HomeMy WebLinkAboutIR 8494 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8494
. T�$ Date: May 20, 2003
t To the Mayor and Members of the City Council
8 Page 1 of 1
f � SUBJECT: Electricity Contract with TXU Energy
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The current contract with TXU Energy to provide electricity to City facilities is scheduled to expire at the end of this
month. In accordance with M&C G-13298, approved by the City Council on July 10, 2001, the City Manager is
authorized to execute contracts for the purchase of electricity with terms not to exceed 24 months. On May 7,2003,the
City of Fort Worth entered into a new contract with TXU Energy to continue to provide electricity to City facilities.
TXU Energy was chosen over other providers based on a variety of factors, including price, financial stability,
established presence in the market,and ease of transition to the new contract.
Structure of Contract
Under the new contract,TXU Energy will continue to provide electricity through Oncor, the existing Transmission and
Distribution Service Provider (TDSP), for a 24-month period beginning June 2003. The City will pay TXU Energy a
fixed rate per kilowatt-hour(kWh) for most of its electricity usage. Village Creek Wastewater Treatment Plant will be
placed on separate one-year contract due to the unique nature of its usage patterns and electricity generation
capabilities. Streetlights will continue to be paid at the Price-To-Beat (PTB) rate, which was created by the Public
Utility Commission (PUC) during the industry deregulation process as an alternative for certain types of electricity
accounts.
Implementation
The new contract will take effect for each of the City's approximately 1,200 meters and accounts upon completion of
the billing cycle in June 2003. City staff will work with TXU Energy to make the contract transition as smooth as
possible.
Estimated Savings
Since electric deregulation began, the City has saved over $4.4 million compared to regulated rates. Electricity prices
under the new-contract are 9% higher than they are under the expiring contract, but regulated prices have increased
16.5%. The new,prices are 21% less than the regulated rates, saving the City an estimated $3.2 million per year in
electricity costs. Further, timing of the contract execution appears to have been fortuitous as market energy prices
increased approximately 20% shortly after the contract was signed.
Please feel free to contact me if you have any questions regarding the new electricity contract.
Gary W. Jackson
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS