Item 4I CITY OF
SOUTHLAKE
MEMORANDUM
(December 30, 2015)
To: Shana Yelverton, City Manager
From: Ben Thatcher, Assistant City Manager
Subject: Item 41: TXU Energy Contract
Action
Requested: Approve a contract with TXU Energy to provide electric
services for the term of June 2018 to November 2026.
Background
Information: The City has maintained a fixed rate agreement to purchase
electricity from TXU Energy since 2007 in its ONCOR
electric footprint, and has negotiated several new
agreements since then when rates have become favorable
to do so. The following agreements and subsequent rates
have been made with TXU.
• 2007 - $0.0805/kwh (100% traditional energy)
• 2011 - $0.0685/kwh (10% renewable energy)
• 2014 - $0.0498/kwh (25% renewable energy)
The current agreement is set to expire in May 2018. TXU
has invited the City to be a part of a new program created for
its more fiscally responsible customers that would allow the
City to purchase all of its ONCOR provided electricity from a
combination of wind and solar energy (both renewable
energy sources) at a lower rate, $0.04683/kwh, and for a
longer term than previously offered, 8 '/2 years.
The proposed contract would allow the City to secure a
reduced rate for electric services when the current contract
expires in May 2018. Taking action at this time will allow the
City to establish a lower fixed rate for future energy costs
while rates in the market are low. Electric rates have only
been this low twice before since deregulation of the Texas
electricity market occurred in 2002.
TXU Energy's proposal includes:
• $0.04683 per kilowatt hour rate, or lower (The final
rate will depend on the market rate at the time of
council action and should not vary much from the rate
above).
• 8 '/2 year term (to begin at the end of the current
agreement)
• An increase in power from renewable energy sources
from 25% to 100%
• An estimated savings of $150,000, or more, over the
term of the contract
• Option to acquire annual energy efficiency rebates of
$5,500 to be used on new buildings or upgrades to
existing buildings
City staff has been monitoring the market and talking with
our benchmark cities to compare rates. Until this point staff
has not seen a lower rate among other DFW municipalities.
Staff recommends entering into an agreement with TXU
Energy because their rate is the lowest to others that were
quoted and it includes an increase in the percentage of
renewable energy.
TXU Energy's ongoing level of customer service and
responsiveness to the City's needs has also been
appreciated. TXU has been a great partner outside of just
providing the City electricity. They also provide trees to the
City on an annual basis to beautify parks and open spaces,
and have recently offered to provide the City electric auto
charging stations where appropriate in public spaces.
Financial
Consideration: An estimated savings of approximately $150,000, or more,
over the 8 '/2 year term.
Strategic Link: The proposed contract update aligns with the City Strategy
Map under the Focus Area "Performance Management &
Service Delivery" and Corporate Objective "134 Provide high
quality services through sustainable business practices."
Citizen Input/
Board Review: N/A
Legal Review: The standard contract language has been reviewed
previously by the City Attorney.
Alternatives: Wait to establish a new contract with TXU Energy or another
retailer at the end of the May 2018 contract.
Supporting
Documents: Proposed Agreement
Staff
Recommendation: Council approval of the contract with TXU Energy to provide
electric services for the term of June 2018 to November
2026.
Staff Contact: Ben Thatcher, Assistant City Manager