19-A-1 - Atty's Report - CAPPAGENDA INFORMATION SHEET
PROJECT: City Attorney Report on the proceedings of the first membership meeting of the
Citizens Aggregate Power Project (CAPP) - Thursday, May 17, 2001
BACKGROUND: City Council will recall that at a prior City Council meeting the City formally
approved the Bylaws and Articles of Incorporation and joined a consortium of cities incorporated as
the Citizens Aggregate Power Project (CAPP). The purpose of this consortium of cities is to
negotiate the most favorable price possible for electric service for city-owned and operated facilities
following the January 1, 2002, date when retail electric service to everyone other than residential
users will be deregulated. The concept is that cities, because of the nature of their power
consumption both as to amount of consumption and stability of consumption, should as a group be
in a position to obtain a favorable price from the new retail electrical power providers (REPs).
The first membership meeting of the Citizens Aggregate Power Project (CAPP) was held in the City
Attorney's office of the City of Arlington this past Thursday, May 17, 2001.
During the course of the meeting, there were a number of important handouts, some of which are
included herein. They include a copy of the request for qualifications (RFQ) which, with a few minor
revisions not reflected in this draft, was approved by unanimous vote of the membership. The RFQ
will be used in the process of seeking proposals from retail electric providers (REPs) seeking to be
the providers of electric power to the CAPP participants. Also included in the RFQ is the schedule
of events which will be followed during the course ofthe proposal process. Your attention is directed
to that schedule found on page four of the RFQ.
DESCRIPTION: During the course of the discussion, there were various important points that
were brought out. These include the following:
► As reflected in the attached Exhibit 1 to the RFQ, there are five cities which provide 73% of
the electric power consumption. The City of Dallas, as you would well imagine, provides
roughly 5 1 % of the total CAPP consumption. Ft. Worth represents another 14%. As a
consequence, there may have to be some special price structuring to retain these large cities
in the project because of their major impact on the over-all consumption. Currently those
same cities receive special price differentials from the power companies, so this would not be
anything abnormal.
► The key components to this process in getting good bids for power will be how much
consumption or demand can be delivered to a particular REP, and how stable the demand is;
that is, is the demand fairly constant or does it have a series of peaks and valleys. Fortunately
for cities, their demand in the aggregate as you can see in Exhibit No. 1 is rather significant
and at the same time fairly consistent during a twenty-four hour period. This should place
cities in an excellent position as an aggregate of cities to receive very favorable pricing.
However, as was emphasized through the whole process, this is a whole new ball game for
purchasing electric power in Texas and there are no certainties.
► Although the statute deregulating the purchase of power goes into effect January 1, 2002,
there will probably be a transition period within which cities will transition from their current
electric supplier arrangement to a new REP.
► Statewide, TXU won the bid through the Public Utility Commission (PUC) to be what is
called the "provider of last resort" for residential and small non-residential users in the long
term. That designation means when residential users begin to leave their current provider
(and they have protection for some period of time), but fail to make a timely election as to
who will be their REP, state law mandates TXLT as the winning bidder will become the
provider of last resort. This arrangement assures there will be no interruption of power.
However, the rate for electric service by the provider of last resort will also presumably be
much higher than could be found by purchasing the power from one of the other competitors.
► There was discussion about the impact of this process on the cities' pending budget process.
The question was what sort of power cost do cities budget for their ensuing fiscal year.
Special counsel for CAPP, Mr. Geoffrey Gay, and the consultant, R. J. Covington Consulting,
offered to provide a formula based on what is called the "price-to-beat" for cities to calculate
a cost to put in the budget. In doing so, this price will probably be very conservative, and
hopefully this price will be improved by the competitive process, but it will give cities a factor
to use in the budgetary process. This formula was promised within the next thirty days.
► The question of street lighting was raised and how that billing would be handled following
deregulation. Street lighting will probably continue to be part ofthe transmission/distribution
service provider's (TDSP) responsibility on the basis of the price-to-beat for the next five
years. This basically reflects the fact that under the current regulatory scheme, nobody has
yet figured out how to handle the responsibility for maintaining the street lights, a
responsibility previously assumed by the power companies. Originally, the PUC was looking
at street lighting as a so-called competitive service, but fortunately that perspective was
changed either during the legislative or administrative process. As a consequence, street
lighting will probably continue to be handled much the same way as it is now for the near
future.
► All the cities were asked to request from TXLT data for the last fifteen months, including the
last quarter for comparison purposes to the data that each of the cities generated.
► It was also pointed out that during the ensuing year and perhaps for quite sometime
thereafter, cities will need to continue to have someone track their electric consumption data
in the format recently used to provide it to the CAPP consultants in order to continually
update the consumption package for purposes of bidding. What the consultants are most
interested in is kilowatt hours, total kilowatts, and dollars in expenditure for all city accounts.
► The city attorney has been placed in the group to review the requests for proposals when they
come in from the electric providers. The time line for this activity has not yet been scheduled.
► June 14, 2001, has been scheduled as the next board meeting at 10:00 a.m.
► Once the proposals are received from the REPs, and evaluated by the review committee, there
is an approximate six-week period from August the 13th to the end of September for a city
to opt in to the negotiated price, or to go its own way to purchase power. During that time
frame, the consultants will provide each city an analysis of the pricing through the competitive
process as well as pricing information available from other sources. It is important to
remember that if a city does not go with the CAPP pricing, it will be on its own to attempt
to negotiate a price for power. Obviously, if one assumes the two key components in getting
a favorable price under this new scheme will be based on power consumption and how stable
the consumption rate is, being a member of CAPP is favorable on both of those points.
