Topic:
Consider and take action on a resolution authorizing the City Manager to execute an agreement for the purchase of electric energy from a retail energy provider at the best value for the City of League City, Texas (Assistant City Manager)
Background:
Approval of this resolution will authorize the City Manager to execute a contract for the purchase of electricity based upon the best offer received under a competitive solicitation. The City's current five-year contract for electricity with TXU expires November 2022. The current contract rate is $0.0384/kWh. Under Texas Government Code 252.022 (15) the City is exempt from normal competitive purchasing requirements for the purchase of electricity.
Based on continual analysis of the energy markets by Tradition Energy, it is found that forward prices for 2022 and beyond should be secured today, while energy market rates are at a historical low. Natural gas prices have hit 15-year lows recently, creating a situation to secure future terms now. While these prices have been driven low due to an imbalance of excess supply vs. demand, the long-term concern is that demand will catch up to supply and then create an imbalance in the other direction. This increase in demand is expected to also increase the costs for electricity in the future. Therefore, it appears advantageous to secure future electricity prices now during this climate.
Based on recent analysis done by Tradition Energy, the expectation is that the City could lock in future rates now that could save the City 5% - 10% starting November 2022 through November 2027, providing an annual average savings of approximately $125,000 per year for the proposed five-year term. Taking action now will ensure lower future costs for the City’s electricity supply. This item is to enable the City to accept competitive offers for a new electricity contract and to authorize the City Manager to execute a contract that will secure the best price for the City.
The curren...
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