Topic
Consider and take action on a resolution authorizing an agreement for the purchase of electric energy from a retail electric provider for a term of up to 60 months, based on the best value available to the City of League City, Texas (Director of Finance)
Background
The City’s current five-year electricity supply contract with TXU expires in November 2028. The current contract provides a fixed electricity supply rate of $0.0334 per kWh, with an estimated annual supply cost of approximately $3.5 million. The Tradition Energy analysis identifies the City’s current estimated annual electricity usage at approximately 33.9 million kWh across 265 electric accounts.
The electricity supply rate does not include transmission and distribution service provider (TDSP) charges assessed by CenterPoint Energy and Texas-New Mexico Power. These charges are regulated through tariffs approved by the Public Utility Commission and are passed through to the City regardless of the retail electric provider selected.
In preparation for the expiration of the current contract, the City, through Tradition Energy, has evaluated pricing from multiple retail electric providers for contract terms beginning in November 2028. The August 2026 pricing analysis includes terms ranging from 12 to 120 months. For a 60-month term covering November 2028 through November 2033, pricing included $0.07271 per kWh from Reliant and $0.06842 per kWh from bp Retail, with bp Retail providing the lowest 60-month rate reflected in the analysis.
Based on the City’s projected usage, the bp Retail 60-month pricing would result in an estimated electricity supply cost of approximately $23.43 million over five years, or $4.69 million annually, excluding regulated utility charges and taxes.
Electricity is a volatile commodity, and market pricing can change throughout the day. Because pricing available on the date of the Council meeting may differ from the indicative pricing presented in the attached analysis, staff recommends authorizing the City Manager to execute an electricity supply agreement for a term of up to 60 months at the best available rate and overall value to the City.
The purchase of electricity is exempt from the City’s normal competitive purchasing requirements under Texas Government Code 252.022(a)(15).
Attachments:
1. Proposed Resolution
2. Renewal Analysis
FUNDING
{X} Funds are available from operating department’s electricity accounts. Contractual rate increases in future years will be included annually in the proposed budget.
STRATEGIC PLANNING
{x} NOT APPLICABLE