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Home My WebLink AboutItem 07 - CAPP Membership i��l`+J� � _. `� MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: BRUNO RUMBELOW, CITY MANAGER �ji�— MEETING DATE: AUGUST 05, 2008 SUBJECT: CITIES AGGREGATION POWER PROJECT (CAPP) MEMBERSHIP RECOMMENDATION: City Council consider approving a resolution authorizing staff to become a member of Cities Aggregation Power Project (CAPP), authorize initial membership payment of not to exceed $14,000, and take any necessary action. BACKGROUND: CAPP is a non-profit group created in 2001 that pools Texas cities' electric power needs in order to negotiate lower, more stable prices through bulk purchasing (aggregation). CAPP currently has more than 100 members. CAPP is run entirely by its members. The voluntary ten-person CAPP Board of Directors is made up of city employees and city officials and meets once a month. After deregulation, the City entered into a contract with the Houston Galveston Area Council (HGAC) to secure aggregated purchase of electrical power. This served Grapevine well for five years. TXU Energy was prohibited from bidding on electrical sales in the DFW Metroplex for a (2) year period following deregulation. In 2007 Grapevine negotiated a better price with TXU than the HGAC aggregated price. Since then, power costs have steadily increased. Our most recent contract for 2008 is with Reliant Energy at 8.9c/kwh which expires in December 2008. Since the beginning of the year, natural gas (which is the raw material used to produce power in 70% of Texas power plants) has increased by 40%. The price of natural gas has a direct affect on the price of electricity. The current rates being quoted by Reliant Energy are in the range of 8.9c/kwh. Therefore, it is imperative that we find ways to reduce power costs. Being a member of CAPP will provide the City with several benefits. ■ CAPP is a true aggregator. It purchases all of its power through a single contract for a specific contract term. The CAPP approach results in a 5-10% cost savings. � � July 31, 2008 (9:50AM) ■ CAPP member cities are currently paying 8.2c/kwh. Grapevine's current contract with Reliant Energy, which expires in December 2008, costs us 8.9c/kwh. The City's annual usage is approximately 19 million kwh. ■ CAPP has experienced energy consultants who follow the natural gas markets closely and have more resources than the City to evaluate various purchase options and time the markets to get better pricing. ■ Staff currently spends a significant amount of time working with the Retail Electric Provider (REP) on billing issues. There are currently about 225 meters in the City spread among 14 divisions. As vendors change, all these meters have to be moved from one vendor's system to the other. The format and structure of the bill changes and staff has to invest significant time and resources to get the vendor to create a bill that groups meters under the correct divisions and provides bill summaries. CAPP is able to negotiate a standardized billing format up front and facilitates bill processing. ■ CAPP also has experienced legal consultants to investigate and resolve billing disputes and switching problems. In addition, CAPP has been active in the legislature pursuing bills that benefit electric deregulation in Texas, e.g., CAPP pursued legislation that would allow cities to provide residents with the same wholesale rates that CAPP was able to obtain through a process called Opt-out Aggregation. ■ CAPP is currently negotiating a long term contract directly with a power generator to buy electricity at a price very close to the cost of production. The contract would allow CAPP members to buy electricity at a fixed price for the next 24 years. CAPP members expect to pay about 5.5 c/kwh for 60% of its power (base load) including the cost of debt service. If a contract is indeed signed (between CAPP and the power generator), each member would be given the option to join this program. CAPP has indicated that the agreement is going to the board for approval in the first week of August and 80°/o-90% of the cities have indicated their intent to be a part of this long term contract. The cost to join CAPP is a one time fee of $14,000. CAPP also charges an aggregation fee of 0.0013c/kwh (about $25,000/ year). CAPP's current contract expires in December 2008. So, if the City joins CAPP in the coming months, we will have the opportunity to be part of their new contract that will begin in January 2009, whether it is with a retail electric provider or a long term contract with a power generator. CAPP membership will require a city council resolution approving the membership and adopting the CAPP Articles of Incorporation and By- Laws. ��:.;::. July 31, 2008 (9:50AM) Over the last few weeks, there has been a downward trend in energy prices and natural ,� gas prices have also shown a downward trend. CAPP may be looking at locking in a low price in the very near future to take advantage of this trend, so we need to act quickly if we want to pursue a membership with CAPP. Staff recommends approval. MS/rc O:�agenda\04012008�agmemo.capp membership.doc ,� ,:;_��, July 31, 2008 (9:50AM) .�._.� �,�.<,��....��._� ,��. . ._ �: , �.�,.,� . _ . . ,�P'C E OA Corporations Section r.v � � Roger Williams P.O.Box 13697 � Austin,Texas 78711-3697 Y � Secretary of State RE � E � � ED Office of the Secretary of State OCT 11 Z��E Packin Sli g P LI�j��c�i5��r�t�dl?R�6 Page 1 of 1 Lloyd Gosselink,Attomeys at Law 816 Congress Avenue Ste. 1900 Austin,TX 78701 Batch Number: 14685634 Batch Date: 10-06-2006 Client ID: 137735016 Return Method:Mail Phone No: 5123225800 - Document Page Number pocument Detail Filing Number/Name Count Fee 146856340002 Articles of Amendment CITIES AGGREGATION 0 $25.00 POWER PROJECT,INC, Total Document Fees $25.00 Payment Type Payment Status Payment Reference Amount Check Received 3641 $25.00 Totai Payments Received $25.00 Totat�1moLnt C�argec!:a Client Acco:;nt $O.CO Tota(Ameunt Credited to Ctient Account $0.00 Note: This is not a bill. Please do not send any payments until the monthly statement is received. Any amount credited to Client Account may be refunded upon request. Refunds(if applicable)will be processed within 10 business days. Acknowledgement of Filing Document(s)(if present)is attached. User ID:PCANTRELL Come visit us on the Internet @ http://www.sos.state.t,r.us/ Phone:(512)463-5555 FAX(512)463-5709 Dial:7-1-1 for Relay Services Corporations Section �P�E p�, Roger Williams P.O.Box 13697 5 � � Secretary of State Austin,Texas 787 1 1-3 697 `� ye x � � � E C �. � `��fl ��. Office of the Secretary of State ��r l� ;J�;::; llQY��,��,,;;• �- Ft, October 11, 2006 Lloyd Gosselink, Attorneys at Law 816 Congress Avenue, Ste. 1900 Austin,TX 78701 USA RE: CITIES AGGREGATION POWER PROJECT, INC. File Number: 162172001 It has been our pleasure to file the articles of amendment for the referenced entity. Enclosed is the certificate evidencing filing. Payment of the filing fee is acknowledged by this letter. If we may be of furkher service at any time,please let us know. Sincerely, Corporations Section - Statutory Filings Division (512)463-5555 Enclosure ��.. Come visit us on the intemet at http://www.sos.state.tx.us/ Phone:(512)463-5555 Fax:(512)463-5709 TTY; 7-1-1 Prepazed by:Pat Cantrell Document: 146856340002 ;.,_. <, ��r:�. ��„�_� . , � .�� ,�.,M Gorporations Section �PTg pF Roger Williams P.O.Box 13697 �, � � Secretary of State Austin,Texas 7871 I-3697 � � � � Office of the Secretary of State CERTIFICATE OF AMENDMENT OF CITIES AGGREGATION POWER PROJECT, INC. 162172001 The undersigned, as Secretary of State of Texas,hereby certifies that the attached Articles of Amendment for the above named entity have been received in this office and have been found to conform to law. ACCORDINGLY the undersigned, as Secretary of State, and by virtue of the authority vested in the Secretary by law hereby issues this Certificate of Amendment. Dated: 10/06/2006 Effective: 10/06/2006 �� • • � ` � � � Roger Williams Secretary of State Come visit us on the internet at http://www.sos.state.tx.us/ Phone:(512)463-5555 Fax:(512)463-5709 TTY:7-1-1 Prepared by:Pat Cantrell Document: 146356340002 �� In the Offir.��f the Secretary��°��te of'texa� .�„�.. ARTICLES OF AMENDMENT OCT 0 6 2006 oF Corporations Sectio� CITIES AGGREGATION POWER PROJECT, INC. Pursuant to the provisions of article 1396-4.03 of the Texas Non-Profit Corporation Act, the undersigned corporation adopts the following Articles of Amendment: l. The Name of the Corporation is Cities Aggregation Power Project, Inc. 2. The following amendments to the Articles of Incorporation were adopted on October 6,20Q5. The following Articles Three and Four were added to read as follows: ARTICLE THREE The corporation is a non-profit political subdivision corporation under Chapter 304, Texas Local Government Code, entitled "Energy Aggregation Measures for Local � Govemments,"as amended. ARTICLE FOUR The corporation has been organized for the purposes of purchasing electricity, aiding or acting on behalf of its members with respect to their own electricity use for their respective public facilities and that of their citizens, negotiating on behalf of its members for the purchase of electricity, making contracts for the purchase of electricity, and taking any other actions necessary to purchase electricity for use in the public facilities of the political subdivision or subdivisions represented by the corporation, and for all other purposes as may be permitted by law for political subdivision corporations. No part of the net earnings of the corporatian shall inure to the benefit of, or be distributable to, its directors, officers, or other private persons, T,�_ except that th$ corporation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in this Article. The corporarion hereby pledges all of its assets for use solely in performing the corporation's aforementioned purposes. Upon dissolution of the corporation, (1) all liabilities and obligations of the corporation shall be paid, satisfied, and discharged, (2} all assets held by the corporation upon a condition requiring return, transfer or conveyance, which condition occurs because of the corporation's dissolurion, shall be returned, transferred or conveyed in accordance with such requirements and (3) all remaining assets of the corporation shall be disfibuted to the corporation's members, pursuant to a plan of distribution adopted by the Board of Directors. 3. The amendment was adopted at a meeting of inembers held on October 6, 2005, at which a quorum was present, and the amendment received at least two-thirds of the votes which members present or represented by proxy were entitled to case. The undersigned incorporator,who is over the age of eighteen(18) and is a citizen of the State of Texas, signs these Articles of Incorporation subject to the penalty imposed by Article 9.03A, Texas Non-Profit Corporation Act. � Jay Do �,y, Chai Cities Aggregation Power Project, Inc. THE STATE OF TEXAS § § COUNTY O § BEFORE ME, a notary public, on this day personally appeared t e e known to me to be the person whose name is subscribed to the foregoing document and,being by me first duly sworn,declared that the statements therein contained are true and correct. Given under my hand and seal of office this�day of 006. � "" "''� Notary Public, State of Texas �� PATLMARCUM MY COMMI8810N EXPtRES My Commission Expires: �� 9 ,�r� Mty 3,2000 -��,., .:�,.�.�� .,.�..,�, �.�.�,�x. �,�,�.,. �.,�:Y.�. � ,,_. ._ _. ��.� Revised April 2005 : BYLAWS OF x�4 CITIES AGGREGATION POWER PROJECT, INC. ARTICLE I. Name and Purpose l.l Name. This corporation shall be known as Cities Aggregation Power Project, Inc. 1.2 Purpose. The corporation has been organized for any and all lawful business for which corporations may be organized under the Texas Non Profit Corporations Act, for the purposes of purchasing electricity, aiding or acting on behalf of its Members with respect to their own electricity use for their respective public facilities and that of their citizens, negotiating on behalf of its Members for the purchase of electricity, making contracts for the purchase of electricity, and taking any other actions necessary to purchase electricity for use in the public facilities of the political subdivision or subdivisions represented by the corporation, for the purposes of acting as a local cooperative organization to purchase goods and services for its members, and for all other purposes as may be permitted by law for political subdivision corporations. ARTICLE II. Board of Directors 21 Composition. There shall be a Chair and a Vice Chair on the board and such other directors as required for the performance of duties. 