texas, hereinafter referred to as "City" and Cities Aggregation Power Project, hereinafter referred to as "CAPP". WHEREAS, the City is a member of CAPP, a nonprofit political subdivision corporation dedicated to securing electric power for its more than 86 members in the competitive retail market; and WHEREAS, it is necessary for the City to contract for a supply of electricity or revert to high price standard contracts and independently shop for a power contract; and WHEREAS, the City Council previously passed a resolution authorizing the CAPP Board and its consultants and advisors to negotiate a contract on behalf of the City and committing the City's 2007 and 2008 load pursuant to the contract recommended and approved by the CAPP Board of Directors; and WHEREAS, the approved resolution commits the City to budget and approve funds necessary to pay electricity costs proportionate to the City's load under the supply agreement arranged by CAPP and signed by the Chairman of CAPP for the City; and WHEREAS, the approved resolution designates a representative for the City to execute a contract with CAPP for the City's 2007 and 2008 electricity needs as a member ofCAPP. NOW, THEREFORE, in consideration of the mutual promises and agreements hereinafter contained, it is hereby agreed by and between the parties as follows: 1. TERM. The term of the agreement shall be effective as of the date of the agreement and shall terminate pursuant to the term in the contract between CAPP and the energy company. 2. CONSIDERATION. The City agrees to purchase its energy at the contract amount through CAPP for areas where deregulation is in effect. 3. INDEPENDENT CONTRACTOR. Nothing herein shall be construed as creating the relationship of employer or employee between the City and CAPP or its agents. The City shall not be subject to any obligations or liabilities of Contractor or her employees, incurred in the performance of this agreement unless otherwise authorized herein. Contractor is an Independent Contractor and nothing contained herein shall constitute or designate Contractor or any of her employees as employees of the City. Neither Contractor nor her employees shall be entitled to any of the benefits established for City, nor shall they be covered by the City's Worker's Compensation Program. 1813/00/2007 power loa060511 kpd 4. ENTIRE AGREEMENT. This agreement contains the entire agreement between City and CAPP, and no oral statements or prior written matter not specifically incorporated herein shall be of any force and effect. No amendment, variation, modification or changes hereof shall be binding on either party hereto unless set forth in a document executed by such parties or a duly authorized agent, officer or representative thereof. 5. AVAILABILITY OF FUNDS. Fees for this agreement shall be made from currently available funds. 6. LAW GOVERNING CONTRACTNENUE. For the purpose of determining the place of ~eements and"he law governing same, this Agreement is entered into in the City of ~ ~ ' cKA/f'lVJ? County, Texas, and shall be governed by the laws of the State of Texas. 7. ENTIRE AGREEMENT. This agreement constitutes and expresses the entire agreement between the parties and shall not be amended or modified except by written instrument by both parties. ~ ~WITNESS WHERE~, the parties have executed this agreement ~~I ~ onthe8d" daYOf~ 2006. ATTEST CITYOFcYQ~ in the City of ~(Q)~ Ity Secretary ~~/ /'1/l'1'P'/? Designated City Repr ntative ATTEST Mary Bunkley CAPP Secretary Jay Doegey CAPP Chairman 1813/0012007 power loa060511 kpd 2 ACKNOWLEDGMENT THE STATE OF TEXAS COUNTY OF LClVyljjX~ 9 9 JLLI~ BEFORE ME, the undersigned authority, a Notary Public in and for said County and State, on this day personally appeared Ri Ckllrd mannihg) ~ of the City of 'VOx i'S , Texas, a municipal corporation, known to me to be the pe'rson and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said City of ]7a.~ " S , Texas, a municipal corporation, that he was duly authorized to perform the same by appropriate resolution of the City Council of the City of :Pa r i'S and that he executed the same as the act of the said City for purpose and consideration therein expressed, and in the capacity therein stated. GNEN UNDER MY HAND AND SEAL OF OFFICE this ~ day of , A.D., 20 '1i!