► It is anticipated that for a city to formally opt in to the CAPP price, it will need to pass a
resolution and probably approve a simple form contract between CAPP and the city
manifesting the city's commitment to purchase power through CAPP at the CAPP price.
STAFF CONTACT: Larry W. Schenk, City Attorney ; Michael E. Malone, City Manager; W. E.
Anderson, Finance Director
SCHEDULE: The next membership meeting of CAPP is currently scheduled for June 14, 2001.
ADDITIONAL MATERIALS: See enclosed CAPP materials, as well as an excellent article from
a recent edition of Consumer Reports on electric deregulation.
DRAFT
Cities Aggregation Power Project
Request for Qualifications
for
Power Supply Services
DRAFT
The Cities Aggregation Power Project (CAPP), a group of approximately 53 Texas cities,
intends to select a Retail Energy Provider (REP) to serve the electric needs of their
combined inunicipal loads. CAPP anticipates issuing a fonnal Request for Proposal
(RFP) to selected parties detailing the exact nature of electric services requested to serve
the needs of the CAPP niember cities. This Request For Qualifications (RFQ) is issued
to allow CAPP to select a group of qualified parties to participate in the RFP process. A
brief background of CAPP, description of the requested services, and requested
qualifications is provided below.
Background of CAPP
C:4PP is a non-profit political subdivision corporation fonned in the state of Texas, with
a current potential membership of 53 member cities. Currently, member CAPP cities are
served by various electric utility providers including: TXU, Reliant, WTCT, azid T'NMP.
These utilities will be implementing open access customer choice in their service areas
begiruung January 1, 2002. CAPP was formed to join the individual municipal electric
requirements of the member cities into an aggregated pool in order to realize volume
savings on electric service. CAPP anticipates adding new member cities on an annual
basis in the future to bring the benefits of the pool to more cities in Texas.
The direction and inanagement of CAPP is vested in a Board of Director composed
presently of 3 persons as follows:
Jay Doegey - City of Arlington
Danny Reed - City of Ft Worth
Steven Bacchus - City of Lewisville
This Board will be expanded to 9 members. The first elected Board will include
members based on the following:
Each individual city with a population above 500,000 will have one seat;
All cities with a population between 100,000 and 500,000 will be guaranteed in
combination one seat;
All cities with a population between 50,000 a,nd 100,000 will be guaranteed in
C:ITEMP\CAPP RFQ Draft5_16_01.doc 05/16/2001
DR4FT DRAFF
In addition to price, the. evaluation of proposals subinitted through the RFP process will
;consider other factors, such as, but not limited to: 1.) the REPs ability to provide risk
management services for their load in order to control month to month price volatility, 2.)
level of billing services offered, and 3.) flexibility in adding or reducing load. CAPP
anticipates a multi-year term for the service ageement, with the possibility that a portion
of the total load will be suUject to annual service and/or price re-determination. CAPP
also anticipates thatthe chosen REP will make acrangement with and work with QSEs,
ERCOT, the Texas Public Utility Commission (PUC), transnussion and distribution
service providers, or any other parties necessary in order to effectuate provision of these
services to the CAPP member cities.
This RFQ is being sent to REPs and Power Generating Companies (PGCs) who have
registered with the PUC. CAPP will enter into an agreement for service only with a
registered REP. (Such registration must occurprior to entering into final negotiations).
PGCs seeking to respond to this RFQ must indicate their intent to submit through a
cunently registered REP; or in the alternative, indicate their intent to register as a REP in
Texas. Those PGCs indicating that they will be registering as a REP must provide
infonnation that supports their ability to register and have a R.EP operating by January 1,
2002.
Duruig calendar year 2000, the approxunate annual energy usage for CAPP cities was
1,835,000 MWh, with an average monthly usage of approximately 153,000 MWh. The
highest month of service was August 2000 with monthly energy usage of approximately
174,300 M`Uh. Actual peak demand is unknown at this time. There is an approximate
20% variation over the year from the lowest monthly consumption to the peak August
consumption. The total annual energy associated with accounts that will be subject to
PTB pricing is currently estimated at approximately 1,145,000 MVVh. Exhibit 1 provides
montlily load for CAPP cities for the year 2000. In sorne cases only aculual load numbers
are available at this time, necessitating an estunation of the monthly load for these cities.
Some cities, wluch have recently joined CAPP, have not completed their data gathering
efforts and do not have their load included in the CAPP totals on Exhibit 1. Further
details conceming CAPP member cities electric load will be provided, to the extent
available, wifli the RFP.
Further details of the services to be requested to serve CAPP member load will be
included in the RFP to be issued in June. CAPP is anticipating the initiation of serviee by
the chosen REP to begin on or about January 1, 2002.
Schedule
Responses to this RFQ are due by 2:00 p.m., Central Prevailing Time on June 8, 2001.
Three original responses should be provided in a sealed envelope with the words "CAPP
RFQ" plainly written on tlie envelope. Responses should be mailed or sent via overnight
courier to:
C:\TEMP\CAPP RFQ Draft5_16_01.doc 05116/2001
DRAFT
DRAFT
the latest annual report, and the latest 10K and lOQ if a publicly traded company. If an
annual report is not available, the rnost recent set of audited financial statements may be
provided for the responding party and any relevant affiliate(s) or parent company.
Confidentialitv
CAPP agrees, to the most reasonable extent possible, to keep all information provided
confidential and will not disclose any information provided to other respondents,
potential respondents, or other third parties unless required under law, rule, regulation, or
court order. The information provided in response to this request will be reviewed by
CAPP's third-party consultants ans legal counsel and will not be placed in the files of any
city.