2.2 Powers. The affairs of the Corporation shall be managed by the Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not prohibited by statute, by the Articles of Incorporation of the Corporation, or by these Bylaws. By illustration and without limitation, included among the powers of the Board of Directors is the power to negotiate the purchase of electricity, aid or act on behalf of the political subdivisions for which the corporation is created, make contracts for the purchase of electricity, purchase electricity, and take any other action necessary to purchase electricity for use in the public facilities or by the citizens of the political subdivision ar subdivisions represented by the Corporation; provided, however, no Member shall be obligated under any such contract unless the Member approves such contract. 2.3 Number, Tenure and Qualification. (a) Directors shall be elected to the Board at annual meetings of the Members as hereinafter described from a slate presented by the Board and from nominations by Members. A Nominating Steering Committee shall be appointed by the chair and shall assemble and publish said nominations for a vote of the membership. Nominations for membership on the Board made by Members shall not be considered at any meeting of the Members unless such nomination has been presented in writing, signed by the Member or Members proposing the same, and filed with the Secretary of the Corparation at least sixty (60) days prior to the date of the meeting at which said nominations are to be considered. Nominations for Board positions are open to the entire membership. From the nominations so made and no others, and from the ��,., slate presented by the Nominating Steering Committee to the Board, Directors shall be elected, and the person or persons receiving the highest number of votes shall be declared elected. If the election of Directors shall not be held on the day designated herein for any annual meeting of the Members, or at any adjournment thereof, the Board shall cause the election to be held at a special meeting of the Members, which shall be convened as soon thereafter as is possible. (b) The Board of Directors shall consist of 10 members. Places l, 2, 3, 4, 5, 6 and 10 will be selected by electricity consumption through CAPP. "At Large" places 7, 8 and 9, will be filled with the candidate receiving the highest votes after the board places are filled for places 1, 2, 3, 4, 5, 6 and 10. The Board shall appoint a nominating committee which shall divide the membership by kWh usage through CAPP. Directors serving in place numbers that are odd shall be elected in odd numbered years and directors serving in place numbers that are even shall be elected in even numbered year. The usage allocation will be determined as follows: Places 1 and 2 30 million kWh, but less than 350 million kWh Places 3 and 4 At least 15 million kWh, but less than 30 million kWh Places 5 and 6 Less than 15 million kWh Places 7,8,9 At Large Place 10 350 million kWh, or more ""� The number of Directors may be increased or decreased by resolution of the Board, but no increase shall have the effect of shortening the term of an incumbent Director. (c) Only the CAPP member's officially designated CAPP representative is entitled to vote. One vote shall be cast for each place on the ballot and no more than one vote may be cast for the same nominee. If voting results in a tie vote for any Board Place, the Chairman will call for a run-off election. Each CAPP Representative will be asked to cast one vote per Board Place. The member receiving the most votes will be declared the winner. (d) Each Director of the Board must be an elected official or full-time salaried employee of a Member. Any Director who is an official or full-time salaried employee of an entity that ceases to be a Member participant of the Corporation, and any Director who ceases to be an official or full-time salaried employee of a Member, shall be automatically disqualified to serve as a Director, and the position shall become vacant, such vacancy to be filled in the manner provided in Section 2.5 of this Article II. 2.4 Removal. Directors may be removed from office, with or �vithout cause, by an affirmative vote of the majority of the Members then entitled to vote at an election of the Directors at an annual meeting of the Members or a meeting called expressly for that purpose; provided, no action to remove any Director shall be sufficient unless written �� 2 _ n ��. ��. ��.� �x �,�� . . _ . .r , notice that such action is to be considered shall have been given to all Members by the Chair or Secretary at least sixty(60) days before the meeting. 2.5 Vacancies. Any Director may resign at any time by giving written notice to the Secretary of the Corporation. Such resignation shall take effect at the time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any vacancy occumng in the Board may be filled by the affirmative vote of a majority of the remaining Directors though less than a quorum. A Director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office. Any place on the Board to be filled by reason of an increase in the number of Directors shall be filled by the affirmative vote of a majority of the Directors then in office. A Director chosen to fill a position resulting from an increase in the number of Directors shall hold office until the next annual meeting of Members, at which time a successor shall be elected to serve until the expiration date set for his or her designated place. 2.6 Regular Meetings. A regular meeting of the Board shall be held annually in conjunction with the annual meeting of Members, for the purpose of organization, election of officers, and consideration of any other business that properly may come before the Board. The Board may provide, by resolution, the time and place for the holding of additional regular meetings. 2.7 Special Meetin�s. Special meetings of the Board may be called by the Chair of the Board or at the written request of any two Directors. The person or persons authorized to call special meetings of the Board may fix the place for holding any special meeting of the Board so called. If no place is fixed, the place of ineeting shall be the principal office of the Corporation in Texas. 2.8 Votin�Quorums. A majority of the number of Directors described in by Section 2.3 shall constitute a quorum for the transaction of business. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board, provided, however, the Board may, by resolution, delegate any of its powers in whole or in part, temporarily or permanently, to any Director or committee of Directors then acting; any such delegation shall be by written instrument filed in the records of the Corporation. 2.9 Notice of Meetin�s. Notice for board meetings shall be provided to all Directors and Members either by mail not less than seventy-two (72) hours before the date of the meeting, by telephone, telegram, or telecopy on twenty-four (24) hours notice or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. 2.10 Informal Action by Directors. Any action required to be taken at a meeting of the Directors, or any other action which may be taken at a meeting of the Directors, may be taken without a meeting if a consent or consensus in writing, setting forth the action so 3 taken, shall be signed by all of the Members with respect to the subject matter thereof. Such consent or consents shall have the same force and effect as a unanimous vote of the �" Directors. 2.11 Compensation. Duly elected or appointed Directors shall serve without compensation, but shall be reimbursed for reasonable costs of travel, meals, lodging and incidental expenses while on official business for the Corporation. 2.12 Reliance on Professionals and Experts. Directors are authorized to rely on information, opinions, reports and statements, including financial statements and other financial data, prepared or presented by others to the fullest extent permitted by applicable law. 2.13 Executive Committee. The Chair of the Board may appoint an Executive Committee of the Board to handle the affairs of the Board when regular or special Board meetings are not in session, with such functions as may be designated to the Executive Committee by the Board through a resolution properly adopted. The Executive Committee may consist of the Chair, Vice-Chair, and one or two other Directors as designated by the Chair. 2.14 Other Committees. The Chair is authorized to form any committees as needed in order to assist the Board with its information gathering and deliberations. 2.15 �ecific Powers and Duties. The Board, in addition to other powers and duties herein confened, imposed, and authorized by law, shall have the following powers and duties: (a) It shall carry out all of the duties necessary for the proper operation and � administration of the Corporation on behalf of the Members and to that end shall have all of the powers necessary and desirable for the effective administration of the affairs of the Corporation. (b) It shall be authorized to contract with any qualified individual, firm or organization to perform any of the functions necessary for the effective administration or operation of the Corporation, or to provide for the fiscal protection of the Corporation or in keeping with its fiduciary responsibilities as Directors. (c) It may hire attorneys, accountants, consultants, or such other professional persons that it may deem necessary aid to or for the Corporation. Those persons shall be paid as provided in the contract for hire as executed by the Chair of the Board. (d) It shall have the general power to make and enter into all contracts, leases and agreements necessary or convenient to carry out any of the powers granted under these bylaws or by any other law. (e) It shall provide for an annual audit of the books of the Corporation to be supplied to the Membership within 120 days following the close of each Corporation Year, or as soon thereafter as practicable. �. 4 (� It shall have the authority to terminate membership of any Member that fails to abide by the reasonable requirements of the Board concerning payment of annual dues or aggregation fees as provided in Article V, cooperate with any of the agents hired to provide administrative services on behalf of the Board, or takes any other action that may be detrimental to the Corporation. (g) It may collect interest on all past due accounts not to exceed the amounts allowed under applicable law. ARTICLE III. Offcers 3.1 Generallv. The Board shall elect from among their number a Chair of the Board and a Vice-Chair of the Board. The Board shall designate a Secretary, who may or may not be a Director, to keep the minutes and the records of the Board. The Board may appoint such other officers, assistant officers, committees and agents, including a treasurer, assistant secretaries and assistant treasurers, as they may consider necessary, who shall be chosen in such manner and hold their offices for such terms and have such authority and duties as may from time to time be determined by the Board. No person may simultaneously hold two offices. In all cases where the duties of any officer, agent or employee are not prescribed by the bylaws or by the Board, such officer, agent or employee shall follow the orders and instructions of the Chair of the Board. 3.2 Election; Tenure. The Chair of the Board, the Vice-Chair, and the Secretary shall be elected at the organizational meeting of the Board. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as a meeting may be conveniently convened. Other officers may be chosen by the Directors at such meeting or at any other time. Each officer shall hold office until the first of the following occur: until his or her successor shall have been duly elected and shall have qualified; or until his or her death; or until he or she shall resign; or until he or she shall be disqualified pursuant to these bylaws; or until he or she shall have been removed in the manner hereinafter provided. 3.3 Removal. Any officer or agent may be removed by majority vote of the entire Board for cause or without cause whenever in its judgment the best interests of the Corporation will be served thereby. Neither notice nor a hearing need be given to any officer or agent proposed to be so removed. Election or appointment of an officer or agent shall not in itself create contract rights. 