RES 2005-05TOWN OF TROPHY CLUB,TEXAS
RESOLUTION NO.2005-05
A RESOLUTION OF THE TOWN OF TROPHY CLUB TEXAS,
ENDORSING CERT AIN LEGISLA TIVE CHANGES TO S.B.7
SUPPORTED BY CITIES AGGREGATION POWER PROJECT,INC.
"CAPP";PROVIDING THAT A COpy OF THIS RESOLUTION BE SENT
TO ELECTED LAWMAKERS IN THE LEGISLATURE WHO
REPRESENT THE TOWNS INTERESTS;AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS,the Town of Trophy Club,Texas (Town)has historically been active in
the process of regulation of electric utilities;and
WHEREAS,the Town is a member of Cities Aggregation Power Project,Inc.(CAPP)
and,as such,made a decision to join with more than 78 other cities to switch its municipal
electric accounts from its incumbent provider to a retail electric provider;and
WHEREAS,CAPP's experience with the deregulated market and contracts with several
different retail electric providers has indicated that the Texas electric retail market has failed to
develop into a truly competitive market as envisioned by Senate Bill 7 (SB7)in part because
congestion zones within the ERCOT market have allowed certain market players to control
enough generation capacity within a given zone to exercise market power to the detriment of
customers and non-affiliated retail electric providers;and
WHEREAS,retail electric price competition has not successfully reached residential
customers in Texas communities with populations less than 40,000;and
WHEREAS,the formula established by SB7 to determine the amount to be paid to
cities for electric franchise fees is based upon information from 1998 and fails to account for any
increases to keep up with inflation,impacting municipalities'revenue and budgets;and
WHEREAS,the Public Utility Commission of Texas is considering implementing a
nodal market design in ERCOT that would,as currently contemplated,directly assign congestion
costs in a manner that will create winners and losers among geographic areas of the state and
harm economic development in areas receiving congestion cost surcharges;and
WHEREAS,the Town endorses efforts proposed by CAPP to modify the electric
deregulation legislation to improve competition,implement the original intent of S.B.7 and
reduce costs to the Town and its residents.
NOW THEREFORE,BE IT RESOLVED BY THE TOWN COUNCIL OF THE
TOWN OF TROPHY CLUB,TEXAS:
Section 1.That the following legislative reforms endorsed by CAPP to limit market
power,prevent cost shifting between geographic areas of the state,create effective citizen
aggregation and permit annual adjustments to municipal franchise fees be supported by the
Town:
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.Require that ERCOT function as one zone or limit the ownership and control of
generation within functional markets (ERCOT zones)and require further
Commission action to mitigate market control.
.Authorize citizen aggregation projects that will permit cities and towns with
populations less than 40,000 to aggregate the load of all of their residents that have
not specifically asked to be excluded from the aggregation project.Changing citizen
aggregation from "opt-in"to "opt-out"will enhance the opportunities for rural
residential customers to benefit from deregulation and benefit the entire state by
increasing competition.
.Tie escalation of electric franchise fee amounts to the Consumer Price Index by
permitting municipalities to annually adjust franchise fee amounts by one-half of the
annual change to the consumer price index,mirroring a provision already in law for
telecommunications franchise fees.
.Oppose any cost allocation system of nodal pricing costs that would directly assign
congestion costs in a manner that is detrimental to economic development.CAPP
and STAP question whether ERCOT is capable of handling the massive operational
change that creating a nodal market would require and whether the projected benefits
are worth the approximately $500 million up-front costs to implement.However,if
nodal pricing is instituted then congestion costs should be spread to the entire
ERCOT service area rather than increasing electric costs for customers in certain
regions of Texas.
Section 2.That a copy of the resolution shall be sent to the elected lawmakers
representing the Town's interests in the Texas House and Senate and to the Chairman and legalcounselofCAPP.
Section 3.That this Resolution shall take effect from and after its date of passage inaccordancewiththelaw.
thPASSED and APPROVED by the Town Council of the ~wnyfTh;~;clb,Texas on
this7 day of February,2005.,-
...//_~.--O~TROj:>.{.l:::~~~~~;;.'v
~'/0 Mayor
f.?i C./Town of Trophy Club,Texas
~T~
\J/h4?
Town Secr4u-y,
Town of Trophy Club,Texas
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APPROVED AS TO FORM:
~cDOd~
Town Attorney,
Town of Trophy Club,Texas
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