C:\TEMP\CAPP RFQ Draft5_16_01.doc 05/16/2001
Exhibit 1
C.A.P.P. Monthly Energy Consumption for the
Year 2000
(Kwh)
Line No.
Ciry
January
February
March
Aprll
May
June
July
August
Seplember
Oclo6er
November
Daeembar
Total
1
ACOison
612,529
653,819
618,508
837,480
843,979
736,742
766,092
826,151
857,931
713,563
612,546
679,512
8,356,852
2
Allen
500,000
495,102
457,873
401,163
669,682
710,673
890,785
873305
921,543
642,025
499,086
502,096
7,564,233
3
Alvin (Reliant)
40,435
53,521
63,033
47,733
47,688
48,130
57,381
56,853
56,773
58,786
48,210
56,708
835,287
4
Alvin(TNMP)
634,893
638,800
604,581
607,369
650,673
691,330
725,072
715,091
748,475
722,228
672,211
730,029
8,140,732
5
Minglon
2,255,675
1,950,707
2.120,397
2,257,543
2,584,163
2,809,938
2,352,712
3,383,094
3,860,733
3,338,068
2,374,364
2,397,901
31,684,695
fi
Baytown
2,137,948
7,949,486
2,308,811
2,792,060
2,238,711
2,423,066
2,394,197
2,451,675
2,438,780
2,309,984
2,352,882
2,196,229
27,391,109
7
Bellon
175,534
116,885
705,682
106,759
118,693
132,925
142,677
145,180
146,799
120,543
59,783
140,568
1,459,368
B
Benbrvok
132,003
154,518
134,798
130,593
139,614
167,128
246,643
271,931
262,571
238,984
207,340
210,974
2,297,096
9
Big Spring
703,315
767,868
794,191
767,865
816,020
978,459
899,267
1,005,229
987,010
851,714
597,014
849,095
9,975,847
11
Brownwood
12
BuAeson (TXU)
282,699
268,076
255,810
259,807
200,663
352,587
381,958
424,417
445,773
353,069
277,157
270,189
3,810,045
14
Carrolllon
1,539,521
1,622,153
1,818,387
3,082,711
3,505,445
3,808,396
2,105,173
1,945,273
1,456,997
1,375,067
1,550,314
1,393,800
25,389,237
15
Clebume
16
Cdleyville(TXU)
336,217
297.570
289,572
323,403
360,775
350,529
314,724
332,609
300,619
271,804
281,052
350,742
3,809,810
17
Cortunerce
18
Dallas
90,420,137
85,768,237
B8,841,296
81,159,749
97,520,860
101,242,830
107,131,982
105,847,488
99,758,280
95,833,343
90,439,948
07,380,932
1,141,343,178
19
Denison
20
Duncanville
574,427
505,280
561,471
648,844
754,731
583,188
795,258
547,870
450,211
484,951
539,429
576,595
6,980,953
21
Ellago
13,181
12,430
12,281
13,118
14,945
14,287
15,098
15,164
15,010
13,517
14,155
16,696
170,192
22
Euless
678,245
666,170
692,943
760,869
096,852
995,067
1,128,557
1,124,152
1,102,510
799,155
781,817
721,538
10,345,775
23
Forl Slockton
333,942
325,187
335,569
346,575
380,006
398,873
413,328
402,324
414,613
394,838
343,024
332,736
4,421,017
24
FoA Wonh
14,062,354
14,682,803
14,627,361
12,955,637
16,166,335
17,096,748
17,560,982
19,612,759
22,881,584
22,899,748
12,745,378
11,901,829
197,193.619
25
Friendswood(Reliant)
121,311
118,128
114,116
105,897
115,668
99,072
158,138
160,899
156,118
111,290
113,151
144,858
1,518,642
26
FAendswood (TNMP)
217,152
228,813
257,560
290,156
295,847
308,022
441,185
425,372
440,960
280,015
265,276
243,032
3,893,190
27
Gainesville
709,087
644,657
624,438
737,647
660,881
814,833
780,754
882,282
960,950
836,155
701,972
697,125
9,058,761
28
GaAantl
7,129.737
1.080,840
1,032,820
1,005,378
1,119,982
1,101,590
1,119,285
926,315
975,535
982,347
1,057,223
1,081,483
12,592,545
29
G2nd Prairie
326,490
327.273
332,658
349,157
389,952
409,969
412,679
407,047
412,738
356,068
379,846
330,765
4,445,442
30
Hfghland Park
136,849
144,297
740,478
140,449
168,177
174,427
168,364
105,017
784,948
153,017
162,861
178,513
1,941,425
31
Howe
79,522
72,127
58,049
65,505
69,847
238,920
73,193
83,707
95,758
93,981
70,307
86,531
1,088,847
32
Hursl
625,987
619,527
545,790
590,735
556,326
753,621
998,358
1,002,807
1,509,531
1,476,652
7,128,231
049,236
10,656,881
33
Irving
3,745,955
3,277,411
3,472,967
3,108,940
3,492,781
4,211,277
3,782,510
4,808,066
4,406,897
4,893,312
3,522,365
3,61f1,683
46,433,170
34
Kaulman
200,604
189,999
160,166
173,549
117,907
191,716
178,973
206,207
215,474
192,411
176,582
204,379
2,207,967
36
Lamesa
338,728
300,304
300,824
318,573
430,659
387,913
399,859
388,169
387,848
320,311
289,753
332,387
4,195,327
37
League Cily
781,687
742,494
724,135
726,747
675,663
819,690
854,708
782,743
963,800
672,899
728,456
770,640
9,231,642
38
Lewisville(TNMP)
1,705,452
1,599,993
1,707,719
1,733,960
1,923,552
1,538,734
1,774,074
2,286,333
2.032,143
1,704,642
1,846,850
2,028,404
27,879,938 _
40
Merkel(TEC)
21,254
25,272
24,281
23,618
33,782
29,165
34,897
33.358
36,484
26,679
27,576
30,335
352,647
41
Merkel (WTU)
23,625
22,085
20,285
22,111
