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Texas General Land Office

Texas General Land Office. Sharing our experience with public customers. Texas General Land Office State Energy Marketing. STATE ENERGY MARKETING PROGRAM Take In-Kind Program Public Customer Gas Program State Power Program. State Energy Marketing Program. Take In-Kind Program.

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Texas General Land Office

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  1. Texas General Land Office Sharing our experience with public customers.

  2. Texas General Land Office State Energy Marketing STATE ENERGY MARKETING PROGRAM • Take In-Kind Program • Public Customer Gas Program • State Power Program

  3. State Energy Marketing Program

  4. Take In-Kind Program • SEMP Takes in kind Royalties • Established in 1983 through the state’s appropriations bill. • The Program operates by taking royalty payments in the form of mineral production instead of receiving monetary royalty payments. • The Program sells the mineral production to customers.

  5. Take In-Kind Program • SEMP Takes in kind Royalties • The Program contracts out with mainline transporters and local distribution companies to transport mineral production to our customers. • Natural Gas value is established using location differential pricing points around Texas that equate back to Houston Ship Channel prices.

  6. Take In-Kind Program • In 1983 State agencies were directed to reduce their utility costs by buying lower priced gas being produced on state lands. • GLO contracts went into effect in 1985. • 33 state agencies were participating.

  7. Take In-Kind Program • TIK Producers ACE ANADARKO APACHE BP AMOCO CABOT OIL & GAS MKTG ETOCO EXXON MOBIL FINA GENESIS GRYPHON EXPLORATION IBC LOCIN MASTERS MERITECH NEUMIN NEWFIELD NORTHSTAR OSPREY PANACO REEF EXPLOR SABCO SAMSON (CONTOUR) SENECA SPINNAKER TRANS-TEXAS VINTAGE WALTER OIL & GAS

  8. Take In-Kind Program • Contract Agreements • Interlocal • Interagency - Last Look • NAESB • Staff negotiates on behalf of the Commissioner.

  9. Take In-Kind Program • TIK Wholesale Purchasers Reliant Houston Pipeline Energy Transfer Kinder Morgan Pipeline Formosa - Dow CrossTex Trammo Plains Marketing Sunco Sempra

  10. Take In-Kind Program • Pricing Model • NYMEX Base Pricing • Differential Base Pricing • Competitive Pricing • RFP Pricing

  11. Take In-Kind Program • Annual Revenue TIK Gas Oil % FY 01 $96.6 M $22.5M 45% FY 02 $55.4M $14.8M 48% FY 03 $117.3M $18.1M 46%

  12. Take In-Kind Program • Annual Volume Gas Oil FY 01 16.8BCF 788Kbbl’s FY 02 19.6BCF 698Kbbl’s FY 03 25.1BCF 631Kbbl’s $0.03 per mmbtu Admin. Fee $0.05 per bbl Admin. Fee

  13. State Energy Marketing Customers • City and county governments, school districts and others may now purchase natural gas through Public Customer Gas Program. • Now serving 587 meters at 24 universities, 2 school districts, 1 city, 39 prisons, and 18 state agencies. • 10 Wholesale Gas and Oil companies and over 26 pipeline and LDC’s.

  14. Energy Marketing Successes • 1986 - 2,209,600 mcf of gas was sold to state agencies - Over $1,196,000 savings! • 1991 - Legislature expanded the program and gave the GLO authority to review and approve the acquisition of natural gas by state agencies. • 2003 - Annual Volume 25.1BCF • 2003 - Annual Revenue $119.7 million • 2003 - Annual Savings of $62 million

  15. State Power Program

  16. State Power Program SB 7 - 76th Texas Legislature • Comprehensive electric restructuring bill. • Authorized start date for State Power Program-September 1, 1999. • Public Utility Commission rulemaking proceedings were necessary to set up program. • State Power Program began providing retail electricity in June 2000. • Full competition began January 1, 2002.

  17. State Power Program • In-kind royalties from state mineral production may be converted into other forms of energy, including electricity, for sale to public retail customers. • These royalties are also defined as royalties from University Fund lands and royalties from the Outer Continental Shelf, otherwise known as the 8(g) area.

  18. State Power Program PROGRAM OBJECTIVES • Increased revenues to the Permanent School Fund. • Utility savings to public retail customers. • Share experience of the competitive retail marketplace prior to and continuing through the deregulated arena.

  19. State Power Program Who Are Public Retail Customers? • Public School Districts • State Colleges and Universities • Junior and Community Colleges • State Agencies • Cities, Counties, and other Local Governments • Military Bases and Federal Veterans Facilities

  20. State Power Program • The State Power Program originally focused and currently serves many of the Independent School Districts and other Public Retail Customers in the Houston area. • The program now also serves Public Retail Customers in Texas Utilities, Central Power & Light, West Texas Utilities, and Texas-New Mexico Power service territories.

  21. State Power Program Progress of Program • 93 contracted customers under 5% discount deal prior to January 2002. • 180 customers added, or re-signed, under new market value contracts going through 2003. • 355 customers now being served by State Power Program.

  22. State Power Program Program Progress (Continued) • Now serving 238 school districts, 29 cities, 13 universities, 5 state agencies, 40 counties, 30 municipal utility districts. • Now serving a total of 355 Public Retail Customers. • Power program increased value over 50% compared to monetary royalty payment, not including the savings realized by customer base.

  23. State Energy Marketing • Customer Count: Electricity 182 ISDs 49 MUDs 39 Counties 13 Colleges 31 Cities 15 Other 5 State Agencies 2 Military Bases

  24. State Energy Marketing • Annual Volume Electricity FY 01 200MW FY 02 400MW FY 03 1200MW

  25. Texas General Land Office Energy Marketing Contact: Richard Bone, Director richard.bone@glo.state.tx.us 512/475-1525 1-800-998-4GLO (4456) www.glo.state.tx.us/energy

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