3.4 Vacancies. A vacancy in any office, however occurring, may be filled by the Board for the unexpired portion of the term. 3.5 Powers and Duties of the Chief Executive Officer. The Chair of the Board shall be the Chief Executive Officer of the Corporation. Subject to the control of the Board and the Executive Committee, the Chief Executive Officer shall have general executive charge, ,� 5 management and control of the properties, business and operations of the Corporation with all such powers as may be reasonably incident to such responsibilities; may agree � upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation; and shall have such other powers and duties as designated in accordance with these bylaws and as from time to time may be assigned to him or her by the Board. He or she shall preside at all meetings of the Members and of the Board. 3.6 Vice-Chair. The Vice-Chair shall assist the Chair and shall perform such duties as may be assigned to him or her by the Chair or by the Board. In the absence of the Chair, the Vice-Chair shall have the powers and perform the duties of the Chair. In addition, the Vice-Chair shall have such other powers and duties as from time to time may be assigned to him or her by the Chair or by the Board. 3.7 Secretary. The Secretary shall: (a) keep the minutes of the proceedings of the Members, the Executive Committee and the Board; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the records and of the seal of the Corporation and affix the seal to all documents when authorized by the Board; (d) keep at the Corporation's principal place of business within the State of Texas a record containing the names and addresses of all Members; and (e) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chair or by the Board. 3.8 Executive Director; Other Officers. The Board may select and appoint an Executive �' Director and any other employees to serve at the pleasure of the Board. At the discretion of the Board, the Executive Director may be an independent contractor or an employee of the corporation. The Executive Director and any other such employees duly selected and appointed employees shall receive such compensation and other benefits as the Board may determine, and, additionally shall be entitled to reimbursement of expenses for attendance at official meetings of and official functions for the Corporation. ARTICLE IV. Membership 4.1 Eli ibility. Any political subdivision that approves the Articles of Incorporation and these Bylaws by ordinance, resolution, or order adopted by the governing body of the political subdivision and that purchases electricity for one or more of their respective public facilities is eligible for membership in Cities Aggregation Power Project, Inc., subject to the right of the Board to determine eligibility and conditions of inembership, and subject further to the authority of the Board to terminate membership of any Member as provided herein, or in any agreement made between the Member and the Corporation. 4.2 Representation. Each Member shall appoint, by formal action by its governing body, a representative to act for it at the meetings of Members and shall give to the chair of the Board of Directors in writing the name of the person thus appointed. Only appointed representatives may act on behalf of Members in the conduct of business of the ��, 6 .,.�.�.��,�--. � a., � -, . . , �. ...�� ,�.. _ �« � corporation. If at any time a Member withdraws from participation or otherwise has its membership status terminated, that Member shall no longer have a representative in the Membership, on the Board, or on any committee of the Corporation. Each Representative will serve until a successor is appointed. 4.3 Withdrawal. Any Member may withdraw from participation in the activities of the Corporation at any time upon thirty (30) days notice, whereupon it shall cease to be a Member, shall cease to be entitled or obligated to participate in the activities of all committees and subcommittees of the Board of Directors and shall have no further obligations as a Member; provided, however, that if such notice is given more than thirty (30) days after such Member's receipt of its statement of annual dues, fees and expenses for a fiscal year, the Member shall be obligated to pay for the full fiscal year within which such termination is effective. 4.4 Votin� Ri h� ts• Voting rights are limited to Members. Each Member shall be entitled to one vote in any regular or special meeting of the members upon all matters of business. Such vote may be exercised in person or by mail by a representative of the Member duly authorized in writing; provided, however, that proxy and cumulative voting shall be prohibited. 4.5 Annual Meetings. The annual meeting of the Members shall be held at a time and on a date selected by the Chair of the Board, with written notice to each Member, for the purpose of electing Directors, receiving the annual report from the Board, and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Texas, such meeting shall be held on the next succeeding business day. 4.6 �ecial Meetin�s. Special meetings of the Members, for any purpose, unless otherwise prescribed by statute, may be called by the Board, and shall be called by the Chair of the Board or by the Secretary at the request of not less than one-tenth (1/10) of all of the outstanding Members of the Corporation. 4.7 Place of Meetin�. The Board may designate the place for any annual meeting or for any special meeting called by tl�e Board. If no designation is made, or if a special meeting shall be called otherwise than by the Board, the place of ineeting shall be the principal office of the Corporation in Texas. 4.8 Notice of Meetin�: Votin.