27,793
32,297
34,466
33,260
28,541
23,338
28,447
28,687
324,935
42
NonhRichlanCHllls
851,965
785,047
790,207
788,442
830,412
1,157,691
1,209,051
7,636,278
1,137,163
929,553
649,568
664,597
11,438,774
43
Odessa
1,510,425
1,585,918
1,421,021
1,346,413
1,411,693
2,316,882
2,372,789
2,048,294
2,352,058
2,290,139
1,082,921
1,832,724
22,188,875
44
Paris
1,443,686
1,498,203
1,375,104
1,334,521
1,438,199
1,616,465
1,649,564
1,846,543
2,022,455
1,771,626
1,503,061
7,654,532
19,153,959
45
Plano
3,255,973
3,170,608
3,271,836
3,379,144
3,705,101
3,889,057
4,029,996
3,922,705
4,042,526
3,849,712
3,344,522
3,244,216
43,105,392
46
Red 08k
69,491
66,008
91,579
81,398
68,204
82,251
65,601
110,990
134,399
119,627
81,672
82,509
1,033,869
47
Richland Hills
48
Robinson
185,531
179,189
182,893
235,882
219,811
280,928
444,820
490,096
341,850
214,093
281,248
236,283
3,272,602
49
Saginaw
157,747
153.296
143,697
137,362
145,190
185,978
194,738
238,739
257,008
193,109
156,062
154,230
2,118,054
50
Shertnan
1,458,571
1,420,330
1,465,678
1,513,748
1,659,767
1,742,173
1,805,309
1,757,246
1,010,922
1,724,548
1,498,239
1,453,305
79.309,838
51
Snyder
409,626
403,707
392,453
390,689
491,060
469,284
430,700
458,458
477,545
423,200
398,605
493,121
5,297,446
52
Spring Valtey
105,767
46,112
151,960
108,466
123,459
125,794
147,193
137,554
119,754
148,158
107,016
95,015
1,414,248
53
SugaAand
2,410,639
2,010,743
2,003,983
2,117,147
2,387,098
2,404927
2,693,268
3,062,203
3,218,417
3,229,075
2,502,768
2,228,466
30,271,794
54
SweeN+aler
784,188
698,493
737,313
708,849
854,868
000,120
794,075
785,053
635,000
737,239
616,953
753,119
8,897,276
56
Vemon
322,248
904,986
290,211
286,386
290,646
295,203
333,065
381,613
440,863
449,844
525,777
530;546
4,459,388
57
Waco
1,320,326
7,105,836
1,047,885
1,102,231
1,247,560
1,554,949
1,975,393
2.467,327
2,624,588
1,793,900
1,185,207
1,131,435
10,496,877
58
Walauga(TXV)
117,460
108,641
113,190
116,434
152,906
152,535
160,634
167,354
. 155,912
123,474
116,175
135,962
1,620,677
59
Waxahachie
1,254,976
956,716
811,640
842,912
1,010,095
957,755
133,117
1,059,820
1,515,350
1,024,653
954,522
1,806,264
72,327,820
60
Whitney
70,772
80,724
73,579
73,442
82,996
89,297
100,224
123,518
716,480
130,165
85,646
80,190
1,114,693
61
Wichita Falls
540,039
575,837
577,371
610,556
747,460
864.020
927,993
915,522
1,057,365
754,346
606,694
656,508
8,833,609
62
Total
141,810,480
135,448,781
138,026,038
141,239,321
154,814,174
163,678,253
168,919,603
174,300,307
172,396,013
163,464,074
141,397,948
138,363,812
1,834,859,981
63
Ratio 1o Peak Month
0.8136
0.7771
0.7976
0.8103
0.8882
0.9391
0.9691
1.0000
0.9891
0.9378
0.6712
0.7838
NOTES: ' The above values may nol include kWh for non-metered accounts such as street lighting and traffic ligtils.
Cities without load information are still accumulating load dala and shoidd be available in lhe near (uture.
DRAFT
Eghibit 2 ~
CAPP Request for Qualifications for Power Supply Senzces
Please provide three originals of the information requested below. Answer all
infonnation below as completely and accurately as possible.
DRAFT
Responses must be received by June 8, 2001, 2:00 p.m. Central Prevailing Time. Please
send responses to:
R. J. Covington Consultuig
13276 Research Blvd., Suite 201
Austin, TX 78750
ATTN: Bill Stames
(512) 331-4949
All questions regarding this RFQ should be duected to Bill Stames at (512) 331-4949, or
e-mail at bstarnes@jump.net.
No facsimile or e-mail responses will be accepted.
1. Name of Respondent Company:
2. Contact Person
a. Name:
b. Title:
c. Address:
d. Phone Number:
e. Fax Number:
3. Is your organization currently registered with the Texas PUC?
Yes No
REP
PGC
4. Please provide your most recent annual report, or a complete set of your most recent audited
financial statements, and a copy of your most recent Form lOK and lOQ if publicly
traded.
5. CAPP will Ue requesting that respondents to the RFP be willing to provide a corporate
guarantee or letter of credit to secure pricing guaranteed under the proposed agreement
Based on the amount of energy required to serve the electric nceds of CAPP cities, CAPP
7
C:ITEMP\CAPP RFQ Draft5_16_01.doc 05/16/2001
DRAFT
DRAFT
8. If your organization is a PGC, do you intcnd to align with a REP or regisfer as a REP?
Not applicable, my organization is a registered REP in Texas.
