More information on the recent TMPA and member cities' lawsuit settlement was published in an article in Saturday's Metro section of the Dallas Morning News. In a previous post, I took a look at the Garland individuals most involved in the settlement.
 

From the Dallas Morning News:

Garland residents avoid electric rate increase

12:00 AM CST on Saturday, December 19, 2009
By RAY LESZCYNSKI / The Dallas Morning News
rleszcynski@dallasnews.com
 
The member cities of the Texas Municipal Power Agency were bogged down in debt, feuding, litigation and an uncertain future.
 
Twenty lawsuits over the course of a dozen years had sidetracked the cities – Bryan, Denton, Garland and Greenville – from their calling to provide consistent, stable rates to customers. And when the attention was refocused this week, the city that owns 47 percent of the agency and its debt celebrated.
 
Ray Schwertner, director of Garland Power & Light, called a settlement agreement among the partners a great deal Wednesday night as Garland became the last city to accept the terms. Garland ratepayers will avoid a spike of about 2 cents per kilowatt-hour between fiscal 2010 and 2012, and as a result, the residential rate will stay at 11.13 cents per kilowatt-hour.
 
"We're not incurring new debt. We're taking it upon the city to take that debt and restructure that debt so that it's beneficial to us and our ratepayers," Schwertner said. "That ability to restructure this creates about $135 million of rate savings between now and 2018."
 
Garland will extend debt that was to be paid by 2018 to fit the projected life cycle of the agency's Gibbons Creek coal plant in Grimes County, which in the most recent study, was to 2035. Cities are no longer tied to each other's debt and can get lower interest rates than could the power agency.
 
Each city maintains an equal share of the TMPA voting powers. That board is led by former Garland City Council member Tom Jefferies, who has been involved in the city's complex utility dealings for more than 20 years.
 
The settling of the litigation also takes future attorney fees out of the picture. But because Garland was represented by City Attorney Brad Neighbor and assistant Michael Betz, the city had kept those fees somewhat in check.
 
"It was certainly a great team effort," Jefferies said, crediting Schwertner and the city attorneys. "It was one of those things we were optimistic that we were going to get, but never quite sure."
 
Among the disputes, Bryan had argued that because it is closer to the Grimes County plant, it should pay a lower transmission cost than the other member cities. The agreement instead continues to provide for a bundled contract in which the cost of delivering electricity for all cities is included in the price charged to the each member until 2018.
 
Another point agreed upon was to share the costs of refurbishing a scrubber device to control emissions at the Gibbons Creek plant.
 

 
Just 18 months ago when natural gas rates were high, GP&L rates were the lowest in the region because we had the benefit of power from the TMPA coal-powered generation plant at Gibbons Creek. Since then, gas has dropped to lows not seen for many years, which made our coal-generated power less competitive, and—even though rates have not changed—GP&L rates became among the highest in the region. Fortunately, the GP&L rate has more recently been somewhat more competitive. However, looking long-range there was no little possible relief in sight because TMPA rates were expected to rise significantly to cover the higher payments that come with short-term debt as necessitated by the short life of the power sales agreement that expires in 2018.
 
Much of the reason behind the plethora of lawsuits that have arisen over the last dozen years have stemmed from that shrinking window for debt repayment and the more business-like case of not front-loading debt payments but extending it over a more prudent period beyond 2018.
 
As referenced in the story above, the settlement agreement allows all parties to continue by the terms of the current power sales agreement, which also serves to keep the TMPA rates we pay down because TMPA is not forced to encumber additional short-term debt. The cities can each handle their share of additional debt in whatever manner is to the best interest of their ratepayers.
 
If TMPA rates were to rise as appeared necessary, the rates for GP&L customers would have similarly been forced to rise. The agreement removes that upward pressure. Garland and GP&L can more successfully handle the additional debt through longer debt terms, lower interest rates, and access to the Rate Mitigation Fund that was established for debt relief and rate protection than would have been the case under the restrictions in place before the settlement.
 
Under the new agreement, there is no pressure to raise rates for many years. The opportunities to lower rates may be limited but at least there is some prospect now.
 
UPDATE: A couple paragraphs above, I reference the rates we the citizens and city, as owners of GP&L, pay to TMPA. I live in the 15% of the city not served by GP&L. I do not have access to GP&L and usually get to pay a higher rate to some outside utility. Those of us on the fence between being owners of GP&L but not directly paying the debt sometimes sit in a confusing position.