Loading...
2005-039-RES ACCEPTING A SETTLEMENT AGREEMENT WITH TXU ELECTRIC DELIVERY RESOLUTION NO. 2005-039 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, ACCEPTING A SETTLEMENT AGREEMENT WITH TXU ELECTRIC DELIVERY AS RECOMMENDED BY THE STEERING COMMITTEE OF CITIES SERVED BY TXU; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City of Paris, Texas, is a member of the Steering Cornmittee of Cities rved by TXU (Steering Committee); and, WHEREAS, the Steering Committee did encourage certain member cities to initiate show ause rate proceedings against TXU; and, WHEREAS, TXU Electric Delivery and the Steering Committee engaged in settlement iscussions regarding abatement of any full-scale rate investigation and interim relief that may be vailable to Cities; and, WHEREAS, it remains impractical, if not impossible, to deliver rate relief to the vast ajority of residential customers until the expiration of price to beat (PTB) on January 1,2007; and, WHEREAS, the unfair and adverse impacts of street lighting and water pumping tariffs that ities have experienced since the implementation of retail deregulation on January 1, 2002, can be ddressed on an interim basis pending a final order in a future rate case through a financial istribution from the Steering Committee of funds received from TXU Electric Delivery as part of Settlement; and WHEREAS, such interim relief is coupled with the Steering Committee's recognition that r sources should be devoted to the 2005 Legislative Session to promote overall enhancements in lectric retail competition for the benefit of all end-users; and, WHEREAS, the Steering Committee and TXU Electric Delivery have entered into a ettlement Agreement pending approval by the 20 Cities that passed show-cause resolutions and tification by other member cities with original jurisdiction; and, WHEREAS, TXU Electric Delivery has agreed to improve communication, coordination d timing of construction in rights-of-way, permit development of a tariff that will allow city andated underground placement of distribution facilities, modify certain franchise renewal egotiation positions, and improve meter reading on certain city accounts that are estimated; and, WHEREAS, TXU Electric Delivery has committed to the Steering Committee during the riod of rate case abatement to share information on certain company operations and procedures at should enhance the Cities' ability to appropriately exercise regulatory responsibilities in the rate oceeding that TXU Electric Delivery has agreed to file on or before July 1, 2006; and, WHEREAS, the aforementioned Settlement Agreement calls for irnmediate and long-term nefits to flow to all city members of the Steering Committee which in turn have indirect but sitive benefit to all city residents and public safety in general; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, EXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things proved. Section 2. That the Settlement Agreement between the Cities' Steering Committee and XU Electric Delivery, attached hereto and for all purposes incorporated herein as Exhibit A, shall and is hereby in all things ratified. Section 3. That this resolution shall be effective from and after its date of passage. PASSED AND APPROVED this 14th day of March, 2005. Curtis Fendley, SETILEMENT AGREEMENT This Settlement Agreement ("Agreement'') is made and entered into betWeen TXU Electric Delivery Company ("Electric Delivery") and the Steering Conunittee of Cities Served by TXU Electric Delivery Company on behalf of all cities listed on Exhibit A to this Agreement (''Cities''), hereinafter referred to jointly herein as "Signatories." WHEREAS, the city councils of 23 cities who are members of Cities passed resolutions in 2004 requiring Electric Delivery to file with those cities infonnation that demonstrates good cause for showing that Electric Delivery's transmission and distribution rates should not be reduced (hereinafter referred to as "Show Cause Actions''); WHEREAS, other cities who an: members Qf Cities an: contemplating initiating similar Show Cause Actions against Electric Delivery; WHEREAS, Cities and Electric Delivery desire to resolve all outstanding issues related to the existing and potential Show Cause Actions and other regulatory issues; and WHEREAS, after extensive negotiations, Cities and Electric Delivery have reached a compromise and settlement to resolve those issues. NOW, THEREFORE, the Signatories, through their undersigned representatives, hereby agree to the following: 1. Electric Delivery agrees to propose and support in its next system-wide rate case or city rate inquiry one or more municipal rates, each without a demand ratchet, that together will cover all municipal accounts, including a street lighting rate and municipal pumping rate that will be lower than they otherwise would be. Cities agree to provide to Electric Delivery any infonnation needed to design the rates described in this paragraph. 2. Electric Delivery agrees to file a system-wide rate case at the Public Utility Commission of Texas ("PUC") no later than July 1,2006, based on a test year ending December 31, 2005 unless Cities and Electric Delivery mutually agree that such a filing is unnecessary. For those cities that do not have a City Council meeting in July, 2006, Electric Delivery will extend its effective date to accomplish suspension by August 31, 2006. However, if Electric Delivery files a system-wide rate case at the PUC on or before June I, 2006, then Electric Delivery will not extend its effective date. 3. Cities agree that Electric Delivery is not required to respond to any pending Show Cause Action initiated by any city listed on Exln'bit A to this Agreement prior to July I, 2006. Cities further agree to abate or dismiss all pending Show Cause Actions, not to pursue any abated Show Cause Actions, and not to initiate similar actions before July I, 2006, provided the provisions of this Settlement Agreement an: honored. Cities agree not to intervene in, or participate in any manner in, any show cause action initiated at the PUC or in any other jurisdiction prior to the proceeding described in paragraph 2, or in any appeals of such show cause actionS, except as necessary to protect the tariff or tariff-efforts associated with paragraph I or to protect the city or ." . ,.. 1 EXHIBIT A. its residents from being prejudiced in any show cause action pending on appeal at the PUC. If Cities intervene in a show cause action pending on appeal at the PUC, then Cities agree not to take any position in that proceeding that is inconsistent with its obligations under this Settlement Agreement. 4. In consideration for Cities' obligations under this Agreement, Electric Delivery agrees to make a cash payment oUS.5 million to Cities by the later of March 31, 2005 or two weeks after receiving notice from Cities that (1) all cities listed on Exhibit B to this Settlement Agreement have abated or dismissed show cause actions pending against Electric Delivery, and (2) each city on Exhibit C to this Settlement Agreement has passed a resolution ratifiying this Settlement Agreement or provided to Cities a letter in substantially the same form as Exhibit D to this Settlement Agreement that has been signed by an authorized representative of the city. Starting March 31, 2006, and each March 31. thereafter, Electric Delivery will make an annual cash payment of $S million to Cities. Electric Delivery's obligation to make this payment ceases on the date upon which Cities fail to comply with their obligations under this Agreement or the date upon which the tariffs approved in Electric Delivery's next system-wide rate case at the PUC or in a city rate inquiry become effective on a temporary or pennanent basis ("Termination Date"); provided, however, in the year the new tariffs become effective, the annual payment shall be prorated until the Termination Date. S. Electric Delivery agrees to w',rk with Cities to improve the timeliness of streetlight maintenance and to develop a proee8J so that every city-owned and Electric Delivery-owned street light is assigned an identifish1e geographic location. Signatories agree to establish a task force of senior employees that will develop, by June 30, 2005, the process and planned rollout for the street light assignment project. Electric Delivery also agrees to provide to Cities a specific contact person (or persons) within Electric Delivery who will be responsible for handling all unresolved Cities' requests with respect to streetlights, including, but not limited to, billing, maintenance, installation, removal, and account initiation and closure. Signatories agree to diligently pursue resolution of the issues discussed in this paragraph; however, failure to reach an agreement with respect to these issues will not constitute a breach of this Settlement Agreement by either Cities or Electric Delivery. 6. Electric Delivery agrees to work with Cities to establish improved communication, coordination, and timing of constlUction concerning relocations of Electric Delivery's facilities in public right of way. Signatories agree to establish a task force of senior employees that will develop, by June 30, 2005, the process and planned rollout of an improved relocation process. Signatories agree to diligently pursue resolution of the issues discussed in this paragraph; however, failure to reach an agreement with respect to these issues will not constitute a breach of this Settlement Agreement by either Cities or Electric Delivery. 7. Electric Delivery agrees to discuss with Cities the payment of franchise fees on a quarterly basis regardless of whether the basis for a quarterly payment is historic or prospective and the standardization of a franchise renewal process that permits transition from a prospective basis to a historic basis where the franchise is up for renewal. Signatories agree to diligently pursue discussion of the issues discussed in this paragraph; however, failure to reach a resolution . - ,... 2 of these issues will not constitute a \neach of this Settlement Agreement by either Cities or Electric Delivery. 8. Electric Delivery agrees to negotiate with Cities, and Cities agree to approve, a tariff that permits Cities to request undergrounding of new or existing distribution facilities. The tariff shall ensure full cost recovery by Electric Delivery through a surcharge in the requesting city in the event that no third party is required by Electric Delivery's tariff; or applicable city ordinance, to pay for undergrounding costs. That tariff will also allow Cities to request undergrounding of transmission lines to the extent Electric Delivery determines that (a) such undergrounding is feasible, (b) such undergrounding is consistent with the PUC's Substantive Rules and ERCOT's requirements, and (c) Electric Delivery can recover the costs of such under grounding through a surcharge in the requesting city. Electric Delivery will not be obligated to file the tariff for city approval until after the expiration of the Price to Beat or the modification of the Price to Beat in a manner that allows pass through of tariff charges to the ultimate consumer. 9. Electric Delivery agrees to provide quarterly updates to representatives designated by Cities and their consultants concerning Electric Delivery's capital expenditure projects and affiliate transactions, the creation and regulatory treatment of a Pension and Health Benefits Reserve for Electric Delivery, possible workable parameters for performance based rates for Electric Delivery, and other topics as agreed upon by the Signatories. Electric Delivery will work with Cities to provide information requested by Cities concerning those topics. 10. Electric Delivery shall pay up to $10,000 per month in regulatory expenses directly to Cities' consultants, after receipt of appropriate documentation and invoices, provided said expenses may be deferred fur recovery. Cities agree to support recovery of such costs in Electric Delivery's next rate case. Should recovery be denied by the PUC, then the payments will immediately cease. 11. Electric Delivery agrees to work with Cities to establish better communications between the Cities and Electric Delivery with respect to access to city meters for monthly reading. Each city shall provide in writing, by March 31, 2005, a contact person for inaccessible meters for city accounts, and shall promptly notifY Electric Delivery of any change in the contact person. In months where a meter reader is unable to gain access to the premises to read the meter on regular meter reading trips, or in months when meters are not read, Electric Delivery agrees to provide the customer with a postcard and request the customer to read the meter and return the card to Electric Delivery. If the postcard is not received by E1ei:tric Delivery in time for billing, Electric Delivery may estimate the meter reading and issue a bill. Electric Delivery agrees that all municipal meters will be read at least once every three months by it or by the respective city. The failure of a city to designate a contact person for inaccessible meters affects only that city and does not adversely impact any other city or mitigate responsibilities and benefits otherwise inherent to this Agreement 12. Electric Delivery agrees to reimburse Cities for the expenses incurred related to the Show Cause Actions in an amount not to exceed 5100,000 after receipt of appropriate documentati<ln and invoices, and Cities agree that those costs can be deferred for recovery in its next rate case and agree to support deferral and recovery in that case. Notwithstanding any provisions in . . .... 