My organization will be aligned with
as the REP.
My organization will register as a REP.
9. Please provide information conceming comparable electric services provided to similariy
situated municipal customers in other areas of the country by your organization in the last
three years. Please include, to the extent possible, the name of the municipalities, the
type and nature of the electric service(s) provided, the starting and ending dates of
service, and the name, address, and phone number of a contact person for each customer
listed (use a separate sheet if more convenient).
Name of
Munici ality
Type of Electric Service
Provided
Start
Date
End
Date
Contact Information
10. Signature of Authorized Agent
I hereby acl:nowledge that I am an aufhorized agent or atiorney in fact for the
aforementioned organization and that the information provided above is true and accurate
to the best of my knowledge.
Signature:
Name:
Title:
Date:
C:ITEMP\CAPP RFQ Draft5_16_01.doc ' 05/16/2001
Overview of Presentation
1. Request for Qualifications (RFQ)
2-. Request for Proposals (RFP)
3. Member Survey
R. J. Covington Consulting
X
Overview of Request for
Qualifications
RFQ Respondent Requirements
1. Provide Financial information and Contact
2. State any Affiliations or Affiliates to be used in the
Provision of Service
3. State Willingness to Provide Security
4. Provide Information on Experience Providing
Similar Services
RJc
~.t = R. J. Covington Consulting
Request for Proposals
RFP Outline
1. Overview of RFP and CAPP
2. Description of CAPP
2. Requested Services
3. Response Requirements
4. RFP Schedule
5. Response Evaluation Criteria
6. Pre-Bid Conference
Fi4c_l
R. J. Cov ing ton ConsuCting
~
Requested Services
1. Retail Electric Service
2. Rate Stru ctu re I ss u es
3. Billing Services
4. Other Services
Fij-cll
- R. J. Covington Consulting
Schedule
1. Response Due Date
2. Winner Announcement
3. Negotiations
4. City Approval and Acceptance
5. Contract Signed
6. Service Commencement
RJc
- R. J. Cov ing ton ConsuCting
rF:, Pre-Bid Conference
Pre-Bid Conference to be held shortly after issuance of
RFP
1. Explain Key Points of RFP to Potential Bidders
2. Answer Questions from Potentia( Bidders
3. Feedback from Potential Bidders
RJc
R. J. Cov ing ton Consulting
RFP Issues
Billing Options
1. Will different cities require different billing
information or formats?
2. Will Respondents be willing to accommodate this
billing flexibility if desired?
RJc
N, R. J. Covington ConsuCting
Potential Respondents
REPs - 22 Parties (estimated)
PGCs - 26 Parties (estimated)
Other Parties - 24 Parties (estimated)
Rjc
T R. J. Covington Consulting
CAPP Survey Questions
1. Goals of Individual Cities Regarding Electricity
Purchases
2. Desired Pricing Structure For Power
3. Preferred Rate Structure of Individual Cities
4. Desired Term of Contract for Services
5. Preferred Billing Format and Options for Individual
Cities
6. Other Pertinent Information - Special Programs
Currently in Place; Load to be Excluded from RFP
RJc
R. J. Covington Consulting
CAPP Survey Instructions
Instructions for Completing Survey
1. Time is of the Essence - Please Fill Out the
Survey as Quickiy as Possible
2. Have One Party Complete Survey - Piease
Avoid Passing Survey From Person to Person
3. For Questions Requiring Detailed Answers -
Provide a General Response and the Name and
Phone Number of a Knowledgeable Contact -
Person
RJc
R. J. Covington Consulting
Cities Formally
Approving
CAPP Articles and By
Laws
(as of 5/18/2001)
Addison
Arlington
Bellmead
Belton
Benbrook
Brownwood
Burleson
Canollton
Cedar Hill
Cleburne
Clyde
Colleyville
Commerce
Dallas
Denison
Duncanville
Euless
Everman
Gainsville
Heath
Henrietta
Hurst
Irving
Kaufman
Kennedale
Lamesa
Lewisville
Mansfield
Nlerkel
Nlidlothian
Nacogdoches
North Richland Hills
Odessa
Pantego
Paris
Plano
Richland Hills
Robinson
Rowlett
Saginaw
Sherman
Snyder
Watauga
Waxahachie
White Settlement
Wichita Falls
(46)
Several other cities have action pending
before city councils.
Allen
Burkburnett
Comanche
Forest Hill
Fort Stockton
Grand Prairie
Highland Park
Jolly
Keller
Killeen
Rockwall
The Colony
Trophy Club
Waco
Woodway
(15)
Cities Aggregation Power Project Survey
Please answer the following questions to the best of your knowledge. The answers to the
questions are not binding, but give us an idea of what your ciry's goals and concerns are for
C.A.P.P. The purpose of the survey is not to limit options in contracting for electric service,
but to learn what is MOST important to the cities. Due to time limitations, we would
appreciate receiving your reply by May 25.
Please fax responses to:
Andrea DeAngelis R. J. Covington Consulting (512) 331-5743
City:
Respondent:
Phone Number:
Note: For questions 1-4, please rank in order of importance, with 1 being the most
important/ preferred.