� by Ballots Forwarded bv Mail. (a) Written or printed notice stating the place, day and hour of the meeting, and, in case of a special meeting, the purposes for which the meeting is called, shall be delivered, not less than ten (10) nor more than fifty (50) days before the date of the meeting (either personally, e-mail, facsimile or by mail), by or at the direction of the Chair of the Board or the Secretary to each Member entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. In order that Members may vote by mail, each notice of ineeting shall include a r... 7 ballot containing each issue to be voted at that meeting and instructions as to the date by which such ballot must be postmarked in order for the vote to be counted. (b) Whenever notice is required in this Section 4.8 of Article N, a waiver thereof in writing signed by the Member, whether before, at, or after the time stated therein, shall be equivalent to such notice. By attending a meeting, a Member waives objections to lack of notice or defective notice of such meeting unless the Member, at the beginning of the meeting, objects to the holding of the meeting or the transacting of business at the meeting. Further, a Member waives objection to consideration at such meeting of a particular matter not within the purpose or purposes described in the meeting notice unless the Member objects to considering the matter when it is presented. 4.9 uorum. A quorum for the election of Directors, and conducting normal business at all meetings of the Members shall be twenty-five percent of the Members present in person or voting by mail. 4.10 Informal Action by Members. Any action required to be taken at a meeting of the Members, or any other action which may be taken at a meeting of the Members, may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, shall be signed by all of the Members with respect to the subject matter thereof. Such consent or consents shall have the same force and effect as a unanimous vote of the Members. ARTICLE V. Funding "'�" 5.1 Generallv. Funding of the corporation shall be by member political subdivisions through the assessment of dues or through an aggregation fee charged per kilowatt-hour, or a combination of both as determined appropriate by the Board of Directors. 5.2 Initial Membership Fee. The initial membership fee shall be based upon %z of 1% of the total annual electric bill of the last full year of billing information available prior to membership application. Such fee shall not exceed $14,000. The initial fee will be credited against future administrative fees. It is permissible for political subdivisions to pay the fee prior to formally joining the corporation and be credited with payment of the fee after a resolution approving the articles of incorporation and by-laws is passed by the political subdivision. 5.3 Board Authority. The Board shall have the authority to establish membership dues, an aggregation fee, or both, to be applicable to all Members of the Corporation. The Board may amend such dues and fees at its discretion. The Board shall have the authority to establish appropriate penalties that may be assessed against a Member for failure to pay the dues, aggregation fee, or both, established by the Board. �. 8 _ � �,�� .�� w � . ,�..,_._. , .. ,��.,.� �,.H.�� . �v,. � � 5.4 Statements. Membership fees will be billed annually; statements for other fees and expenses will be provided monthly as needed. Due dates for fees and expenses will be determined by the Board. 5.5 Books and Records. All Members of the corporation will have access to the books and records of the corporation, including financial statements and budgets; however, the Board of Directors may adopt policies that provide reasonable protection against the unnecessary disclosure of information to individual employees. ARTICLE VI. Indemnification 6.1 Liabilitv. A Director, officer, employee or agent of the Corporation who performs his or her duties in good faith, in a manner he or she reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances, shall not have any liability by reason of being or having been a Director, officer, employee or agent of the Corporation and shall not have any liability for any action taken by any employee, agent or independent contractor selected with reasonable care, or for any loss incurred through the investment of or failure to invest monies of the Corporation or any Trust Account. No Director, officer, employee or agent shall be liable for any action taken or omitted by another Director, officer, employee or agent. 6.2 INDEMNIFICATION. EACH PERSON WHO AT ANY TIME SHALL SERVE, OR SHALL HAVE SERVED, AS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF THE CORPORATION, OR ANY PERSON WHO, WHILE A DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF THE CORPORATION, IS OR WAS SERVING AT ITS REQUEST AS A DIRECTOR, OFFICER, PARTNER, VENTURER, PROPRIETOR, TRUSTEE, EMPLOYEE, AGENT OR SIMILAR FUNCTIONARY OF ANOTHER FOREIGN OR DOMESTIC CORPORATION, PARTNERSHIP, JOINT VENTURE, SOLE PROPRIETORSHIP, TRUST EMPLOYEE BENEFIT PLAN OR OTAER ENTERPRISE, SHALL BE ENTITLED TO INDEMNIFICATION AS, AND TO THE FULLEST EXTENT, PERMITTED BY ARTICLE 1396 SECTION 2.22A OF THE TEXAS NON PROFIT CORPORATION ACT OR ANY SUCCESSOR STATUTORY PROVISION, AS FROM TIME TO TIME AMENDED, SUCH ARTICLE OR SUCCESSOR PROVISION, AS SO AMENDED, BEING INCORPORATED IN FULL IN THESE BYLAWS BY REFERENCE. THE FOREGOING RIGHT OF INDEMNIFICATION SHALL NOT BE DEEMED EXCLUSIVE OF ANY OTHER RIGHTS TO WHICH THOSE TO BE INDEMNIFIED MAY BE ENTITLED AS A MATTER OF LAW OR UNDER ANY AGREEMENT, VOTE OF DISINTERESTED DIRECTORS, OR OTHER ARRANGEMENT. IT IS EXPRESSLY ACKNOWLEDGED THAT THE INDEMNIFICATION PROVIDED IN THIS ARTICLE COULD INVOLVE INDEMNIFICATION FOR NEGLIGENCE OR UNDER THEORIES OF STRICT LIABILITY. ,._ 9 �:. 6.3 Advance Payment. The right to indemnification conferred in this Article VI shall include the right to be paid in advance or reimbursed by the Corporation the reasonable expenses incurred by a person of the type entitled to be indemnified under Section 2 who was, is or is threatened to be made a named defendant or respondent in a proceeding in advance of the final disposition of the proceeding and without any determination as the person's ultimate entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such person in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of a written affirmation by such Director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification under this Article VI and a written undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under this Article VI or otherwise. 6.4 A�pearance as a Witness. Notwithstanding any other provision of this Article VI, the Corporation may pay or reimburse expenses incurred by a Director or officer in connection with his or her appearance as a witness or other participation in a proceeding involving the Corporation or its business at a time when he or she is not a named defendant or respondent in the proceeding. 