Doug,

Thanks for the update on the Staff/Council GP&L briefing. However, this is the same history lesson that GP&L staff has bren preaaching since 2000. Baased n your comments, which I believe are actualy what you were told., the documented facts do do correspond with what the GP&L told the Council. I do not see anywhere on this blog for attachments, so I will past the documented facts that differentate from what you say you wer told at this meeting. I will take this opportunity to comment on some of the info you posted in these comments that do not require documentation.

If there is a way to post documents to this blog, will you please let me know. Thanks!!

My comments:

1. I was part of the delegation that went to Austin which included the Mayor Greenville, the Mayor of Bryan and the Mayor of Denton. We met with Mark Zion who is the President of the Texas Public Power Assn. We met with our lobbyist and with Jim Boyle who was th attorney for Greenville. Hinton did not send a representative from his office. We also had the mnager of TMPA. We met with all the Legislators who had anything to do with he drafting of Senate Bill 7, the main on being Senator Sibley who was the co-author of the bill nd who introduced it to the Senate. I was in the Senate chambers the day the bill was introduced and passed.

The original bill conatind language that mandated that all electric providers , including Mun's, Co-op's and River authorities like LCRA , were to be included in retail competition. We pleaded our case with the Legislators to give us more time to prepare for retail competition because most of us realized that we could not compete with the TxU's of the world, certainly not GP&L whose rates were already higher across the board than TXU's, in Garland. All this was in 1999 because Governor Bush signed the bill in June of 1999 and it went into effect on September 1, 1999, mandating a pilot program be started by all the "price to beat"ities, like TXU to start a pilot program to see how this was going to work.

Acording to your above date, GP&L told the Council that in 2000=2001 GP&L participated in the development of Municipal code of Conduct (PUC order 24.275) which calls for unbundling if a muni ipted in. This is a false statement because chapter 40 of SB7 which was passed and signed into law in 1999 was alrready in place. SEction 40.055 OF sENATE bILL 7, "JURISDICTION OF MUNICIPAL GOVERNING BODY, OUTLINE THE JURISDICTION OF A MUNI. (2) STATES: (THE GOVERNIng BODY, THE COUCIL), (2) DETERMINE WHETHER TO UNBUNDLE ANY ENERGYTRLATED ACTIVITIES AND IF THE MUNICIPALLY OWNED UTILITY CHOOSES TO INBUNDLE , WHETHER TO DO SO STRUCTURALLY OR FUNCTIONALLY :. (3) REASONABLY DETERMINE THE AMOUNT OF THE MUNICIPALLY OWNED UTILITY'S STRANDED INVESTMENT.

(2) first gave the governing board, the Council, the option as to whether or not to unbundle if they chose to opt -in and if so whether or not to do so functionally or structurally. A Muni could opt-in without unbundling anything. If a muni did opt- in they could set up a marketing division to go outside of their marketing area and solicit business. That would be the only difference in the operation from what it is today.
the GP&L staff together with Dollar and Muzzy used the study that they had done by R>J> Covington that show how much it would cost to completely unbundle everything like an IOU was mandated to do with which to scare the Council in to not enter into retail ompetition. We did not have the money to do this with. plus we all new that GP&L was in not financil position to compete with anybody in a retail competetive market. Nobody on Council had even seen a copy of SB&, to my knowledge. I got my copy from Jim Boyle, the Greenville attorney at a later date. Either the City Manager, Dollar or Harder had not read SEction 40 of SB& or they had read it and did not tells us the provisions it provided for muni's. I did not find out myself until all the dirty work had been done and Staff had gotten what they wanted. In July 2000 the Council passed resolution #8383 and I signed it as Mayor, This was the compteitive matters resolution, which is useless to everybody except the GP&L staff. Most of the information they declard bsck then to be "competitive" is now public information on the internet.