1. What is the main goal of your city regarding purchases of electricity?
(a) Receive lowest price power possible
(b) Have predictable costs in order to meet annual budget goals for energy
purchases
(c) Keep monthly bills as consistent as possible (avoid price spikes)
(d) Have no service interruptions
(e) Have billing services that facilitate tracking electricity costs
Have provider that will help in controlling costs through offering load
management programs or other services aimed at controlling usage
(g) Have flexibility in adding and taking away accounts that are being served
(h) Other: Please describe below:
2. What type of pricing would you like to see for electricity purchases?
(a) Fixed price for term of contract
(b) Price tied to the current market price for energy (low or high)
(c) Mix of fixed price and market based prices
(d) Market price with an option to fix future prices
(e) Other. Please describe below:
Page 1 of 3
8. What type of special programs does your city offer or are currently receiving
from your current utility provider for energy efficiency? Please provide a brief
description of each program and the term of the program, if possible.
9. Are there any City accounts that are currently under a contract that would
exclude them from consideration for inclusion in the CAPP energy loads?
(a) No.
(b) Yes. Please specify below:
10. Additional Comments (Optional)
Thank you for taking the time to answer this short survey. Your responses will be
invaluable in development of the service offering for CAPP customers.
Page 3 of 3
Power to the people.?
Wh
you've been zapped by deregulation or
not, you can trim your electric bill this summer.
F or months, rollinq blackouts have dimmed lights, idled air conditioners,
and shut down offices and factories in California. No~v, public offi-
cials in the 22 other states from Maine to Arizona that have begun to
deregulate residential electric-titility rates are scrambling to reassure
anxious constituents that a California-style
utility meltdown won't jolt them. And with
the cost of fuels used by po~ver-generating
plants rising sharply and the nation's trans-
mission infrastructure nearing overload,
consumers in the 27 states that still operate
with regulated markets may also experi-
ence service disruptions and higher elec-
tricity bills.
Public-utility eommissions in Rhode
Island and htassachusetts (imong the early
states to deregulate) have already approved
double-digi[ electricity rate increases. Utili-
ties in Pennsylvania and Texas-states often
lauded as models of well-designed deregu-
lation plans-have also requested rate hil:es.
In New York, where a deregulation plan is
being phased in, electricity prices rose as
much as 40 percent last summec This sum-
mer, the typical Con Edison customer in
New York City could pay $I20 a month-
an increase oE more than 25 percent for the
same level of service as last year. [n Washing-
ton state, which still operates as a regulated
market but has been sucked inro California's
headaches due to a shortage of hydroelectric
power, energy costs have increased benveen
25 and 30 percent.
What's in srore where you live? This re-
port will size up what residential consumers
can eacped, spotlight changes in public policy
needed to curtail the many shortcomings of
electric-utility deregulation, and oEFer tips
for how you can rein in your costs.
DEREGULATION'S CROSSED WIRES
With hindsight, it's easy to see that Califor-
nia's electric-utility restructuring scheme
had many fatal ftaws. Lawmakers froze the
retail prices residential ratepayers ~vould be
charged until competition cou(d develop.
Other aspects of the Plan, however, made it
unlikely that prices would remain stable
for long. The law pressed the sta[e's utili-
ties ro shed their power-generating plants
but initial(y barred them from entering
into long-term contracts with other sup-
pliers. The utilities profited handsomely
from this arrangement at frst. But as ener-
gy usage and generating costs both in-
creased, they were forced to turn to the
notoriously volatile spot markets to buy, at
toP dollar, the extra power the}''d need ro
meet peak demand.
The resulr. C:ilifomia's nvo bi~est utilities
are now insolvent, as generating companies
learned to e.~cploit ne~vfound opportunities to
drive uP prices. I~teamvhite, ratepayers and
t:L~ayers have been saddled wich as much as
$20 hillion in costs to ele:in up the mess.
But consumers in other states should no[
be lulled into a false confidrnce that they
c,in avoici Californi:is woes. Electric-uti(ity
restructuring plans in the other deregulated
states share many features with the Blackout
State. (For an overview, see "Coming Un-
pfugged" on page 55.)
Overly optimistic forecasts. Most of the
new restructuring laws coming online were
passed since the mid-1990s, when big
industri~il users in high-cost states were clam-
oring For electricity-rate relieE Lower electric
biils looked attainable because supplies of
natural gas used ro generate electricity were
abundant and costs were at near-record
lows. Lawmakers drafted deregufation plans
assuming electricity prices would continue to
fall. But soon after the ink was dry on the new
larvs, a sharp rise in energy prices threw those
rosy scenarios into doubt.
Unrealistic promises. To sell skeptical
voters on the idea that deregulation could
benefit residential eonsumers, legislators
and public-utility commissiuns ordered
their soon-to-be deregulated utilities to freeze
or reduce residential rates. In New Jersey, for
example, the 1999 Electric Discount and
Energy Competition Ad decreed
that residential rates come down
by 5 percent when the new law
took eEfect in February 1999 artd
by 10 percent within three years.
West Virginia's law put a cap on
rates that won't expire unti12011.
It's unlikely that those legislated reduc-
tions can be met now that the cost of gen-
erating power is increasing. Instead, public
oFficials are facing ongoing pressure from
utility companies to retreat from their
promised reductions, as they already have
in California. NIeanwhile, competing elec-
tricity providers are unwilling to offer
power to consumers in states where prices
are artificially loiv. In either case, it's all but
certain that few residential customers wiit
see the promised benefi[s of deregulation
in their electricity bills anytime soon.
Residents of states where electric utilities
are still regulated and are less reliant on
importing electricity from out-of-state
generators, by contrast, can expect more
modest rate increases over the near term.
That's because electricity generated by most
facilities based within those states' bound-
aries remain subject ro the oversight of
public-utility commissions empowered to
act on ratepayers' behalf.
