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Important Letter from Texas Power's Founder and COO

A Message to our Customers:                                                                June 16, 2008

I want to take just a moment of your time to explain Texas Power’s position in the Texas electric market and the turmoil and volatility that seems to currently pervade this market.

You have no doubt either read or heard about the number of Retail Electric Providers (“REP”) that have gone out of business in the past few weeks.  Many news accounts have been published and many reasons have been given for these failures.  In the majority of the cases the contributing factors were (1) the inability of the REP to meet the financial assurance requirements of the Electric Reliability Council of Texas (“ERCOT”), (2) the inability to post the financial assurance with wholesale suppliers to insure a continued and dependable supply of power or (3) the sale of long term contracts without the underlying purchase to hedge these sales.

I want to assure all of you that Texas Power is well funded.  We have met all financial requirements and requests from ERCOT, we have met all credit requirements of our suppliers of power in the wholesale market and have excellent credit arrangements.  Since all of our sales are variable rate agreements with a month-to-month term we do not have to purchase long term supplies to hedge long term sales.
 
I also want to address the rate increases you have seen over the past couple of months.  As the price of gasoline, milk, corn products, wheat products and other commodities we consume every day have increased, so has natural gas.  In Texas, the price of power is directly tied to the price of natural gas. In January natural gas traded at $7.172 per MMBtu.  In June it traded at $11.916.  As I write this letter July natural gas is trading at $12.96 per MMBtu.  That’s more than an 80% increase.  All of the energy sectors are extremely volatile and we, like you, have no control over energy prices. I can assure you however, that all of us at Texas Power are dedicated to give you value and services that rival any of our competitors.        

Thanks for taking the time to read my comments.


Larry Kelly
Chief Operating Officer