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12/16/03 ~ 17:17 FAX $12 396 1575 CITY CLERK <br /> <br /> Price Select® 2004 <br /> Fuel & Power Cost Recovery FactOr Form <br /> <br />~]002 <br /> <br /> Please select one of the following options by checking the appropriate box, filling in any <br /> blanks, and return to LCRA by December 1, 2003. <br />~ Traditional F&PCRF: By choosing the Traditional F&PCRF option, ! understand LCRA <br /> will continue to manage fuel costs in the same manner it has in the past. The Traditional <br /> F&PCRF appears within the Price Select® 2004 energy charge and is subject to change based <br /> on LCRA's fuel costs. <br /> <br />F&PCRF with Natural Gas Hedging: By choosing the F&PCRF with Natural Gas <br />Hedging, I tmderstand that LCRA will execute transactions to hedge the cost of the applicable <br />percentage (filled in below) of my utili.ty's projected gas requirements for the entire year, based <br />on natural gas prices at the time this selection is returned to LCRA and LCRA staff completes <br />the associated hedging transaction. I also understand that there are qualifiers and other <br />scenarios that could impact my F&PCRF with Natural Gas Hedging selection, as explained in <br />the Price Select® Fuel & Power Cost Recovery FaCtor Options documents, and that, if any such <br />circumstances occur, my utility may be subject to a monthly fuel adjustment on the LCRA <br />wholesale power bill. <br /> <br />I request that LCRA staff begin executing hedging instruments for % of my <br />ufility's 2004 forecast natural gas needs, to the nearest executable-p--e~centage, with <br />any balance to be managed under the Traditional F&PCRF. <br /> <br />F&PCRF with Natural Gas Hedging - Market price order basis: By choosing the <br />F&PCRF with Stabilized Natural Gas on a market price order basis, I understand that my utility <br />is subject to the same guidelines associated with the F&PCRF with Natural Gas Hedging <br />option, as described above, except that LCRA staff will hedge my utility's natural gas for 2004 <br />if and when market gas prices match my specified preference (filled in below). If gas prices do <br />not reach my preferred level by the Dec. 1, 2003, deadline and I do not notify LCRA that I <br />want the F&PCRF with Natural Gas Hedging under different terms, my utility will be subject <br />to the Traditional F&PCRF for the calendar year. <br /> <br />I request that LCRA staff begin executing hedging instruments for % of my <br />utility's 2004 forecasted natural gas needs, to the nearest executabl-~ercentage, <br />when market gas prices hit $ per mmBtu. Anybalance is to be <br />managed under the Traditional F&PCRF. <br /> <br /> Please respond promptly. <br />FAX your selection immediately upon making your choice. <br /> <br />Please sign and date: <br /> <br />City of San Marcos <br /> <br />Mr. BOb Higgs 0 I- <br />Utility Director <br /> <br /> Lower Colorado River Authority <br /> <br />Date Received by Date <br /> Fuels & Energy Risk Management <br /> <br /> Page 1 of 2 <br /> <br /> <br />