The unbundling thing is strictly a scare tactic still being used by staff. The facts simply d not warrant them still using this information to scare Council into doing their bidding. You can believe what they ar telling you are you can believe thee documented facts., the choice is yours. They are simply still trying to cover their behinds. The $10 million dollars figure that gave you is purely BS because unbundling would not be necessary even if the Council chose to enter retail competition. With today's high Gp&L operatoonal costs. they will not last long. This being the lowest in North Texas since January 2002, is strictly temporarily, believe me. Let me put it this way, If staff is so confident they can keep they rates that much lower than the market price, why not enter into retail competition and at least pick up the 15% of Garland residents who are in the TXU areas of Garland. It woulkd be interesting to hear wha Harder and ?Dollar would say about that if a Councilmembr brought that idea to the table. Forget the unbundling BS you heard, because GP&L would not have to unbundle nd set up seperate operating companies. In one of the attachments I will send you is a statement from the City of Denton they filed with the PUC under Docket #26672-13, in which they state that Senate bill 7 allows that muni; who decide to opt-in do not hanve to unbundle. Denton;s staff did not have any problem interpreting the law, so doen't it make you wonder why GP&L staff had trouble intrepreting the law.

In December 2001 after we had two consultant's reports come back the SVBK and The draft of the RW Bck study, both telling usthatGP&L's rates were higher across the board than TXU's, the Council was facd with a delima. #1, I don't think anyboy on Council ever knew that Gp&L rates were higher than TXU"s. I know I didn't. Every time I would ask Dollar about it he reply was always" we are competitive", when in reality we were not. Council started asking for a cost of service study but were told by GP&L that at least 18- to 14 months of fdate neded to be recorded before a cost of service study could be done. I see that now, at last, one is being done but I am skeptical that it will be writeen by GP&L staff to show what they want it to show, like they did the SVBK report. We also knew that SB& mandated TUX and the other price to beat tntities to lower their base energy charge by 6%. Senate bill 7 allowed to price of fuel to float , as had always been doen, even by Gp&L for over 25 years.

The only time that GP&L rate have bee ,ower than TU and manyo of the other GArland providers has been in March 2006. From January 1, 2002 there have been as many as 5-8 profivers selling in Garland that were cheaper than GP&L.

I would still like for someone to tell me why what TXU does and charges their customers has to do with what GP&L is charging me. GP&L is not in retainl competition and I do not have a choice in selecting my provider.

Council bacl in 2000, 2001 and 2002, were sold a bill of goods by the staff. Now staff is scaring the heck out of Council over this Nodal market thing which nobody on Council knows anything about it. I have the PUC report on the Nodal market and will send it to all the Council. Whether or not they choose to read it or not is up to them. Probably most of them won't care anything about it but it is now law and will be implemented in 2009. All QSE"s such as GP&L willbe assesed a fee by ERCOt, which they can recover in their ancillary fees. The present zonal market design is costing the raatepayers of Texas multi=millions of dollars a year and the PUC is going to change that. GP&L might as well get ready.

Alwys remember, the constraints are caused mainly by the older generating entities, like GP&L, Newman & Spencer. One of the purposes of SB7 was to eventually shut down all those old outdatd inefficent genrating plants, and replace them wih the new combined cycle generating uniits which can generate a kwh of electricity 40% less that GP&L can generate it at Olinger or Spencer. GP&L is blowing the "cost" factor of the Nodal system up just as they did the "unbundling" costs. As I said, staf is simply trying to cover their behind for the inefficent way they have managed Gp&L in the last 4 years. Harder is getting ready to bail out and I suspect Dollar won't be far behind. They see the handwriting on the wall.

I don;t know who in their right mind would want to serve on the UAB. That would be a full time job even if you knew what was going on and staff is not going to pay any attention to what they recommend ayway. If you dont believe me, take a lookat the recommendations the both SVBK and RW Beck made in their reports in 2001-02 and then compare their recommendations to what GP&L actually implemented, whihc was almost none.

If harder does leave, I beg you to make /Dollar replace him with someone who is a business or finance person. At least put George Kauffman back and give him oversight over the GP&L financial operation. Muzzy made a one man operation of GP&L shortly after I left office and we can see what that has led to. I am not sure that GP&L is even salvagable with the shape it isin now. When TXU and NRG gets their 15 coal plants up and running, someby2009=10, they will be burning coal that cost 1.5 cents per kwh for fuel cost and Olinger and Spencer will still be using Gas which coul be over $10 again. Doesn't take a college professor to figure out who would win that war. I also think this Council should mandate a studyby an outside consultant to see if GP&L can buy energy on the market cheaper than they can generate it at Olinger, which is the reason why Denton wanted so bad to get rid of Spencer. Maybe it can't be done but it seemsto be working for Denton.