-J. .,.'to My Commission expires: r~rnrny Strickland i'l. ,tJ1)I Public ',',:", of Texas My Commission Expires 08-15-2009 <.i 11J1JJ.WL!.UJ.lI'J C6 ~ I ~ -dooC1 CORPORATE ACKNOWLEDGMENT STATE OF TEXAS COUNTY OF DALLAS S 9 BEFORE ME, the undersigned authority, a Notary Public in and for said County and State, on this day personally appeared Jay Doegey, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that slhe was authorized to execute the same by a resolution of the CAPP Board of Directors for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the a () ih day of ~llJ [A , A.D., 2006. J '11tttitti}"Y Tqi11 my Strickland i1ilary Public i~~)e of Texas My CommisSIon Expires 08-15-2009 My Commission Expires: g -/5 - fJooq 1813/00/2007 power loa0605 J J kpd 3 CITIES AGGREGATION POWER PROJECT, INC. \ , I , c<; TO O~ / -....... ..j~0", -<;>~Q"" o >;""" C - z E.i/,A\'Fift.,,' J;> r_ o "r: "'~t;g:>~"'-' ; ,. ?C) :. "'0....... / - " ... CITIES AGGREGATION POWER PRO~ECT, INC Chair: Vice-Chair: Board Member: Board Member: Board Member: Board Nember: Board Member: Board Member: Board Member: Secretary- Treasurer: Jay Doegey, City of Artington Randy lWJravec, TO'o'o'Il of Addison Steve M.assey, City of Allen Don Wilson, City of Eastland Bill Holmberg, City of Gainesville Christal Kliewer, City of Grand Prairie James Zentner, City of Odessa Rod Hogan, City of Plano Carolyn House, City of Snyder Mary Bunkley, City of Arlington FREQUENTLY ASKED QUESTIONS ABOUT AGGREGATION AND THE CITIES AGGREGATION POWER PROJECT, INC. ("CAPP") What is aggregation? Aggregation is the legal relationship, created by legislation deregulating the electric market, which joins together two or more customers for the purpose of purchasing electricity. How does customers? aggregation benefit Aggregating the electric needs of several customers generally means that each member will pay less for electricity and obtain more favorable contract terms from a retail electric provider than if the member was contracting separately for its own electric needs. This is because aggregation is essentially volume purchasing -- which reduces risk, and lowers transaction, operation and advertising costs for retail electric providers. Some of the savings generated by the arrangement is passed on to the aggregated load in the form of lower electric prices. Sophisticated aggregation groups also retain energy experts to manage load and price risk and to undertake long- range planning for low cost power. What is CAPP? CAPP is a non-profit political subdivision corporation created in 2001 to aggregate the electricity purchased by participating Texas governmental entities (primarily cities and other political subdivisions). CAPP, together with its sister aggregation group South Texas Aggregation Project ("STAP"), is one of the largest political subdivision aggregation groups in Texas. More than 90 cities and other political subdivisions are members of CAPPo What is the legal authority for CAPP? Chapter 304 of the Texas Local Government Code provides that a political subdivision may join with another political subdivision or subdivisions to form a political subdivision corporation (PSC). The PSC acts as an agent to negotiate the purchase of electricity and to act as a conduit for the acquisition of power for its members. How is CAPP governed? How is board selection and voting set up? CAPP is run entirely by public officials. A nine- person board is elected by members to govern CAPPo Board membership can be at-large and by load volume. The CAPP Board of Directors meets once a month. Who is eligible to join CAPP? Membership is available to all political subdivisions in Texas. To join, a political subdivision must formally approve the CAPP articles of incorporation and bylaws, pay the initial fee, and purchase electricity through CAPPo Is there a cost of membership? There is an initial charge of one-half of one percent of the city's or entity's annual cost of electricity. The initial charge shall not exceed $14,000. The aggregation fee is charged on a per kilowatt-hour basis and is included within the price of electricity. For more information, contact Geoffrey Gay, General Counsel to CAPP (512) 322-5875. 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.lglawfirm.com Mr. Gay's Direct Line: (512) 322-5875 Email: ggay@lglawfiml.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 of 2008. Hope you find this to be great news. 1 813 IOOlmmo06091 9 Lloyd GosseJink Blevins Rod1elle & Townsend, Pc. r' Lloyd t.\ A T Q?N~~~)!r:~--- - . 816 Congress Avenue, Suite 1900 Austin, Texas 7870 I Telephone: (512) 322-5800 . Facs~~I:.:J5EL~?~:_~~~.__.