Dallas City Council Approves Extension of Contract with TXU Energy

In a 10-5 vote, the Dallas City Council has awarded TXU Energy with a new contract to continue providing electricity to the city for another five years. The decision was made after hiring a consultant to determine whether or not an extension of the current TXU contract was the best way to help the city save money. According to the consultant hired from Priority Power Management, the new deal will help to save the city $3 million per year.

A Decision Not Taken Lightly

While all of the particulars of the deal have not been settled at this point, the Dallas City Council did decide to award TXU Energy with a contract worth up to $450 million. Some council members, however, were not so sure that it was prudent to make such an important decision so quickly. In fact, council members Scott Griggs and Philip Kingston tried to delay the vote because they felt it involved too much money. They also felt that it was too risky to take a vote on a matter that was put on the agenda only shortly before the meeting, a fact that they felt raised too many red flags to take a vote at this time. City Manager A.C. Gonzalez, however, felt the city need to act quickly in order to enjoy low electricity rates. With council members going on vacation until August, he felt the vote could not be postponed.

While the City Council members did decide to extend the contract, they said they would not negotiate a deal for more than five years. By approving the contract now, even if for a shorter period of time than initially requested, consultant John Bick of Priority Power Management told the council it would reduce the cost for the remainder of the current contract by at least $3 million. After talking to the consultant and receiving these figures, council member Lee Kleinman voted in favor of renewing the contract. Initially, Kleinman was skeptical about renewing the contract without first seeking other bids.

Four of the council members who voted against renewing the contract – Phillip Kingston, Scott Griggs, Sandy Greyson and Adam Medrano – did so because they wanted to get a second opinion on the contract while also looking at other bids. Vonciel Jones Hill also voted against renewing the contract because she wanted the contract to be extended for eight years rather than five years. While Jones maintains that there is no reason to consider the contract problematic, some have criticized the Dallas City Council for failing to look at other bids that could have potentially saved the city money.

Under the terms of the contract, TXU Energy will provide the city with all of the electricity that it uses for its facilities and buildings. In exchange for the contract, TXU will also provide the city with $1.65 million for city facilities.

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