Board Agenda - March 20, 2007

l. Second amendment to electric energy sales agreement

Presenter: Richard Matkin

Purpose: A - Request decision - closure required

Time: No time limit

Description:

The District is currently under contract with the Texas General Land Office to purchase all electricity requirements for our facilities. This contract is in effect through May 31, 2009.

Electricity prices in the deregulated market are extremely volatile and sensitive to movements in the prices of natural gas. As a result, the price of electricity can fluctuate from day to day. While no one can predict whether electricity prices will be higher or lower, the Board authorized the Superintendent, or his designee, to sign a contract that allows for the flexibility to immediately lock into a beneficial electricity price, when the opportunity arises.

The Administration took advantage of this flexibility by blending prices and extending the contract two years, through May 31, 2011. In doing so, the District saves an additional $588,000 per year over the first amended contract. This is the second time the District has blended and extended for a total savings of $1,038,000 per year.

Recommendation:

The Administration recommends the Board ratifies the extension of the electricity inter-agency agreement with the Texas General Land Office, to run through May 31, 2011.

Business Impact:

$588,000 Savings - M&O Budget

Summary:

Appendix:

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