Unreliable infrastructure. Successful
deregulation dePends on the ability of
power-generatinS companies ro move mega-
watts of elcctricity through thous:inds of
milcs of high-voltage lines to mret consumer
demand. But the nation's tr:insmission grid
is fragmeilted and choked with bottle-
necks, potentially afFecting consumecs in
all states-deregulated or not.
A recent report prepared by Richard
Mathias, chairman of the Illinois Commerce
Commission, for example, assessed vulnera-
bilities in that state's power-distribution grid
and found transmission bottlenecks that
could leave the city of Chicago exposed to
power shortages during tlle summer
monchs. Wi[h the state slated to open its res-
identia( market to competition next year,
Mathias warns that the Illinois grid could
end up "a dysfunctional system:"
HOW TO KEEP THE JUICE FLOWING
Officials in some regulated states, including
Georgia and South Carolina, have seen
enough oE the energy future under deregu-
lation to pull the plug, at least for now, on
plans to open their own electricity markets
to eompetition. But before deregulation
54 CONSVMER REPORTS 0 JUNE2001
plans proceed much further anywhere, the
sobering example of California and the
prospects of a long, hot summer suggest
that a few circuit breakers are needed to
protect consumers:
Insulate vulnerable consumers from
price spikes. People with low incomes and
elderly people living on fixed incomes are
often the most dependent on reliable elec-
tricity and the least able to withstand high
prices or sudden price spikes. But whether
they live in states that have deregulated
or places where pubiic-utility boards must
still approve rate changes, these people
need help paying their utility bills so that
they are not forced to choose between food
and potentially life-saving air conditioning.
The federal government's Low-Income
Home EnergyAssistance Program (LIHEAP)
is designed to help meet the needs of those
consumers. But its resour<es are inadequate
to meet the greater need that has been the
byproduct of deregulated-energy markets.
Indeed, in the aftermath of this winter's
heating season, the LIHEAP coffers have
already been depleted. Congressional action
to authorize supplemental funding for the
program is badly needed.
► Boost residential consumers' bargain_
ing power. Acting alone, most individual
homeowners do not have sufficient infor-
mation and expertise to sort out the often-
ephemeral differences between rate plans of
rival electricity companies. Nor do they
have the bargaining clout that commercial
users wield to negotiate advantageous terms
directly from the power suppliers.
Fortunately, there are ways for consumers
to band together through town, county, or
municipsl cooperatives. Aggregate purchas-
ing pools in places like Barnstable County
in 1%Iassachusetts and several counties in
a
0
Y
U
C
>
m
0
~
Comin9 unPlu99ed The states of deregulation
Electric-utility deregulation has become the law
appraved. Other deregulation-related
of the land in 23 states and the District of
problems that have cropped up in-
~
Columbia. This table summarizes the status of
clude system-relia6ility problems,
=
the market-opening plans in terms of what the
or the challenge some power com-
-
laws provide and how developments have
panies have experienced moving
played out so far. Most of the states below sold
kilowatts from the generating
_
consumers on the idea of deregulation by prom-
plants through the transmission
ising rate cuts or rale ireezes to deliver lower
grid to where consumer demand
electric bills. But in many states (indicated by a
exists. Faced with the prospect
check in the appropriate column), those low-
of voters made irate by soaring
~
-
price initiatives have ignited little competition to
electric bills, some state regulators have '
~
date or have evaporated entirely as utilities pres-
ordered their deregulation plan implemen-
sure states to pass on rate increases pending or
tation delayed.
SCHEDULED START OF
WHAT THE
COMPETITION FOR DEREGULATION
STATE RESIDENTIAL CONSUMERS PL
AN PROVIDES CURRENT STATUS AND NEAR-TERM PROSPECTS
Rate cuts Rates capped or Little competition Rate increase pending
System-reliability Deregulatlon plan
frozen until to date or approved
problems Implementatfon delayed
Arizona early 2001 2•7.5
2004 ✓ ✓
Arkansas 2003 0
n/a n/a
✓
I Califomia early 1998 10
2002 ✓ ✓
✓
' Connecticut mid-2000 10
2003 ✓
Detaware late 2000 up to 7.5
late 2003 ✓
✓
Iilinois mid•2002 up to 20
2005 n/a
✓
Maine early 2000 2.5-10
early 2002 ✓
Maryland mid•2000 up to 7.5
2004•2008 ✓
Massachusetts early 1998 15
2004 ✓ ✓
Michi an early 2002 5
2005 n/a
✓
Montana mid•2004 0
2002 n/a ✓
~
Nevada early 2000 0
early 2003 n/a ✓
~
New Hampshire mid-2001 17
early 2004 n/a
New Jersey mid-1999 10
mid•2003 ✓
New Mexico early 2007 0
n/a n/a ✓
New York mid•2001 3-10
inde(inite n/a
~
Ohio earl 2001 2-3.5
2004•2006 ✓
Oklahoma mid•2002 0
mid•2005 n/a
Pennsylvania early 1999 0
2004•2010 ✓ ✓
Rhode Island early 1998 0
n/a ✓ ✓
Texas earl 2002 0-6
2005 n/a ✓
Vir inia 2002-2004 0
mid•2007 n(a ✓
ul-~ 111...;..;, iata 70ni 0
20tl n/a
.,y.,
JUNE 2001 0 CONSUMER REPORTS 55
sumer
Tielpopts
Best Travel Deals
Don't wait to start saving.
Travel Well for Less now, with
this must-have travel resource.
~ESTM
TRAVEL
DEALS
TiEn tisrr:rccpits 2001
for.mtt,art tnvrl pIanrtirtg
This completely updated edidon of
Best Travel Deais gives you the
expert tips and strategies you need to
travel in the style and comfort you
deserve - at a price you can afford.
