The article is misleading regarding the role of Reliant Energy Solutions. Reliant did not submit a proposal, and Reliant is not the city's REP. Reliant has an existing contractual relationship with the GLO. However, the contract does not require that the Reliant and GLO relationship remain intact. It allows the GLO to provide service with another firm, as well as step-in provisions that allow Reliant to assume the contract if the GLO fails to fulfill its obligations with the REP.
Your statement is completely incorrect that "Reliant was offering a discount" if the contract was executed within a certain time frame. Reliant did not make such an offer because Reliant did not submit a proposal. No discounts were offered by any of the short-listed participants. They were all allowed to include a risk factor that would increase their price if the city was unable to execute a contract by April 16. Both the GLO and TXU Energy Services chose to include a risk factor, whereas Constellation New Energy (CNE) did not.
Your statement is inaccurate and misleading that "the city's consultants finally reached their conclusion" that CNE was the best for the job. Under the previous director and without assurance that the city would secure the contract before April 16, the consultant concluded, "In CDM's opinion, the city should consider both the GLO and the CNE Best and Final Proposals." The consultant informed the city that the GLO offered the lowest price contingent upon a contract by April 16.
I can assure you that, unlike the quote from Stephen Brownell, I have no knowledge of any dark deals or smoke-filled rooms.
The city's process was fair, successful and proper. It resulted in firm pricing from three of the state's largest and most qualified REPs, all of which had equal opportunity to win this business from the city. This level of competition was exactly what was anticipated under deregulation in the state.
The bottom line is that for this contract, the city chose the firm that offered the lowest price. As such, I think it would be more appropriate to title your article "Business as Usual: City leverages the deregulated electric market to secure competitive pricing from the state."
Issa Z. Dadoush, director
Houston building services department
Editor's note: Dadoush's letter does not disagree that the Reliant/GLO team offered a lower price if there was a contract by April 16. We call it a discount, while he states that it was due to a "risk factor" that would have increased the price after April 16.
Regarding Reliant's role, the city's own bid tally sheets call the partnership "Reliant through the GLO." City Council minutes show Reliant VP David Roylance told councilmembers on April 13 that Reliant "was ultimately responsible for providing the service the General Land Office was going to provide" to the city.
As for the consultants' ratings of CNE's final proposal, documents released by the city show CNE earned 22 out of a possible 25 points, compared to 15 for Reliant/GLO, that CNE provided "most of the major contract terms sought" and that the price difference was insignificant, "so other factors are important."
