Harlingen leaders opt to lock in energy price for city
HARLINGEN -- City commissioners on Wednesday approved a measure to allow the South Texas Aggregation Project to negotiate a five-year electricity supply contract to meet the city's needs.
STAP will negotiate the contract with Florida Power and Light Energy and Direct Energy for the period of Jan. 1, 2009, to Dec. 31, 2013.
STAP is a nonprofit political subdivision corporation dedicated to securing electric power for about 50 political subdivision members in the competitive retail market.
Commissioners said they do not want to contract for power under a different proposal that would lock in a rate for the next 24 years.
During pervious workshops with a representative from Cities Aggregation Power Project, Inc., a sister organization to STAP, commissioners said they do not want to take a gamble on the electricity market over a period that long.
FPL will provide the power supply and Direct Energy will provide the billing, administrative and other customer services for the next five years.
The city has been a member of STAP since about 2002, City Attorney Brendan Hall said.
Since then, Hall said that the price of electricity has nearly doubled and that the five-year contract is expected to help save hundreds of thousands of dollars.
CAPP general counsel Geoffrey Gay said last week that the price of electricity will continue to be directly correlated to the price of natural gas.
Hall said this contract will lock in a rate at less than 9 cents per kilowatt hour used, but the rate won't be fixed until about a week after contract negotiations with other STAP cities are finalized as well.
The fixed rate will help commissioners during budget planning for the next five years, Hall said.
The city spends about $3 million each year on its power supply for all city buildings and entities such as Valley International Airport and Harlingen WaterWorks System, Hall said.
Commissioners also approved funding contracts with the Harlingen Performing Arts Theatre, Rio Grande Valley Birding Festival and Harlingen Area Chamber of Commerce for use of the hotel/motel tax funds budgeted for fiscal year 2008-2009.
The HPAT will receive $21,000, the RGV Birding Festival will receive $23,000 and the HACC will receive $488,000.
Commissioners also renewed fire protection service contracts with Combes, Primera and Palm Valley.
Under the approved contracts, Combes will pay $56,035, Primera will pay $61,033 and Palm Valley will pay $105,302 to Harlingen for fire services.
The contract rates are 0.1 percent of each community's appraised taxable value.
