From
Mark Dempsey
Title
Resolution authorizing the City Manager to execute a Professional Service Agreement with the Texas Coalition for Affordable Power ("TCAP") and a Commercial Electric Service Agreement with Gexa Energy, and providing an effective date
Presenter
Mark Dempsey - Deputy City Attorney
Recommended Action
Approve
Analysis
The City is a member of the Texas Coalition for Affordable Power (TCAP), which is made up of over 160 Texas cities that aggregate their electric power needs in order to use the increased size of their requirements to obtain better pricing from suppliers for its members. The City is currently in the third year of a five-year fixed price contract for its electric power. The contract expires on December 31, 2022.
TCAP has traditionally gone to the market and negotiated with power suppliers to get the best deal possible for its members, after which each individual city has signed the same power supply contract with the supplier for a fixed number of years. However, TCAP itself has not actually made any power purchases on behalf of the member cities. It has merely arranged the deal.
While TCAP will continue to provide an option for a fixed price contract, it is proposing a new approach to purchasing power on behalf of cities after the current contract expires that it believes will provide lower rates to its members. If the City elects to participate, it will need to sign a professional services agreement with TCAP that actually gives it the authority to make power purchases for the City. It will also require the City to execute a Commercial Electric Services Agreement with the power supplier - Gexa Energy.
TCAP refers to the new purchasing approach as the Strategic Hedging Program ("SHP"), under which it will buy future supplies on or near a monthly basis, thereby eliminating the risk premiums suppliers add to long term fixed rate electric contracts to account for future market uncertainty. In short, the risk premium...
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