Lubbock's Relationship with the WTMPA-Q&A - KCBD NewsChannel 11 Lubbock

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Lubbock's Relationship with the WTMPA-Q&A

Lubbock City Council Update on WTMPA Issues

October 8, 2002

a.     What happened to the $1.6 million that was withheld from the final payment to GE Power Systems for the Generator Contract?

The $1.6M was money from proceeds of WTMPA bond issuance.  It was used to make bond payments in 2000.  It has been verified by Ed Esquivel from Fulbright & Jaworski (bond counsel) that this was not a violation of bond covenants.  This was never City of Lubbock money.

b.     A corrected statement of terms of the lawsuit settlement voted upon by the City Council at the September 26 meeting:

In the fall of 1999, WTMPA withheld  $1,684,000 from GE Power Systems because a new power turbine did not work and could not be accepted.

Those funds were spent to make bond payments in February 2000 because the generator was still not working and no revenue was coming in.  A lawsuit was subsequently filed by WTMPA and the City of Lubbock against GE Power Systems and Energas Company over the damaged turbine.

A settlement was approved by the City Council on September 26, 2002, wherein GE Power Systems:

1.     Released it’s claim on the $1,684,000 retainage, meaning WTMPA would not have to find the funds to pay GE Power Systems for the final payment on the generator, which was subsequently fixed by GE Power Systems and has been generating power since September 2000.

2.     Paid $150,000 to WTMPA.

Additionally, WTMPA must pay back $422,000 to it’s insurance company for the cost of the initial repairs to the turbine, plus $150,000 in attorney’s fees.

c.      The City Council's position on Councilman Cooke's $36,000 per year expense reimbursement.

The WTMPA is a separate governmental entity made up of the four cities of Lubbock, Tulia, Brownfield, and Floydada.  Each city appoints two directors to the WTMPA board.  The Board created the office of Chairman of the WTMPA board, a non-voting member. The Board also passed a resolution establishing an office in Lubbock and set reimbursement of $3000 per month for supplies, equipment, and maintenance of the WTMPA office.  Mr. Cooke was elected Chair.

The decision regarding Mr. Cooke’s reimbursement was not made by the Lubbock City Council.  While Council recognizes this reimbursement is legal, Council members differ as to whether Mr. Cooke should accept the reimbursement.  Nonetheless, Council acknowledges this arrangement is between the WTMPA chair and the WTMPA Board.

d.     The amount of debt owed by WTMPA to the City of Lubbock/LP&L.

As of September 30, 2002 — $5.3 million of principal.  (unaudited number)  Council is investigating whether we can charge WTMPA interest retroactive to 1999.

e.     WTMPA's plan to repay this debt.

In March 2002, the surcharge paid by member cities was increased from 1.41 cents to 1.621 cents per kilowatt hour.  This is designed to recover the principal amount in a 60 month period.  The surcharge will be closely monitored to be certain that we reach this target.  An Interlocal agreement will be created to formalize this arrangement.

f.       What WTMPA does:

WTMPA was created to give the member cities (Lubbock, Tulia, Brownfield, & Floydada) more leverage in negotiating wholesale power contracts and engage in intervention proceedings with the Federal Energy Regulatory Commission and the Public Utility Commission of Texas. 

g.     That the City of Lubbock assures the repayment of the debt of WTMPA.

The City of Lubbock is responsible for 85 percent of the indebtedness of WTMPA.

h.     Should the City of Lubbock/LPL remain a part of WTMPA?

The City Council will continue to investigate whether LP&L should remain a member of WTMPA.

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