2009-012-RES-ENDORSING CERTAIN LEGISLATIVE CHANGES TO ENHANCE COMPETITIVE ELECTRIC MARKETRESOLUTION N0. 2009-012
A RESOLUTION OF CITY COUNCIL OF THE CITY OF PARIS, TEXAS,
ENDORSING CERTAIN LEGISLATIVE CHANGES TO ENHANCE THE
COMPETITIVE ELECTRIC MARKET SUPPORTED BY CITIES
AGGREGATION POWER PROJECT, INC.; MAKIIVG OTHER FINDINGS A1VD
PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN
EFFECTIVE DATE.
WHEREAS, the City is a member of Cities Aggregation Power Project, Inc.
("CAPP"), a non-profit organization created by cities throughout Texas to secure affordable
energy for its members in the deregulated electric market; and
WHEREAS, affordable and reliable power means economic development for our
cities and a better standard of living for our citizens; and
WHEREAS, by deregulating the retail electric market, Senate Bill 7 of 1999 ("SB
7") intended to allow competitive forces to drive down the price of electricity; and
WHEREAS, CAPP's seven-year experience with the deregulated market, including
negotiating power contracts with several different retail electric providers, indicates that
the Texas electric retail market has failed to develop into a truly competitive market as
envisioned by the Texas Legislature and that prices are higher, not lower, after
deregulation; and
WHEREAS, competition has failed to develop in the deregulated electric market
because certain power generation companies own or control enough generation capacity to
exercise market power to the detriment of customers and non-affiliated retail electric
providers; and
WHEREAS, alleged market power abuse inquiries conducted by the Public Utility
Commission ("PUC") are hampered by the lack of adequate resources because the parties
hurt by the illegal activity, like cities, are not allowed to participate in the investigations;
and
WHEREAS, residential customers in Texas communities are unable to obtain
lower power prices that may be available to them through bulk purchasing because current
law makes the creation of citizen aggregation groups unworkable; and
WHEREAS, the Electric Reliability Council of Texas ("ERCOT") is expected to
spend at least $660 million to implement a nodal market in Texas, an unproven market
design program that is several years behind schedule and several hundred million dollars
over budget; and
WHEREAS, the City supports all legislative initiatives that promote a truly healthy
electric market where competition can flourish and consumers can save money; and
WHEREAS, the City endorses efforts proposed by CAPP to modify the electric
deregulation legislation to enhance competition, implement the original intent of SB 7 and
reduce costs to the City and its residents.
1VOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PARIS, TEXAS, THAT:
Section 1. The findings set out in the preamble to this resolution are hereby in all
things.
Section 2. The City supports the introduction and adoption of legislation in the
81St Session of the Texas State Legislature that promotes affordable power and the
transition of the Texas electric market from a deregulated market to a fully competitive
one. Specifically, the City supports legislation that will address the following issues:
• All generators, regardless of size, should explicitly be barred from the unlawful
exercise of market power.
• Ownership and control of generation capacity should be limited to no more than
twenty percent (20%) of total generation capacity within the market in order to
enhance competition and mitigate market power and the ability of any one
generator to affect prices. This is in accordance with basic anti-trust principles
and as originally designed in SB 7, although the "market" should be redefined as
the functional market (an ERCOT zone) to reflect real-world conditions. In the
alternative, the PUC should be directed to create a single ERCOT-wide market
with uniform congestion pricing.
• Entities such as municipalities, commercial customers or retail electric providers
harmed by wholesale market abuse should be given explicit standing to
participate in market power abuse enforcement actions brought by the PUC.
• Cities should be permitted to create citizen aggregation groups to combine the
power needs of residents that have not specifically asked to be excluded in order
to facilitate bulk power purchasing and enhance the opportunities for residential
customers to benefit from deregulation and benefit the entire state by increasing
competition. Citizens who have signed a contract with a retail provider would
be excluded, as would those citizens who otherwise opt out.
• All efforts to transition to a nodal market in ERCOT should be abandoned and
other market design options that benefit all market participants should be
considered.
Section 3. A copy of the resolution shall be sent to the elected lawmakers
representing the City's interests in the Texas House and Senate and to the Chairman and
legal counsel of CAPP.
Section 4. This resolution shall be effective immediately upon passage.
DULY PASSED AND APpROVED on this 23rd day of February, 2009, by a vote of
7 ayes and 0 nays at a regular meeting of the Ci~y Council of the City of Paris, Texas.
ATTEST:
Jxsse Jame~Freelen, Mayor
,
'0'a~n~ie Ellis, City Clerk
APPROVED AS TO FORM:
.
W. Kent McII r, ity Attorney