HomeMy WebLinkAboutIR 9008INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9008
The purpose of this report is to inform the City Council of a new electricity contract awarded to TXU Energy
that will commence in June 2009.
For almost four years, the City has enjoyed relatively low prices for electricity to City -owned facilities
through our contract with the Texas General Land Office (GLO), which expires in June 2009.
On July 10, 2001 (M &C G- 13298), the City Council authorized the City Manager to execute contracts for the
purchase of electricity with terms not to exceed 24 months. Subsequently, on April 25, 2005 (M &C G-
20675), the City Council authorized the City Manager to execute future contracts for terms not to exceed 48
months. This enables the City to take advantage of the rapid market changes that affect the price of
electricity.
Last Wednesday, January 7, 2009, the City entered into a new contract with TXU Energy to provide
electricity to the City for 24 months from June 2009 through May 2011. Based on staff analysis, TXU
nergy was chosen over other providers because of price, term, and previous experience with the City.
Due to a number of factors including the current economic conditions, prices for electricity have dropped
dramatically over the past six months. As recently as last July, costs for electricity were expected to increase
$11 million per year when the GLO contract expires. The contract awarded to TXU Energy is at an overall
price that is slightly lower than the current price on the GLO contract, providing budget certainty for two
more years. Annual electricity expenditures with the new contract will continue to be approximately $25
million.
The new contract will take effect for approximately 1,350 meters and accounts, upon completion of the
billing cycle in June 2009. The City's Utility Manager, Danny Reed, will work with TXU Energy to make
the contract transition as smooth as possible.
Please feel free to contact Danny Reed (ext. 6145) if you have questions regarding the new electricity
contract.
Dais A. Fisseler, P.E.
City Manager
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS