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Item No. 14 memorandum TO: City Council John Godwin, City Manager FROM: Gene Anderson, Finance Director SUBJECT: ONCOR RATE CASE DATE: April 13, 2016 BACKGROUND: Recent Public Utility Commission of Texas (PUC) proceedings related to approval of conversion of Oncor into a Real Estate Investment Trust (REIT) resulted in the Commissioners' desire to share $200 million to $250 million in annual federal income tax (FIT) savings with Oncor ratepayers. Since the proceeding involving a change of ownership and control of Oncor was not a rate case, the Commission had no jurisdiction to order a reduction in rates. The new owners of Oncor indicated intent to file a rate case in mid -2017 to become effective in 2018. Believing that a two year wait to factor FIT savings into rates was too long to wait, the Steering Committee of Cities Served by Oncor (Paris is a member) decided to initiate a rate case against Oncor. Paris and other cities can file a rate case because they have original rate making jurisdiction over Oncor's rates and services within their municipal limits. STATUS OF ISSUE: In order for there to be a rate hearing in calendar year 2016, cities must pass a resolution starting that process in April 2016. Oncor will have to provide historical data from which the cities will prepare a report on why rates should be lowered. Oncor can agree with the cities' report or it can file a rebuttal report. The final step either way is that the PUC will have a rate hearing in November or December and a final order will be issued before the end of the calendar year. BUDGET: This item will have no impact on the City budget. Expenses related to the case will be paid for by the Steering Committee of Cities Served by Oncor. RECOMMENDATION: Motion to approve a resolution which initiates a rate case with Oncor.