HomeMy WebLinkAboutItem 05 - Power Purchase AgreementMEMOTO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: BRUNO RUMBELOW, CITY MANAGER
MEETING DATE: AUGUST 4, 2020
SUBJECT: TCAP POWER PURCHASE AGREEMENT
RECOMMENDATION: City Council to consider adopting a resolution authorizing Texas Coalition
for Affordable Power (TCAP) Professional Services Agreement (PSA) and
Gexa Energy's Commercial Electric Service Agreement (CESA) to provide
the City with electric power beginning in 2023 and take any necessary
action.
FUNDING SOURCE: Funds are programmed annually in the operating budget.
BACKGROUND: In 2008, the City of Grapevine resolved to become a member of Cities
Aggregation Power Project (CAPP) and joined with a group of cities that
had banded together to aggregate their power demand to acquire
electricity at the lowest rate possible. In 2011, CAPP consolidated their
network with others to create the Texas Coalition for Affordable Power
(TCAP) and opened its doors to other governmental entities such as
counties and water districts. TCAP currently has approximately 165
members.
Our fixed price contract with Gexa through TCAP expires on December
31, 2022. We are currently paying $0.03684/kWh to Gexa for electricity
and $0.0012/kWh to TCAP for an aggregation fee.Our current
arrangement is significantly less than our costs prior to 2008. The rates
above exclude delivery, fees, taxes, and other charges approved by the
Public Utility Commission (PUC).
Looking forward, TCAP's management believes that money can be saved
by getting away from long-term fixed price contracts and using a short-
term market driven auction process. This approach is called the Strategic
Hedging Program (SHP).The rationale of this program is that TCAP
believes there is excess energy supply in the coming few years that will
result in pricing that is to the buyer's advantage, and we would be better
served buying energy in year over year blocks than committing to a 5 year
fixed price contract.
A significant feature is that the City has the option, twice a year, to
terminate participation in SHP and convert to a fixed-price contract similar
to our current arrangement.
City staff has briefed the Utility Committee on this issue and obtained their
support to move this item to the full City Council for consideration.
Staff recommends approval.
BB/ds
RESOLUTION NO. 2020-014
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS, ADOPTING THE TEXAS COALITION
FOR AFFORDABLE POWER, INC. PROFESSIONAL
SERVICES AGREEMENT AND GEXA ENERGY'S
COMMERCIAL ELECTRIC SERVICE AGREEMENT FOR
POWER TO BE PROVIDED ON AND AFTER JANUARY 1,
2023; AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of Grapevine, Texas is a member of Texas Coalition for
Affordable Power, Inc. ("TCAP"), a non-profit, political subdivision corporation of the State
of Texas; and
WHEREAS, TCAP has previously arranged for the City to purchase power through
Gexa Energy with a contract set to expire December 31, 2022; and
WHEREAS, TCAP has designed a new procurement strategy that will involve
TCAP initially committing to purchase power two years in advance of delivery on behalf
of its members who desire participation in a Strategic Hedging Program ("SHP") that will
involve a series of monthly competitive auctions; and
WHEREAS, TCAP has prepared a Professional Services Agreement ("PSA"), that,
in addition, to enumerating services and benefits to members of TCAP, provides TCAP
with specific authority to procure power in the wholesale market on behalf of members
who choose to participate in the SHP; and
WHEREAS, approval of the PSA is a necessary, but not sufficient, prerequisite to
participation in the SHP; and
WHEREAS, the PSA is a relational contract that defines services provided by
TCAP to members regardless of whether a member decides to commit to the SHP; and
WHEREAS, the industry -standard retail contract is a Commercial Electric Service
Agreement ("CESA") offered by a Retail Electric Provider ("REP"); and
WHEREAS, TCAP has negotiated modifications to the current CESA between the
City and Gexa Energy to reflect participation in the SHP; and
WHEREAS, the CESA that will facilitate participation in the SHP effective for power
deliveries in and beyond 2023 will need to be approved and signed prior to October 1,
2020 -land
WHEREAS, the City desires to participate in the SHP; and
WHEREAS, all legal prerequisites for the adoption of this resolution have been
met, including but not limited to the Local Government Code and the Open Meetings Act;
and
WHEREAS, the City Council hereby declares that the approval of this resolution is
in the best interests of the health, safety, and welfare of the public.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS:
Section 1. That all matters stated hereinabove are found to be true and correct
and are incorporated herein by reference as if copied in their entirety.
Section 2. That the City Manager is authorized to sign TCAP's Professional
Services Agreement, and Gexa Energy's CESA, and send the agreements to TCAP,
15455 Dallas Parkway, Ste 600, Addison, TX 75001.
Section 3. That this resolution shall be effective from and after the date of its
passage.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS on this the 4th day of August, 2020.
APPROVED:
William D. Tate
Mayor
ATTEST:
Tara Brooks
City Secretary
APPROVED AS TO FORM:
City Attorney
Resolution No. 2020-014 2