__ www.lglawfirm.com Ms. Doyle's Direct Line: (512) 322-5820 Ell1ail: kdoyle(i.l;lglawfim1.Coll1 MEMORANDUM TO: All CAPP Members FROM: Geoffrey Gay Kristen Doyle DATE: December 28, 2006 RE: CAPP's Year in Review This year marked the fifth anniversary of the Cities Aggregation Power Project, Inc. ("CAPP"). The CAPP Board, CAPP members, and CAPP consultants continued their dedication to protect city budgets by managing the volatile cost of power in the deregulated electric market. In honor of CAPP's fifth anniversary, this memo lists the top five highlights of the past year. We count our blessings and are thankful for CAPP's successes. Best wishes for the New Year. Highlight No.1 CAPP Members Save Monev Since 2002, CAPP members have saved more than $95 million off the Price to Beat. Once figures are totaled for 2006, we expect CAPP members' savings to meet or exceed CAPP's average of 20 percent off of the Price to Beat. The price for the first six months of CAPP's 2006 energy contract was heavily affected by the aftermath of Hurricanes Katrina and Rita. Fortunately, CAPP's consultants were able to negotiate terms with CAPP's energy provider, FPL Energy, allowing CAPP to reprice its load for the second half of 2006 in the spring, when electric prices decreased. The CAPP Board approved a very favorable 7.75 cents per kWh rate for the second half of 2006. As a result, CAPP's average price for the year was 9.8 cents per kWh. While CAPP was able to take advantage of energy price declines and reprice its load in the second half of 2006, the Price to Beat and other retail prices remained artificially high throughout the year. CAPP savings are attributable to well crafted contracts and timely market executions. Highlight No.2 2007 - 2008 Contract UniQuely Positions CAPP to Take Advanta2e of Electric Market In September, the CAPP Board approved a two year contract extension with CAPP's current provider, FPL Energy. The 2007 price will be 8.13 cents per kWh, which is a 17 percent savings off the average 2006 price. The two year contract extension continues the unique three party agreement between CAPP, FPL Energy (CAPP's power supplier) and Direct Energy (CAPP's REP). CAPP created this contractual arrangement that permits a REP to provide CAPP only administrative and billing services while a separate generator/wholesaler supplies the power Lloyd GosseJink Blevins Rochelle & Townsend. Pc. r' . Page 2 December 28,2006 for CAPP members. No other aggregator offers this one-of-a-kind arrangement, which makes the nature and magnitude of various costs more transparent (more so than any traditional retail electric contract). Moreover, this distinctive contract structure permits CAPP to take power using multiple supply agreements, including an anticipated long-term base load power supply agreement for 55 -60 percent of CAPP's load that is expected to commence in 2009. Highlight No.3 CAPP's Clout Increases as Membership Roll Grows CAPP's influence in the marketplace and among policy makers continues to grow. CAPP now has 96 city and other political subdivision members. This year every 2005 CAPP member approved resolutions renewing CAPP membership. In addition, several new members joined CAPP in 2006, including Oak Point, Copperas Cove, Whitney, Celina, Sugar Land, La Marque, Aquilla Water Supply District, Lake Jackson, Webster, Pearland, Spring Valley, and Texas City. Power suppliers are increasingly aware of the attractiveness ofCAPP's growing aggregated load. Highlight No.4 Long:-Term Contract to Reduce Electric Costs Nears Final Ag:reement All but two CAPP members passed resolutions supporting CAPP's efforts to secure a long-term base load power supply contract to reduce costs and price volatility. For the past several months, CAPP consultants have been engaged in exclusive negotiations to structure a 25- year fixed price, no-escalation power purchase agreement at a price significantly below current market prices. It is anticipated that as early as next month the CAPP Board will finalize a contract and will release it to CAPP members for consideration. Highlight No.5 CAPP's Advocacy Benefits Members and the Texas Market For the past several years, CAPP has been an active participant in legislative and policy arenas to advocate for a competitive electric market. Early this year, CAPP and ST AP were involved in the PUC proceeding convened to consider the model protocols for a nodal market in ERCOT. During a week-long hearing, the Commission heard testimony regarding hundreds of pages of protocols recommended by ERCOT. Ultimately, the Commission required only three changes be made to the proposed protocols. Two of the three mandated changes were proposals advocated by CAPP and STAP. CAPP will continue to remain vigilant and advocate protections for its members as the ERCOT market undertakes the transition to the nodal market. Cities