3 existing applicable franchise agreements to the contrary, Electric Delivery agrees to reimburse Cities for reaso1l8b1e and necessary expenses incurred in Electric Delivery's next rate case in an amount not 10 exceed S2,000,000. The rate case expense reimbursements will be made monthly, beginning with the first month after the consultants are hired. Cities further agree not to contest the recovery of Cities' rate case expenses and Electric'Delivery's reaB01l8b1e and necessary rate case expenses in Electric Delivery's next rate case. Electric Delivery further agrees to pay, and Cities agrees to accept, S150,000 in scttIement of all previously disputed regulatory expenses. Electric Delivery will not seek reimbursement of that S150,000 amount in Electric Delivery's rates. 13. Electric Delivery agrees that, in franchise negotiations, it will not seek to extend the prohibition on reimbursement of municipal rate case expenses beyond lune 2008. 14. Electric Delivery agrees that if the 2005 Texas Legislature considers the implementation of a nodal pricing system in ERCOT, then Electric Delivery will provide information to the Legislature concerning the importance of a vibrant electric transmission system and the benefits of the expansion of transmission facilities in helping'to reduce congestion costs. IS. Signatories acknowledge that Electric Delivery intends to offer certain terms of this Settlement Agreement to cities served by Electric Delivery that are not listed on Exhibit A ("Negotiations''). Electric Delivery agrees that all cities listed on Exlu'bit A are entitled to Most Favored Nations protection during those Negotiations and that any benefits that E1cctrin Delivery agrees to provide to any city during those Negotiations that are not already included in this Settlement Agreement will be offered to all cities listed on Exhibit A. Cities acknowledge and agree that to receive any additional benefits from Electric Delivery, additional consideration from Cities to Electric Delivery may be required. 16. The Signatories agree that the amounts paid by Electric Delivery to Cities pursuant to paragraphs 4, 10, and 12 of this Agreement are paid solely in consideration for Cities' abatement or dismissal of, and forbearance from filing or pursuing, Show Cause Actions against Electric Delivery and Cities' agreement to abide by the terms of this Agreement, and to reimburse Cities' expenses associated with the Show Cause Actions and other regulatory proceedings. To the extent that the amounts paid may be in excess of Cities' expenses, the excess is paid solely in order to settle the matters that are the subject of this Agreement Signatories recognize and agree that the payments specified in this Agreement are not a rate reduction,. refund, rebate, discount, preference or privilege of any kind for services provided by Electric Delivery or any of its affiliates or predecessors in interest under any tarill: whether in the past, now, or in the future. M such, the provision of electric delivery service to Cities by Electric Delivery or any affiliate or predecessor has been and will continue to be governed solely by the rates, terms, and conditions of the applicable tarifEl. 17. Cities agree that for a ten-day period following the date this Settlement Agreement is executed, neither Cities nor the cities listed on Exhibit A will make any public statements or take any public action concerning the existence of a scttIement or the terms of the Settlement Agreement . . ~.' 4 18. This Agreement shall become effective only upon the execution of this Agreement and the entry of resolutions or orders abating or dismissing the Show Cause Actions. 19. Each person executing this Agreement represents that he or she is authorized to sign this Agreement on behalf of the party represented. 