24-Ordinance approving the electric rates between the City of Paris and Oncor

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STAFF REPORT The City of Paris, along with approximately 160 other cities served by Oncor Electric Delivery Company LLC, is a member of the Steering Committee of Cities Served by Oncor. On or about January 7, 2011, Oncor filed with the City an application to increase electric rates. The Oncor filing sought a $353 million rate increase. The City of Paris worked with the Steering Committee to analyze the schedules and evidence offered by Oncor to support its request to increase rates. The Ordinance, the related rate, and tariffs are the result of negotiations between the Steering Committee and the Oncor to resolve issues raised by the Steering Committee and other intervenors during the review and evaluation of the filing. The Ordinance resolves the Company's filing by authorizing an increase in the Company's base rate of $136.7 million. The monthly bill impact for the average residential customer will be a $2.35 increase (as opposed to the $5.00 per bill increase as proposed in the Oncor's filing). The Executive Committee of the Steering Committee and the Steering Committee's legal counsel recommend that all city members of the Steering Committee adopt the Ordinance implementing the rate change. Background: The tariff was approved by the Executive Committee of the Steering Committee as part of the settlement agreement to resolve the Oncor rate filing at the Public Utility Commission of Texas. As stated above, the agreement reduces Oncor's request for a $353 million increase to $136.7 million. The agreement does not change the current authorized capitalization of 60% debt and 40% equity and return on equity of 10.25% from Oncor's last rate proceeding. Also, the settlement results in a system-wide rate increase of 6.1%. Residential customers will see an increase of 6.2%, much lower than Oncor's requested 14.6% increase. Street lighting rates will increase 13.8%, which is also lower than Oncor's requested increase of 25.9%. Oncor has agreed that it will not file another general base rate case prior to July 1, 2013. However, as cities are regulatory authorities., cities may still initiate a rate case prior to that date. Additionally, consistent with the District Court's reversal of the Commission's decision relating to municipal franchise fees in Docket No. 35717, Oncor will increase franchise fees to the contractually agreed to amounts within 60 days of the final order, or July 1, 2011, whichever is later. Additionally, Oncor will pay cities retroactive franchise fees from the date the rates approved in Oncor's prior rate case, Docket No. 35717, went into effect. Oncor will also pay cities' rate case expenses and recover those amounts over three years with no carrying charges. Finally, at its own expense, the Company will reinstate Rider SCUD, which provides for a 20% discount for institutions of higher learning. Oncor Settlement Ordinance Staff Report 1 162