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PROPOSED FINDINGS SUPPORTING DENIAL OF TXU'S <br /> REQUEST TO INCREASE RATES FOR NATURAL GAS <br /> <br /> 1. TXU's requested return on equity is unreasonable. By far, the largest cost <br /> <br />component of the Company's request for a rate increase is associated with rate of return on <br />equity. At a time when interest rates are at the lowest point in decades and investors' <br />expectations for re~urn on investment are the lowest in many years, T×U proposes to increase its <br />return dollars from gas operations by $60,255,075 (86.7 percent of the total rate increase). Such <br />request is irrational in light of national economic conditions and outrageous in light of the fact <br />that TXU Corporation recently wrote off more than $4 billion in shareholder equity related to <br />poor or imprudent management of European Operations. Any increase in current return dollars <br />is unjustified. <br /> <br /> 2. The basis for proposed consolidation has not been established. The <br /> <br />Company's filing fails to prove that it is reasonable and necessary to incorporate the pipeline <br />cost of service into the distribution cost of service and to consolidate various regional <br />distribution systems into a single statewide system. <br /> <br /> 3. The City's jurisdiction to increase pipeline rates has not been established <br /> <br />and, therefore, the proposed pipeline cost increase should be disallowed. The Railroad <br />Commission has always exercised exclusive original jurisdiction over pipeline costs, while <br />municipalities have exclusive original jurisdiction over gas distribution rates. With this filing, <br />TXU has incorporated pipeline costs in excess of those previously approved by the Commission <br />into the proposed distribution rate to be considered by the City, and all such pipeline costs should <br />be disallowed. <br /> <br />1668\09~9400~nmo030703gmg <br /> <br /> <br />