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Draft <br /> <br />[Date] <br /> <br />[Mayor or City Manager] <br /> <br />Dear : <br /> <br />As you are aware, TXU Gas Distribution recently filed a Statement of Intent to change the rates <br />for local gas distribution service in the Distribution System, which includes your <br />city. This letter confirms that if your city agrees (1) to accept TXU Gas Distribution's proposed <br />rate changes, as filed, and pass an ordinance approving the proposed rates, and (2) to forego any <br />right to participate in an appeal to the Railroad Commission of Texas should the Company file <br />one, the Company will agree as follows: <br /> <br />If any other city in the Distribution System negotiates a settlement <br />with TXU Gas Distribution that results in rates that are less than the proposed <br />rates as filed by the Company with that city, the Company will offer those same <br />settlement terms (reflected as a percentage reduction of the rates as proposed) to <br />your city, such that no other city in the Distribution System will <br />receive more favorable rate treatment than that offered to your city. For example, <br />if City A negotiates a settlement that results in its rates being 10% less than those <br />proposed by the Company, your city will be offered a 10% reduction in the rates <br />as proposed by the Company and approved in your ordinance; <br /> <br />2. The new rates will not be implemented until after July 5, 2001; <br /> <br />Customers in your city will not be surcharged for any rate case expenses <br />associated with this Statement of Intent or any appeal to the Railroad Commission <br />of Texas, should one be filed. <br /> <br />Passage of an ordinance approving the new rates as filed will constitute your city's acceptance of <br />this offer. Of course, if your city accepts this offer, and the Company does not reach a mutually <br />agreeable settlement with any other city in the Distribution System that results in <br />rates that are less than the proposed rates as filed, rates in your city will be set as proposed in the <br />Statement of Intent and passed in the ordinance, and will not be adjusted to comport with the <br />results of any appeal. <br /> <br />We appreciate your consideration of the Company's proposal. Please feel free to call me if you <br />have any questions. <br /> <br />Sincerely, <br /> <br />/gd <br /> <br />Steve Houle <br />Vice President <br />TXU Electric & Gas <br /> <br /> <br />