06-C Settlement Agreement TXU - Laserfiche WebLink

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payments to Cities, there is no guarantee that the PUC would approve such proposal. The proposed Settlement Agreement contains a number of benefits that would not be available as relief in a litigated rate case. The PUC has no jurisdiction to increase franchise fee factors or address when or how franchise fee payments are made. Cities unsuccessfully attempted to achieve franchise fee escalation in the last two general sessions of the Legislature and a favorable franchise fee change for Cities is unlikely to occur independent of the Settlement Agreement. Additionally, the Commission is unable authorize payments to Cities or any consumer representative for participation in ERCOT or market design matters. The Settlement Agreement delays rather than terminates a rate review. The Settlement Agreement obligates the Company to cooperate with Cities in reaching an understanding of Company operations prior to the filing of a rate case, and further provides for reimbursement of Cities' expenses associated with review of Company affiliated transactions. The Steering Committee values the total benefits of the Settlement Agreement with TXU at approximately $85 million for the period 2005 - 2009 (this includes the franchise fee increases through 2009). Probabilities are less than 50 percent that the PUC in 2007 would reach comparable value at the end of a rate case. Moreover, there is no certainty that residential customers would receive any benefit even if the Commission ultimately reduced overall rates by $85 million. RECOMMENDED ACTION: The Staff recommends adoption of the resolution ratifying the Settlement Agreement. All Steering Committee member cities must take action to approve the settlement in order for the benefits to flow to any member. All payments to be made by TXU will not be released until the settlement is fully ratified. STAFF CONTACT: Gene Anderson, Director of Finance and Tony Williams City Manager COUNCIL DATE: To be considered at City Council Monday, February 13, 2006 Regular Meeting.