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natural gas to local distribution companies, certain industrial customers, and other customers for <br />on and off-system usage. The Company is requesting approval of its cost of service for both the <br />Pipeline System and the Distribution System. Rates have been developed that present statewide <br />rates for gas service to Pipeline System and Distribution System customers. Pursuant to Utilities <br />Code § 103.001, the Cities have exclusive original jurisdiction to set rates to be charged by local <br />distribution customers inside of the city limits of the Cities. Thus, the Cities have original <br />jurisdiction over the proposed Distribution System rates within their respective city limits only, <br />unless they cede their jurisdiction to the Commission pursuant to Utilities Code § 103.003. <br /> <br /> The Railroad Commission of Texas (the "Commission") has exclusive original <br />jurisdiction over this Statement of Intent and authority to fix a schedule of rates to be charged to <br />customers served by the Pipeline System pursuant to Utilities Code § 102.001(a), all rates to be <br />charged to environs customers, and rates for any city that cedes its jurisdiction over a gas <br />utility's rates, operations, or services to the Commission pursuant to Utilities Code § 103.003. <br />The Commission also has jurisdiction over the Company's gas costs pursuant to the Final Order <br />issued in Gas Utilities Docket No. 8664.2 Additionally, the Commission has exclusive appellate <br />jurisdiction of any municipal decision regarding this Statement of Intent pursuant to Utilities <br />Code § 102.001(b). <br /> <br /> This Statement of Intent applies solely to the Distribution System's rates within your <br /> city's jurisdiction. <br /> <br /> 2 As set forth in the Tariff, the Company is requesting a new gas cost recovery factor and <br /> procedures to accompany the recovery factor. <br /> <br /> STATEMENT OF INTENT- PAGE <br /> <br /> <br />