6.5 Non-exclusivitv of Rights• The right to indemnification and the advancement and payment of expenses conferred in this Article VI shall not be exclusive of any other right which a Director or officer or other person indemnified pursuant to this Article VI may - have ar hereafter acquire under any law (common or statutory), provision of the Articles of Incorporation of the Corporation or these Bylaws, agreement, vote of inembers or disinterested Directors or otherwise. 6.6 Savin�s Clause. If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and hold harmless each Director, officer or any other person indemnified pursuant to this Article VI as to costs, charges and expenses (including attorneys' fees), judgments, fines and in amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, to the full extent permitted by any applicable portion of this Article VI that shall not have been invalidated and to the fullest extent permitted by applicable law. ARTICLE VII. Code Of Conduct 7.1 Policy and Purposes. (a) It is the policy of the Corporation that Directors and officers conduct themselves in a manner consistent with sound business and ethical practices; that the public interest always be considered in conducting corporate business; that the appearance of impropriety be avoided to ensure and maintain public confidence in the Corporation; and that the Board establish policies to control and manage the affairs of the Corporation fairly, impartially, and without discrimination. � 10 x ..�.�:,.� w: , (b) This Code of Ethics has been adopted as part of the Corporation's Bylaws for the following purposes: (a) to encourage high ethical standards in official conduct by Directors and corporate officers; and (b) to establish guidelines for such ethical standards of conduct. 7.2 Conflicts of Interest. (a) Except as provided in subsection (c), a Director or officer is prohibited from participating in a vote, decision, or award of a contract involving a business entity or real property in which the Director or the officer has a substantial interest, if it is foreseeable that the business entity or real property will be economically benefitted by the action. A person has a substantial interest in a business (i) if his or her ownership interest is ten percent or more of the voting stock or shares of the business entity or ownership of$15,000 or more of the fair market value of the business entity, or (ii) if the business entity provides more than ten percent of the person's gross income. A person has a substantial interest in real property if the interest is an equitable or legal ownership with a fair market value of$2,500 or more. An interest of a person related in the first degree by affinity (marriage relationship) or consanguinity (blood relationship) to a Director or officer is considered a substantial interest. (b) If a Director or a person related to a Director in the first degree by affinity or the first degree by consanguinity has a substantial interest in a business entity or real property that would be pecuniarily affected by any official action taken by the Board, such Director, before a vote or decision on the matter, shall file an affidavit stating the nature and extent of the interest. The affidavit shall be filed with the Secretary of the Board. (c) A Director who has a substantial interest in a business entity that will receive a pecuniary benefit from an action of the Board may vote on that action if a majority of the Board has a similar interest in the same action or if all other similar business entities in the Corporation will receive a similar pecuniary benefit. (d) An employee of a public entity may serve on the Board. It is specifically recognized that as an official or employee of a public entity, that person's primary loyalty is to the political subdivision that employs them. It shall not be a conflict of interest for said Board member to express opinions or vote in a manner that reflects the self-interest of the public entity that the Board member represents. 7.3 Acceptance of Gifts. No Director or officer shall accept any benefit as consideration for any decision, opinion, recommendation, vote or other exercise of discretion in carrying out official acts for the Corporation. No Director or officer shall solicit, accept, or agree to accept any benefit from a person known to be interested in or likely to become interested in any contract, purchase, payment, claim or transaction involving the exercise of the Director's or officer's discretion. As used here, a benefit does not include: �._„ 11 (a) a fee prescribed by law to be received by a Director or officer or any other benefit to which the Director or officer is lawfully entitled or for which he or she gives legitimate consideration in a capacity other than as a Director or officer, (b) a gift or other benefit conferred on account of kinship or a personal, professional. or business relationship independent of the official status of the Director or officer; (c) an honorarium in consideration for legitimate services rendered above and beyond official duties and responsibilities if: (1) not more than one honorarium is received from the same person in a calendar year; (2) not more than one honorarium is received for the same service; and (3) the value of the honorarium does not exceed $50 exclusive of reimbursement for travel, food, and lodging expenses incurred by the Director or officer in performance of the services; (d) a benefit consisting of food, lodging, transportation, or entertainment accepted asa guest if reported as may be required by law. 7.4 Briberv. A Director or officer shall not intentionally or knowingly offer, confer or agree to confer on another, or solicit, accept, or agree to accept from another: �° (a) any benefit as consideration for the Director's or officer's decision, opinion, recommendation, vote, or other exercise of discretion as a Director or officer; (b) any benefit as consideration for the Director or officer's decision, vote, recommendation, or other exercise of official discretion in a judicial or administrative proceeding; or (c) any benefit as consideration for a violation of duty imposed by law on the Director or officer. 