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A timeline of Texas Municipal Power Agency's creation by four Texas cities, Garland, Greenville, Denton, and Bryan, was part of the staff's presentation on GP&L and TMPA mentioned earlier. In so many ways, the creation of TMPA was a perfect storm where being in the wrong place at the wrong time were both at their peaks. The oil embargo of the early 1970's led to laws against new natural gas-fired generation plants and the late 1970's was the peak in interest rates, at one point the prime rate was over 18%. Of course, this is the timeframe when Garland gets into a partnership to build a new coal-fired generation plant. And not just any coal - but the lowest-quality, lowest-efficiency coal possible.
It would make a good movie script except no one would believe it. Such a script might still work if it were funny enough ... and if it weren't the truth. How can you make the story even more compelling? Oh, yeah, you wake up one day and the asset is worth only about a quarter of the debt. What else? There's the fact that most of the debt can't, by law, be refinanced again (without converting the tax status) and that the bonds were written to provide that if you manage to pay the debt off early, you still owe the full amount.
Can't make this story any more ridiculous than that right? Well, one more fact does keep it interesting: Garland owns 47% of this asset, is responsible for 47% of the debt, and every city asset is pledged against that debt (whether you live in the GP&L service area or the TXU area), but ... we only have 25% of the voting rights.
Much of this wasn't part of the presentation and I offer it here as background. Knowing from whence you came and to whence you go always changes your perspective.
As bad as all this sounds, the city and TMPA have done an admirable job over the years making the most of the situation, fending off some of the partners, and when the debt is finally paid, Garland will find itself in an enviable and very competitive position.
For those just too fascinated with this history to breathe before knowing more, there are two lengthy articles here and here (both PDF's).
Early TMPA Timeline
- Prior to 1960
- 1942 - Garland and Brazos River Transmission Cooperative were interconnected
- 1955 - Garland and Greenville were interconnected
- By 1960 - all member cities and Brazos were interconnected at 69 kV
- 1963 - the Texas Municipal Power Pool (TMPP) is formed
- Between 1945 and 1960, power load for the cities increased more than eight-fold
- Savings of 20% could be achieved by pool operation
- Pool was required to have installed capacity sufficient to supply peak load
- Members: Garland, Bryan, Greenville, and Brazos Electric Power Cooperative. Denton joined in 1969.
Outside factors influenced the creation of TMPA and the building of Gibbons Creek Plant
- 1973 - oil embargo forced the member cities to consider fuel sources other than natural gas
- 1974 - member cities began to pursue Texas "Jackson lignite" as a fuel source
- 1974 - Texas Railroad Commission ruled that no new gas-fired electric generation plants could be built
- 1974 - Congress ruled that natural gas consumption for electric generation would be reduced 15% by 1980 and eliminated by 1990
TMPA is created
- 1975 - Texas Legislature passed Article 1435a, allowing formation of a "Joint Power Agency"
- 1975 - member cities passed concurrent ordinances to create the Texas Municipal Power Agency (TMPA)
- Purpose of Agency: to provide an economical power supply to the members for resale to their customers
- Importance of the Agency: provided advantages of large lignite-fueled generation that would not have been possible if the cities continued to operate independently
- 1976 - Power Sales Agreement signed between the Cities and TMPA
- For power rights, the cities agreed to pay all costs of the Agency
- Enabled the Agency to sell bonds to finance early expenses and construction costs
TMPA takes next steps
- 1975-1983 - Construction and startup phases of Gibbons Creek Plant, mine, and associated transmission facilities
- 1979 - Agency purchased 6.2% of Comanche Peak
- Second, alternative fuel source to replace natural gas generation
- However, by 1988, TMPA and TXU reached a settlement allowing TMPA to exit the Comanche Peak Project due to cost overruns and construction delays
- Money from settlement with TXU was spent on operations, fuel, and a new administration building, NOT debt
Industry changes during and after construction of the Gibbons Creek Plant
- 1978 - Natural Gas Energy Act created a single, national natural gas market and allowed market forces, not regulators, to establish wellhead prices
- 1985 - FERC Order 436 began deregulation of natural gas transportation
- These two acts allowed for more efficiencies in the natural gas market and natural gas prices began to fall
- 1987 - The energy crisis was considered over and the Power Plant and Industrial Fuel Use Act, which would have eliminated natural gas plants, was repealed and the cities could keep plants online
- With all these changes, lignite began to look expensive
- October 1, 1983 - TMPA began commercial operations
- 1990 - College Station, Farmersville, and Bowie signed contracts to purchase power from the member cities
- 1991 - Bridgeport signed purchase contract
- 1993 - TMPA successfully refinanced the Agency's debt (interest and bonds) from 14.25% in 1982 to 4.25% in 1993
Coal from Powder River Basin (PRB)
- 1994 - In-depth study began on PRB coal alternative to Texas Jackson lignite
- More efficient form of coal
- Boiler could run at higher temperatures and with less ash, increasing generation by 12%
- Cleaner burning and better for the units
- More cost effective to modify the plant to use the more efficient PRB vs the cost to relocate the mining operations of the less efficient lignite
- 1996 - Conversion from lignite to PRB fuel completed
- Plant easier to run on PRB
- Operation and maintenance cost decreased
- Expected life of the unit increased to 2035, well beyond the life of the debt
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