have significantly raised their profile at ERCOT over the past year. ERCOT is governed by market participants. Consumer voices are few and almost always outnumbered. As a result of a rate settlement with TXU, North Texas cities placed a monitor and customer advocate within ERCOT's midst. With cooperation of CAPP and ST AP members, numerous cities formally joined ERCOT and cities' votes were able to capture both commercial customer seats to the Technical Advisory Committee, giving cities two voices and two votes on the most important committee reporting to the ERCOT Board of Directors. Lloyd Gosselink Blevins Roctlelle & Townsend, P. C. r' . Page 3 December 28, 2006 CAPP's legislative agenda during the past two regular sessions advocated limitations on the exercise of market power and the creation of opt-out citizen aggregation. CAPP and ST AP have been the only advocates on those two important issues at the Legislature. In the last month, both Representative Phil King, Chair of the House Regulated Industries Committee, and Senator Troy Fraser, Chair of the Senate Business and Commerce Committee, have indicated that both these issues will be before the Committees for consideration in 2007. CAPP has become a recognized force in advocacy on all matters related to market structure and market protections. 1813\02\mmo061228 Lloyd Gosselink Blevins Rochelle & Townsend, Pc. ,... I Annual Report to Membership Cities Aggregation Power Project, Inc. December 7, 2006 The year 2006 began with Cities Aggregation Power Project, Inc. (CAPP) having to deal with the very high energy prices from the aftermath of Hurricanes Katrina and Rita. These storms wreaked havoc to energy supplies, and hence, energy prices from August until January 2006, when energy prices finally started to decline. Unfortunately, energy prices did not sharply decline before CAPP had to lock in its contract price for 2006. Fortunately, CAPP was able to negotiate an option with its supplier FPL Energy (FPLE) so that it only had to lock in the first six months of calendar year 2006, but that price was 11.8601 cents per kWh including REP provider fee. When energy prices began to fall, CAPP was able to lock in the second six months of 2006 at a price of 7.7517 cents per kWh. CAPP also negotiated a 3-year contract extension (covering 2007-2009) with. Direct Energy Business Services (DEBS) for REP services. DEBS has provided outstanding performance in its role as CAPP's billing and customer service provider. CAPP also went through an RFP process for energy supply. After consideration of the proposals received, CAPP negotiated a 2-year contract with FPLE (covering 2007-2008), locking in a heat rate multiplier in July, and then waiting until September 15th to lock in a price of 8.132 cents per kWh for 2007, and 8.571 cents per kWh for the first six months of 2008. The new 2007 pricing is expected to reduce CAPP member electricity cost for fiscal year 2007 by approximately 8.6% over fiscal year 2006. CAPP will have until the end of 2007 to ascertain the optimum time to lock in a commodity price for the last six months of 2008 JAC Project-Long Term Energy Contract Simultaneously, CAPP continued its three year effort to develop a better long term solution to steeply rising energy costs. In early 2006, the deal to purchase capacity in Sempra's Twin Oaks plant evaporated when Sempra sold its plant to PNM Resources, which had acquired original owner TNMP. In March, CAPP shifted its attention to TXU and Texas Genco. These two companies were interested in constructing coal fired plants and were looking for customers who might be interested in entering into long term contracts or who might want to buy an equity interest in their plants to help them fund the plant construction. In April, CAPP invited the Executive Director of the North Central Texas Council of Governments to brief the Board of Directors on environmental concerns posed by the construction of solid fuel electric generation plants and the effects they could have on area air quality non-attainment. The Board adopted a statement of policies and procedures for the acquisition and consideration oflong term contracts for power. The policies favored acquisition of a capacity contract rather than equity ownership; fuel diversification in favor of non-gas fired generation sources; minimizing counterparty risk; prepaying the capacity component; and demonstrating economic benefit to members. CAPP eventually entered into a six month (later extended to 9 months) exclusive negotiation agreement with TXU for a capacity contract from the proposed Oak