North Little Rock aldermen approved Monday hiring a nonprofit company to provide wholesale power trading services to the North Little Rock Electric Department.
The 8-0 vote by the City Council authorized a resource management agreement with The Energy Authority Inc., based in Jacksonville, Fla., that the city-owned Electric Department has already contracted with to provide an energy risk management policy.
The additional contract approved Monday is aimed at improving the Electric Department's ability to manage its cost of power, looking ahead to buying electricity on the futures market for 2017. The Electric Department will pay The Energy Authority $21,674 monthly for its services starting Dec. 1.
"This will allow us to buy smaller amounts of power for smaller amounts of time," City Attorney Jason Carter told the City Council. Carter also is legal counsel for the Electric Department.
"It will make sure we're buying power at the lowest cost possible and protect us against fluctuations in the market," Carter said after a presentation on the contract held immediately prior to the City Council meeting.
Having a professional organization managing future power buys will help to prevent drastic rises in power costs such as happened in 2007, Carter said. That year, a higher power-purchase contract raised residential customers' electric rates by 38 percent. North Little Rock Electric has about 37,000 customers in North Little Rock and part of Sherwood.
The Energy Authority has eight owners and 46 partners nationally, all of which are state or municipal-owned utilities, including the Conway Corp., which provides electricity and other services in Conway, said Jamie Mahne, vice president of client services for the organization.
The Energy Authority carries out about 500 power-purchase contracts annually, Mahne said.
"We don't have that kind of capability" to go out and find the best price for power when needed, Carter said. "It's a whole lot of effort to go through for one contract. TEA already has those contracts. They know an advantageous contract when they see it. This is to help us get the most competitive contract that's out there."
Mayor Joe Smith gave his support to the contract, telling the City Council that city officials have worked for the past 12 to 18 months on selecting the management group that would work best with the city utility.
"This was not a decision that was made quickly," Smith said. "I'm real, real comfortable with this."
The contract calls for The Energy Authority to begin power purchases for 2017, after the city's current contract with provider NRG Energy of Princeton, N.J., expires at the end of 2016.
Metro on 11/24/2015