RES 2005-35TOWN OF TROPHY CLUB, TEXAS
RESOLUTION NO. 2005 - 35
A RESOLUTION OF THE TOWN OF TROPHY CLUB,
TEXAS, APPROVING THE CITIES AGGREGATION
POWER PROJECT'S ("CAPP's") LETTER OF INTENT TO
ENTER INTO NEGOTIATIONS FOR A CAPACITY
CONTRACT WITH THE OWNER OF COAL (INCLUDING
TEXAS LIGNITE) GENERATION TO SUPPLY THE BASE
LOAD ELECTRIC POWER NEEDS (APPROXIMATELY
55%-60% OF TOTAL ENERGY NEEDS) FOR CAPP
MEMBERS OVER A TEN-YEAR (10-YEAR) PERIOD
WHEREAS, the Town of Trophy Club ("Town") is a member of Cities Aggregation
Power Project, Inc. ("CAPP"), a nonprofit political subdivision corporation dedicated to securing
electric power for its more than 80 members in the competitive retail market; and
WHEREAS, said membership has resulted in average annual energy savings over 20%
off of the Public Utility Commission ("PUC") approved price to beat; and
WHEREAS, all retail power bids from various Retail Electric Providers (REPs) in the
deregulated electric retail market have been directly linked to natural gas futures prices; and
WHEREAS, natural gas prices have been extremely volatile and have caused substantial
increases in the price of electricity paid by the Town; and
WHEREAS, CAPP is in the process of negotiating a 10-year capacity supply contract for
the Town's base load electric needs (approximately 55% of the Town's total electric energy
needs) for a fixed price that should provide considerable economic benefit and greater price
stability in comparison to traditional energy contracts with REPs; and
WHEREAS, coal-fired capacity in Texas available to retail load is scarce and the
situation giving rise to the Letter of Intent reflects a unique opportunity for CAPP members to
increase savings and reduce electric price volatility; and
WHEREAS, the owner of the coal capacity needs a letter of intent by the end of
September 2005 and desires completion of a contract by December 31,2005.
BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF TROPHY
CLUB, TEXAS:
Section I. The efforts of the CAPP Board to secure coal capacity for the Town of
Trophy Club's base load electric capacity needs for a fixed price for a 10-year period
commencing in the 4th quarter of 2007 are hereby ratified.
Section 2. The Town of Trophy Club endorses the CAPP Board committing to a
letter of intent to contract for coal capacity with the understanding that:
1. CAPP will provide proof of economic benefit of coal capacity and energy
from a coal and gas mix in comparison to exclusive reliance on energy
priced on 100% gas generation coupled with a conservative forecast of
natural gas prices;
2. The Town of Trophy Club will have an opportunity to review and approve
or reject a 10-year contractual agreement to supply all the city's power
needs; and
3. CAPP will issue bonds to secure funding of amounts necessary to prepay
the capacity portion of the coal supply contract.
PASSED AND APPROVED by the Town Council of the Town of Trophy Club, Texas,
this 7" day of November, 2005.
Nick Sanders, Mayor
Town of Trophy Club
ATTEST:
Lisa ~amse~, Town secretby
Town of Trophy Club, Texas
APPROVED AS TO FORM:
Town Attorney
Town of Trophy Club, Texas