Grove lignite plant. On August 20th, TXU announced its intention to seek permits to construct 10 new coal fired plants in Texas. In July, Dallas Mayor Laura Miller began forming a group to challenge whether the coal pulverization technology proposed by TXU was the best available technology for such coal plants. In the meantime, CAPP Board members and its consultants visited the Oak Grove site and commenced contract negotiations. The draft contract provides for a 25 year term, beginning January 1,2009, with power to be provided at a fixed price throughout the term of the contract. By December, contract negotiations were nearing completion. As part of its due diligence, CAPP and its sister aggregation entity ST AP (South Texas Aggregation Project) hired a consultant to perform a load flow study to determine plant load flow efficiencies. If the TCEQ approves the Oak Grove air permit at the hearing scheduled for January 11,2007, CAPP will begin distributing specific contract information and providing a DVD presentation and in-person presentations to city managers, mayors, and city councils. CAPP members will then consider passage of resolutions committing to participate and authorize issuance of debt, or opt out of the long term contract. CAPP will also provide a renewable energy option so that CAPP members may choose to buy renewable energy credits (REC's) to address environmental concerns. Once the debt is issued and sold, CAPP members would then approve and sign a contract. The energy price under the long term contract would be fixed and be considerably lower and lack the volatility of traditional retail electric pricing. 2006 CAPP Saving and Membership Growth During 2005, CAPP member savings over Price to Beat was approximately 16.38%, or $15.6 million. In 2006, CAPP decreased its aggregation fee from 1.5 mils per kWh to 1.3 mils. Following the spike in energy costs caused by the Hurricanes Katrina and Rita, many cities and special districts not in CAPP began searching for an organization to assist them in procuring a cheaper and more stable energy supply. In addition, CAPP representatives aggressively marketed CAPP in the Houston area. Many were particularly interested in participating in the long term contract. Oak Point, Copperas Cove, Whitney, Celina, Aquilla Water Supply District, and Houston area cities Sugar Land and LaMarque joined CAPPo CAPP membership topped 90 members, with several others considering membership. Financial Stability CAPP is audited annually. It received an unqualified audit opinion for its 2005 financials. CAPP ended 2005 with equity of $1.3 million. The auditor, Weaver & Tidwell, noted CAPP's strong balance sheet. Initiative to Lower T & D Rates CAPP continued its cooperation with the TXU Cities Steering Committee in its effort to reduce transmission and distribution (T & D) rates charged by TXU Electric Delivery (TXUED). In January, the Steering Committee reached an agreement with 2 r' . TXUED to extend the interim T & 0 rate case settlement. TXUED agreed to continue making an annual $8 million payment to participating cities. It also agreed to make two $9 million public benefit payments over two years, begin increasing the franchise fee factor up to 5% over a 4 year period, make quarterly franchise fees, negotiate an underground electric utility line rate, sponsor a municipal electric rate class, and initiate a T & 0 rate case in 2008. 2007 Legislative Program During the 2007 Texas legislative session, CAPP will be proposing legislation to require all electric generators affiliated with former investor-owned utility monopoly providers to offer some portion of the output from their coal, lignite and/or nuclear plants at rates reflecting the cost of production. CAPP will also propose legislation that will mitigate the existence as well as the exercise of market power in the electric wholesale and retail markets. CAPP worked to have these two items included in the Texas Municipal League's 2007 legislative program. CAPP will also oppose any legislation that would impose surcharges and automatic adjustments, nodal pricing, securitization, or diminish cities' original rate making jurisdiction. CAPP may also seek to change the ERCOT practice of using the highest price in the balancing energy market. PUC and ERCOT Activities During 2006, CAPP participated in the nodal market proceedings and the project addressing REC's and Competitive Renewable Energy Zones. CAPP persuaded the PUC to adopt a rule requiring the establishment of criteria on when nodal zone boundaries may change. CAPP co-sponsored with the TXU Cities