Ordinance 1st Reading - Lubbock Power & Light: Consider an ordinance re-creating the West Texas Municipal Power Agency (“Agency”), through passage of this ordinance concurrently with the cities of Brownfield, Floydada, and Tulia, being the other member public entities of the Agency, by deletion of the membership of the City of Lubbock as a member public entity of the Agency; finding that no Agency obligation will be impaired by the re-creation of the Agency in the manner provided by this ordinance; providing for an effective date; defining the boundaries of the re-created Agency; providing for a board of directors; and designating the number, place, terms and manner of appointment of directors.
|Structure of WTMPA
The West Texas Municipal Power Agency (“WTMPA”) is a municipal power agency created under the authority of Chapter 163 of the Texas Utilities Code. It is presently comprised of the member public entities of (i) the City of Lubbock, Texas; (ii) the City of Brownfield, Texas; (iii) the City of Floydada, Texas; and (iv) the City of Tulia, Texas.
WTMPA is governed by 8 Directors, each member public entity appointing 2 Directors. Except as provided below, 5 Directors constitute a quorum, and an affirmative vote of the majority of the Directors present is required to approve an action.
Six Directors shall constitute a quorum for the adoption of (i) the operating budget, or amendment thereto; (ii) the approval of a capital project, or a preliminary or final project budget, or amendment thereto; (iii) the approval of a contract for the sale or exchange of electric energy or other property of WTMPA which has a value in excess of $100,000 in any one fiscal year; and (iv) an amendment to the rules and regulations of WTMPA.
Even though six Directors comprise a quorum for such matters, the affirmative vote of at least six Directors, representing a “Majority of Interest” of the parties, is required for approval. Because of the definition of “Majority of Interest” (in the Power Sales Contract between the member cities and WTMPA), Lubbock enjoys the ability to solely prevent such action (a veto type power).
History of WTMPA
A record review indicates that WTMPA was established by concurrent ordinances of the member public entities, the City of Lubbock Ordinance No. 8519 adopted on second reading dated December 15, 1983, and was comprised of the Texas cities of Brownfield, Crosbyton, Floydada, Lubbock, Plains, and Tulia.
Apparently, there was a publishing error as to the City of Plains’ intent to adopt the ordinance creating WTMPA. As a result, the concurrent ordinances of the remaining cities, the City of Lubbock Ordinance No. 8909 adopted on March 27, 1986 (apparently on one reading as an emergency ordinance), were amended to exclude the City of Plains as a member public entity of WTMPA.
Subsequent to the amendments to the concurrent ordinances to delete reference to the City of Plains, the City of Crosbyton sold its electric light and power system. As a result, by concurrent ordinances, the City of Lubbock Ordinance No. 9083 adopted on second reading dated June 25, 1987, WTMPA was re-created to delete the City of Crosbyton as a member public entity of WTMPA.
As a result of such actions, the present member public entities of WTMPA are Brownfield, Floydada, Lubbock, and Tulia.
Activities of WTMPA
WTMPA is or was the contract purchaser of power under (i) a total requirements power purchase agreement with Southwestern Public Service Company; and (ii) a wind energy power purchase agreement with Elk City Wind II, LLC. The total requirements power purchase contract expired at the end of May of 2019. The wind energy power purchase agreement commences on June 1, 2019 and expires on May 31, 2032.
The wind energy power purchase agreement is expressly assignable from WTMPA to its member cities. See discussion, below.
Lubbock’s Future in WTMPA
As stated above, the total requirements power purchase agreement expired at the end of May of 2019. As concerns the wind energy power purchase agreement, several years ago, the City Council directed LP&L staff to not take any actions that would negatively impact the ability of the City of Lubbock to be deleted as a member of WTMPA in the future. The opportunity arose last year to seek the express ability for WTMPA to assign that agreement to member cities of WTMPA, through an amendment of that agreement with Elk City Wind II. After negotiations, Elk City Wind II agreed to that request. LP&L staff and WTMPA officials have discussed this possibility and have agreed that, upon request, Lubbock should be assigned eighty five percent (85%) of the wind energy power purchase agreement, and presently contemplates such Assignment (herein so called) to be effective September 30, 2019. The Assignment will be considered for approval by the Electric Utility Board at its meeting of September 17, 2019.
As a result, there are no obligations that would impede the deletion of Lubbock from WTMPA. Further, LP&L staff believes that there are no operational or business advantages to the electric utility that would be gained by Lubbock remaining a member of WTMPA.
Concurrent ordinances enacted by all members of WTMPA are required by law to complete the deletion of Lubbock as a member of WTMPA. The concurrent ordinance presented to the City Council for consideration provides (i) for the deletion of Lubbock as a member of WTMPA; and (ii) for several other matters that pertain to the re-creation of the “new” WTMPA (i.e., without Lubbock as a member) and organization of the re-created WTMPA, which are not applicable to Lubbock. The concurrent ordinance is effective October 1, 2019. It is contemplated that the cities of Brownfield, Floydada and Tulia will also enact this concurrent ordinance at their meetings in September of 2019.
The Electric Utility Board, pursuant to Resolution No. EUB 2019-R0031, resolved that the City Council should take actions necessary to delete Lubbock as a member of WTMPA.