Title
GRU Membership in The Energy Authority (B)
Explanation
In June 1998, the City Commission authorized the General Manager to execute a Resource Management Agreement with The Energy Authority (TEA). The issues presented and reasons discussed for making the recommendation to (see Attachment A) contract with TEA in June of 1998 are still valid today. Staff also indicated a mutual interest with TEA of exploring full membership. Membership in this context means the City would become part owner of TEA instead of having a contractual relationship.
Membership has several benefits. As discussed in the June, 1998 Commission agenda, the wholesale market has undergone much change in the last few years. Participation in the wholesale market has become more difficult, but at the same time it has become more important for the vitality of the utility to insure long term benefits to the City and its utility customers. Membership provides us with the opportunity to have a voice in the decision making and future direction of TEA. It allows your staff access to complete information about the business activities of TEA, so that we may take full advantage of the resources they provide. Membership also entitles us to utilize TEA's services at cost instead of paying a negotiated service charge. For example, for the period of June 1998 through October 1999, GRU paid TEA a total of $431,370 in fees under our contract. If GRU had been a member for the same period of time we would have paid $139,554 for a savings of $291,816. TEA has not renegotiated our contract fees to date, but staff expects TEA to raise its fees in the near future, at least to adjust for inflation.
Additionally, becoming a member will require us to make an initial contribution of $1 million in a working capital account. GRU's portion of income or expenses incurred by TEA will be deposited or deducted into or from this account and disbursements made to GRU accordingly.
To achieve the above benefit...
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