20. The Signatories expressly acknowledge and agree that oral and written statements made by any party or its representative during the course of the settlement negotiations that led to this Agreement cannot be.used or portrayed as an admission or concession of any sort and shall not be admissible as evidence in any proceeding in any fonun. Executed on this the '2-'), day of February, 2065, by the Signatories hereto, by and through their undersigned duly authorized representatives. TXU Electric Delivery Company SteerID.g Committee of CIties Served by TXU Electric Delivery Company on behalf of an cities liSted on Exhibit A to this Agreement ~/1df'! ~ . . .... s Exhibit A City of Addison City of Allen City of Alvarado City of Andrews City of Archer City City of Ar1i1lgtOll City of BeltOll City of Benbrook City of Big Spring City of Bn:ckcnridge City of Bridgcport City ofBroWIlwood City of Buffalo City of BurkbUl'Dett City of Burleson City of Caddo Mills City ofCamCl'Oll City of CBIlton City of Carrollton City ofCeliDa City of CentcrvilIe City of C1ebume City of Co11cyvi1le City of CoUinsviJIc City of ComBIlche City of Corinth City of Crowley City of Dallas City ofDaiworthingtOll Gardens City ofDcLcon City of Denison City of Early City of East1BIld City of Edgec1iff Village City of Eulcss City of Farmers Branch City of Flower MOUIld City of Forest Hill City of Fort Worth City of Frisco City of Frost City of GlCllIl Heights City of Grand Prairie City of Granger City of GrapcviDc City of Gunter City of Harker Heights City of Heath City ofHcnrictta City of Hewitt City ofHighIBIld Park City ofHoncy Grove CityofHowc City of Hurst City of Hutto City of Irving City of Jolly City of Josephine City of Justin City of Kaufman City ofKcller City ofKercos City of Lakeside City of t.amcsa City of Linda1e City ofLittIe River Academy City of Luella City ofMalalcoff City of Mansfield City ofMcKimley City of Midland City of Milford City ofMwphy City ofMurcbison City ofNcw Chapel Hill City of North Rich1and Hills City ofO'Domrcl1 City of Oak Leaf City of Oak Point City of Odessa City ofOvilla City ofPalcstine City ofPmcgo City of Paris City of Piano City ofRangcr City of Rhome City of Ricbardson City ofRichland Hills City of Roanoke City of Robinson City of R.ockwall City of Rosser City ofRow1ctt City ofShcrman City of Snyder City of Southlalcc City ofSulplwr Springs City ofSlDlIlyvaIe City of Sweetwater City ofTcmple .' . ~.... City of The Colony City ofTyler City ofUnivcrsity Park City of Venus City of Waco City ofWatauga City of White Settlement City of Wichita Falls City of Wood way Exhibit B City of Arlington City ofBcnbrook City of Brown wood City ofBurlcson City of Carrollton City ofDalIas City of Dalworthington GanIeIIs City of Denison CityofFt. Worth City of Harker Heights City ofHcath City ofPantcgo City of Piano City ofRichland Hills City of Robinson CityofRockwall City of Snyder City of Sulphur Springs City of The Colony City of Wood way ," ." ... .-. . , .... - Exhibit C City of Addison City of Allen City of Andrews City of Arl:her City City of Belton City of Big Spring City of Breckemidge City of Bridgeport City of Burlcbumett City of Celina City of Ciebume City of Colleyville City of Deleon City of Early City ofEast1and City of Euless City of Farmers Branch City of Flowcr Mound City of Forest Hill City of Frisco City of Glenn Heights City of Grand Prairie City of Grapevine City ofHenrieua City of Highland Parle City of Howe City of Hurst City ofJrving City of Keller City of Lakeside City of Lamesa City of Lindale City of Little River Academy City of Mansfield City ofMcKiDney City of Midland City of Murphy City of North Richland Hills City of Oak Point City of O'Dormell City of Odessa City of Palestine City of Paris City of Richardson City of Roanoke City of Rowlett City of Sherman City of Southlakc City of Sunnyvale City of Sweetwater City ofTempIe City of Tyler City ofUnivcrsity Parle City of Waco City ofWatauga City of White Settlement City of Wichita FaIls EXHIBIT D March _, 2005 r. Geoffrey Gay loyd Gosselink Blevins Rochelle Baldwin & Townsend, P.C. 11 Congress Avenue, Suite 1800 ustin, Texas 78701 Re: Settlement Agreement between Steering Committee of Cities Served by TXU Electric Delivery and TXU Electric Delivery Company ear Mr. Gay: I hereby acknowledge that the Steering Committee of Cities Served by TXU Electric elivery has the authority to act on behalf of the City of in the negotiation and xecution of a settlement agreement with TXU Electric Delivery Company, dated February 22, 005. I also represent that I am duly authorized by the City of to sign this letter. Sincerely, [Name] [Position]