Last week, Retail Energy Buyer (REB) reported that the Dallas City Council was considering signing a contract worth up to $450 million. This week, WFAA of Dallas reported that the City went through with the deal worth a minimum of $320 million. Jim Moore of the Energy Research Council, who writes a weekly price trends column in REB, was interviewed for the news segment. Moore noted that the vast majority of large power contracts solicit competitive bids from multiple suppliers, whereas this contract only included a single bidder: TXU. The consultants who set up the deal were also former TXU executives.
The City’s current agreement lasts through next May, but, as Moore notes, Texas electricity prices have declined from $60 per MWh to $40 per MWh. That makes it a good time for the City of Dallas (and other retail buyers) to ink long-term energy contracts. Still, the contract, which lasts a minimum of five years (through 2021) is uncommonly long – one of several unusual attributes of the contract. REB’s previous story on the contract explains other oddities in greater detail.