Archives > Carrollton Leader > News
Print
E-mail
Comment
Rate
RSS
Share
City considering an unusual electricity plan
By Senitra Horbrook, Staff writer
The Carrollton City Council is considering an unusual long-term electricity deal in the hopes of locking in low rates and hedging against steep future increases of natural gas prices.
That deal would require a 24-year contract with Luminant, negotiated by Cities Aggregation Power Project (CAPP), a non-profit organization that makes bulk electricity purchases on behalf of its member cities and local subdivisions. The agreement could potentially save Texas communities and taxpayers hundreds of millions of dollars.
“This is a very innovative approach,” said Bob Scott, Carrollton’s chief financial officer/assistant city manager.
“If you do the long-term deal, it’s a way to solidify your future and protect yourself,” Gay told the council.
Gay told the council that the price of power was about four cents per kilowatt hour (kwh) in 2002, before deregulation and since then the price has gone up steadily. Carrollton currently pays approximately 13.5 cents per kwh.
“Gas prices six weeks ago started plummeting,” Gay said. “We believe there is a short-term window to lock in these advantageous prices over the next five years around 8.5 cents kwh. That’s a good deal. The question is do you want a long-term good deal?”
After the presentation, council member Tim Hayden wanted to know the down sides of the deal.
The biggest disadvantage to the agreement is that the city would take on $9 million in debt capacity, according to Scott. Other disadvantages include the risk of default and lack of guarantee that CAPP may be around even 10 years from now and that natural gas prices could go down further, but the city would be locked into a contract.
The council agreed to discuss the plan further in another work session and will make a decision next month.
The following are comments from the readers.
In no way do they represent the view of Starlocalnews.com
In no way do they represent the view of Starlocalnews.com
You must register with a valid email to post comments.
Only your Member ID will be posted with the comments.
Only your Member ID will be posted with the comments.
Registered users sign in here:
Become a Registered User
- Return to: News «
- Home «
- Top of Page ^