7.5 Nepotism. No Director or officer shall appoint, or vote for, or confirm the appointment to any office, position, clerkship, employment or duty, of an person related within the second degree by affinity or within the third degree of consanguinity to the Director or officer so appointing, voting or confirming, or to any other Director or officer. This provision shall not prevent the appointment, voting for, or confirmation of any person who shall have been continuously employed in any such office, position, clerkship, employment or duty at least thirty (30) days prior to the appointment of the Director or officer so appointing or voting. 12 �_ �.,� ��;��..� � �� _ n � : _ .�.��..��,�.�.,,� . _- ARTICLE VIII. Miscellaneous Provisions �° 8.1 Fiscal Year. The fiscal year for the Corporation shall begin January 1 and end December 31. This fiscal year shall also be refened to as the Corporation Year. 8.2 Seal. The seal of the Corporation shall be such as from time to time may be approved by the Board. 8.3 Gender. References herein to the masculine gender shall also refer to the feminine in all appropriate cases, and vice versa. 8.4 Appropriations and Grants. The Corporation shall have the power to request and accept any appropriation, grant, contribution, donation, or other form of aid from the federal government, the State, any political subdivision, or municipality in the State, or from any other source. 8.5 Amendments. These bylaws may be amended by the Board after notice of the proposed amendments has been mailed to each Director of the Board at least ten (10) days prior to the day of the meeting to consider same. The Board shall recommend such changes as it deems necessary or desirable from time to time. Any amended Bylaws shall be signed by the Chair and attested to by the Secretary. A copy of any amendment shall be mailed immediately after its adoption to each Member. 8.6 Conflicts of Interest. Each Director, committee member and subcommittee member shall have an affirmative duty to disclose to the Board of Directors, the committee or subcommittee (as the case may be) any actual or potential conflicts of interest between such Director, committee member or subcommittee member, and the Corporation where, and to the extent that, such conflicts or potential conflicts directly or indirectly affect any matter that comes before the Board of Directors, or any committee or subcommittee. It shall not be a conflict of interest for a Director, committee member or subcommittee member to express opinions or vote the interests of the political subdivision Member that employs that individual. �{- 13 � �� RESOLUTION NO. -�_ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS, APPROVING THE ARTICLES OF INCORPORATION AND BYLAWS OF CITIES AGGREGATION POWER PROJECT, INC., A POLITICAL SUBDIVISION CORPORATION; ACCEPTING MEMBERSHIP IN SAID CORPORATION; APPOINTING A REPRESENTATIVE TO SERVE ON BEHALF OF THE CITY OF GRAPEVINE; APPROVING PAYMENT OF AN INITIAL MEMBERSHIP FEE AND PROVIDING AN EFFECTIVE DATE WHEREAS, Chapter 304 of the Texas Local Government Code, entitled Energy Aggregation Measures for Local Governments, allows political subdivisions to form a political subdivision corporation to act as an agent to negotiate the purchase of electricity, or to likewise aid or act on behalf of the political subdivisions for which the corporation is created, with respect to their own electricity use for their respective public facilities; and WHEREAS, Cities Aggregation Power Project, Inc. ("CAPP") is a political subdivision corporation organized under said Chapter; and � WHEREAS, more than one hundred cities and other political subdivisions have joined CAPP since the Texas electric retail market deregulated January, 2002; and WHEREAS, CAPP member cities and other political subdivisions work collaboratively with the assistance of legal and procurement experts hired by CAPP to negotiate lower cost, stable, reliable electric power; and WHEREAS, the negotiation for electricity by the corporation should result in lower, more stable electricity costs to the City of Grapevine; and WHEREAS, the City of Grapevine seeks to become a Member of CAPP; and WHEREAS, CAPP By-Laws require an initial membership fee of '/2 of 1% of the total annual electric bill of the last full year of billing information available prior to membership application. Such fee shall not exceed $14,000. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS: Section 1. That the recitals contained in the preamble of this resolution are determined to be true and correct and are hereby adopted as a part of this resolution. Section 2. That the Articles of Incorporation and Bylaws of CAPP, a political ,... subdivision corporation, attached hereto and incorporated herein for all purposes as Exhibits "A" and "B" respectively, are hereby approved. Section 3. That the City of Grapevine accepts Membership in CAPP. Section 4. That the City of Grapevine approves payment of an initial fee assessment equivalent to '/z of 1% of the total annual electric bill of the City of Grapevine for the last full year of billing information available prior to membership application. Such fee shall not exceed $14,000. Section 5. That the City of Grapevine hereby appoints the Director of Public Works, or his designee to serve as the City of Grapevine's representative to the corporation and to act on the City of Grapevine's behalf. Section 6. That all resolutions and parts thereof in conflict herewith are hereby expressly repealed insofar as they conflict herewith. Section 7. That if any one or more sections or clauses of this resolution is adjudged to be unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining provisions of this resolution and the remaining provisions of the resolution shall be interpreted as if the offending section or clause never existed. Section 8. That a copy of this resolution shall be sent to Jay Doegey, CAPP Board Chair, c/o City of Arlington City Attorney's Office, MS 63-0300, P.O. Box 90231, Arlington, Texas 76004-3231, along with the initial assessment fee. Section 9. That this resolution shall take effect from and after the date of its passage. PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS on this the 5th day of August, 2008. APPROVED: ��.:��. RES. NO. 2 ATTEST: --��.. APPROVED AS TO FORM: .x�� RES. NO. 3