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LLOYD, GOSSE:LINK, BLEVINS, F~OCHELLE, <br /> BALDWIN ~ TOWNS£ND, P. C. <br /> ATTORNIEys AT LAW <br /> <br /> Ivir. Gay'$ Direct Linc: (512)322-5875 <br /> <br />MEMORANDUM <br /> <br /> TO: <br />FROM: <br />DATE: <br /> <br /> RE: <br /> <br />Cities Served by TXU Gas <br /> <br />Geoffrey M. Gay <br /> <br />May 23, 2001 <br /> <br />Gas Cost Reconciliation <br /> <br /> At the end of June TXU Gas Distribution will file a gas cost reconciliation proceeding at <br />the Railroad Cormmission. At issue will be the prudence and reasonableness of $1.1 billion in <br />gas costs recovered in the 36 months ending in the fall of 2000. Primary responsibility for <br />review of the Company's gas procurement practices and the reasonableness of gas purchases will <br />rest with Cities. The costs incurred by the Cities are reimbursable from TXU Gas Distribution. <br /> <br /> The case will require an expedited review by consultants from June 30 through August <br />30, 2001. Thus, it is critical to have a group of cities prepared to intervene on June 30 and to <br />have consultants available on that date with the resources to commence immediate work. <br />Delaying City action until after the Company makes its formal filing will nullify any effective <br />review. <br /> <br /> Assuming Cities' consultants identify some issues from their review, settlement <br />discussions will commence. If said discussions do not lead to a resolution, Cities' testimony will <br />be due October 29, 2001 and a hearing will occur in November. Any gas costs found to have <br />been unreasonably incurred will be refunded to ratepayers. <br /> <br /> The docket in which the case will be filed has been designated as Gas Utilities Docket <br />9180. <br /> <br />A model resolution is attached that authorizes intervention. <br /> <br /> <br />