Steering Committee and TCCFUI a program on the workings of ERCOT. CAPP urged its members to join ERCOT. This effort greatly expanded city participation and influence on ERCOT policies. Cities now have three representatives in ERCOT -Nick Fehrenbach (City of Dallas) on the T AC Board; Chris Brewster (City of Eastland) TAC Consumer, Small Commercial; and Philip Boyd (City of Lewisville) TAC Consumer, Large Commercial. CAPP Annual Membership Meeting CAPP will be having its annual membership meeting in Grand Prairie on Thursday, December 7, 2006, for the purpose of considering membership business and electing Places 2, 4, 6, and 8 to the CAPP Board of Directors. The Board will meet immediately following the membership meeting and discuss adoption of the 2007 budget, setting of the administrative fee that funds CAPP operations, status of the long term electric supply contract and Oak Grove permit process, update on 2008 energy prices, load flow study, consideration of a resolution adding an additional At Large member to the Board of Directors, consideration of a By-Laws amendment concerning confidentiality of CAPP information, and adjustments to 2006 budget. Employees and officials of CAPP members are always welcome to attend meetings of the Board. These meetings are generally held the first Thursday of the month in Grand Prairie. 3 r'- .. I R{C ~ November 17, 2006 Mr1vl0TC1: CArp Members FROM: Bill Starnes and Bob Stemper 2005 Savings Report SUBJECT: 2005 Savings Report This transmittal contains the Savings Report for calendar year 2005. The Savings Report is based on a comparison of the energy billed by Direct Energy Business Services (DEBS) under the CAPP contract as compared to the estimated Price to Beat (PTB) cost: Total Savings ($) = [Total Estimated PTB] - [Total DEBS Energy Billings] Total Savings ev.l) = [Total Savings ($)] / [Total Estimated PTB ($)] In reviewing the billing data from DEBS that serves as the basis of these reports, RJC has identified a significant factor that we believe has had the impact of reducing the estimated savings shown on the report. This factor is described below: Reduced Billings in Late 2006: Based on the billing data received from DEBS, there appears to be a lack of billings for the lastfew weeks of 2006. Reviewing the metered usage data from the TDSP shows that in some cases, there were a reduced number of meters read after the first or second week of December. This reduces billed volumes for the last few weeks of 2005, since these volumes were not recorded and/ or billed until 2006. Thus, billed usage volumes for 2005 may appear lower than expected annual usage based on usage history in previous years. Although RJC cannot identify the specific source of each delayed meter read, we have heard that much of the problem may be due to systems maintenance activities at ERCOT at that time. Unfortunately, the last two months of 2005 were also the months with the highest Price to Beat Fuel Factor prices, which would thus show the greatest percentage savings. Since these unbilled volumes are not accounted for in the 2005 billing information, the large savings associated with these volumes will also not be reflected in the report. However, these large savings will be accounted for when the savings reports associated with 2006 billings are created in the future. If you have any further questions or concerns regarding the Savings Report, please call Bob Stemper at (512) 331-4949 x 113 or email tobstemper@licovington.com. RJ Covillg/oll CO/lSul/ing, LLC 11044 Research Boulevard, Sui/e A-325 Alii/in, Texas 78759 (5 12) 33 1~4i)49 Fax. (512) 331-5743 WWw.R.JCoving/on.com r' Total 2005 Estimated Savings For CITY OF PARIS 2_0_0_~ful'limL~Estimate_s_Based~_DE~_and TX_1LErreIID'--l2ala~ DEBS Energy Billed Amounts for 2005: Estimated Price To Beat (PTB) Billing: $1,673,215 $1,999,247 Estimated Savings (Loss) in $: Estimated Savings (Loss) in %: $326,032 16.31% Notes _ Price To Beat (PTB) estimates are only for accounts switched To DEBS, from the date of switching according To DEBS .. Amounts billed and Estimated Savings are probably lower than anticipated due to delayed billings in late 2005, primarily due to systems maintenance issues at ERCOT. The amounts unbilled in 2005 are mostly during the time when the CAPP rate was significantly lower than the PTB Fuel Charge and should be recognized in the 2006 reports. For additional information, detail, or questions please contact Bob Stemper at 512 .. 331 .. 4949, ext. 113 or bstemper@rjc.ovlngton.com RJC . --+-- . R. J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 r- ..