Inside this 340-page travel planning
guide, you'll find:
✓ 10 ways to make travel cheaper
✓ Stnte~ies for landinD a good seat
on any airline
✓ Tips for choosing the pecfect tour
or cruise
✓ S[ra[egies for gettino the most out
of your frequent-ftyer miles
✓When to buy (or not buy) car-
rent,al insurance
...and morc!
This cdition includes an
all-ne.v Rcference Section,
making it easicr than ever for you to
get quick answers to the most
frequently askcd travel questions!
On sale now wherever books and
[magazines are sold, or mall the coupon below.
- - ~ mm ~ 7
To order Best Travel Deals 2001, please send a
~ check or money orderfor $9.95 plus $3.50 ship- ~
I ping and handling, payable to Consumer Reports. ~
I Prod# P7as
aozasz 1
I NAME I
' ADORESS APT. '
' cm
' STATE ZIP
Consumer Reports Best Travel Deals 2001 '
C°' PO Box 10637, Des Maines, IA 50336-0637
L ~ ~ .1
Ohio have succeeded in pressing utilities for
the kinds of preferential terms big pur-
chasers have been able to extract. By auth-
orizing public officials to bargain for them,
homeowners and small businesses are
better able to ensure the reliability and
accountability that they could not
command on their own. Before aggregation
can occur in the rest of the country, how-
ever, each state must pass legislation-
a Community Choice law-that gives
municipalities the power to negotiate for
electricity in the same way that most of
them can now negotiate cable-TV deals or
contract for trash-collection services.
► Don't short-circuit the environment.
In their rush to ensure a ready supply of reli-
able local power, state authorities risk cutting
corners that could put the environment at
risk. In NewYork, for examp(e, state author-
ities Put a program to install netiv gas-fired
generating plants on the fast track, accelerat-
ing the normal public-hearing process and
avoiding a Cull environmental-impact review.
If that new capacity proves inadequate to
avoid an electricity shortfall, the state might
allow private owners of potentially more
heavily-polluting diesel generators to mal:e
up the difference.
► Give the wholesale electricity market
a publio-sector watchdog with teeth. It's
long been the job of che Federal Energy Rea-
ulatory Commission (FEFC) to monitor
the reliability of the nation's electricity-
transmission system and to ensure that no
price manipulation occurs. But the agency
hasn't demonstrated much willingness so
f ir ro step up to the new challenges of po(ic-
ing a deregulated markct. In California, for
examp(e, FERC declined to investigate many
al(eg,uions of price gouging, choosing to
look only at the Eew instances that occurred
during times when supply was cri[ica(ly
low. FERC cannot be effective in its over-
sight role unless it obligates the industry
to deliver power to consumers at a price
commensurate with the actual costs it
incurs to generate and transmit it.
SIX THINGS YOU CAN DO
While waiting for public officials to act,
there are simple steps you can take to curb
your electricity bills.
► Seal leaky ducts. Hot, humid air gets
drawn into your home through ductwork
leaks, dissipating the cool air your air con-
ditioner cranks out. Because as much as 40
percent of what you spend to cool or heat
your home can be lost through probtematic
ducts, it pays to sea( and insulate them
carefully, including any that pass through
unheated or un-air-conditioned garages,
basements, attics, or crawl spaces. You can
also keep cool air indoors by caulking or
adding weather stripping around doors
and windows.
► Buy energy-efficient appliances. Most
new major home appliances are required to
carry an Energy Guide tag that spells out
the projected annual cost of operation in
terms of electricity consumed. If you are
in the market for an air conditioner, refrig-
erator, dishwasher, or clothes washer, it pays
to choose an energy-efficient model. A refrig-
erator that consumes a thriEty 500 kilowatt-
hours of electricity each year will cost 40
percent less to operate over the course of a
year than an inefficient model that uses 830
l:ilowatt-hours. (For information on choos-
ing an energy-efficient central air conditioner,
see our Nlay 2001 issue or log on to our web
site at tivnvtiuConsumerReports.org, where
we also report on a wide range of energy-
efficient appliances throughout the year.)
► Limit your use of appliances that throw
ofE heat. You can augment the electricity-
saving potential of your energy-efficient
appliances by running your oven, dishwasher,
or clothes dryer during the coolcr hours oE
the day, when your air conditioner doesn't
have to %vork overtime to overcome the heat
they, generate. And, of course set your air-
conditioner thermostat higher. For each
degree you raise it, you can cut your cooling
bilis by 3 percent.
► Add insulation to your attic. Attics
trap hot air, driving up the tcmperature in
the rooms bclow and pumping up coo(ing
costs. For homes in warm-weather cities like
N(iami or Los Angeles, thr U.S. Department
of Energy recommends insulating with the
eyuivalent of a blanket of fiberglass about
12 inches thick.
► Switch to low-cost fluorescent lighting.
Replace your most commonly used standard
incandescent bulbs with new energy-efficient
contpact fluorescent lights. The new bulbs
cost more, but they can last up to ten times
longer and can reduce lighting costs by
75 percent.
► Get an energy audit. To find other
ways to cut electricity use, ask your electric
company whether it offers free energy
audits. Private firms also perform much the
same service for a fee. You can locate a certi-
fied energy-audit consultant by logging on
to the nonProfit Residential Energy Services
Nenvork (►vww.natresr►et.org). Erpect to pay
$200 to $300 for a comprehensive home
survey. But it can pay for itself many times
over if you put to use the sound advice
about what's watt. 0.
56 CONSUMEH REPORTS 0 JUNE 2001