10 - Suspension of Oncor Proposed Rate IncreaseItem No. 10
Memorandum
TO: Mayor, Mayor Pro -Tem, and City Council
Grayson Path, City Manager
FROM: Gene Anderson, Finance Director
SUBJECT: SUSPENSION OF ONCOR'S PROPOSED RATE INCREASE
DATE: July 11, 2022
BACKGROUND: On Friday, May 13, 2022, Oncor filed a Statement of Intent to Increase Rates
with all cities in its service area that retain original jurisdiction. The Company is seeking to
increase rates by approximately $251 million over rates currently in place, or approximately 4.5%
over present revenues. Residential customers would see an 11.2% increase in rates. If approved,
a residential customer using 1,300 kWh per month would see a bill increase of about $6.02 per
month. Additionally, the Company proposes to increase street lighting rates by 1.6%.
STATUS OF ISSUE: The rate increase requested by Oncor will become effective on August 1,
2022, unless the City takes action to suspend the effective date. By statute, cities are permitted to
extend the effective date by up to 90 days in order to study the filing. The city must take action
to suspend the effective date by August 1, 2022.
BUDGET: N/A
RECOMMENDATION: Motion to approve the resolution suspending Oncor's proposed rate
increase for 90 days in order to examine the validity of the request. The staff will bring back to
the Council a recommendation concerning this issue at a later date.
Lloyd 816 Congress Avenue, Suite 1900
Austin, Texas 78701
Gosselink
Telephone: IR, 2-053 00
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ATTORNEYS AT LAW
www.iglawfirm.com
Mr. Brocato's Direct Line: (512) 322-5857
Email: tbrocato@lglawfirm.com
MEMORANDUM
TO: Steering Committee of Cities Served by Oncor Members
FROM: Thomas Brocato
Jamie Mauldin
Roslyn Dubberstein
DATE: June 13, 2022
RE: Oncor Electric Delivery Company's Statement of Intent to Increase Rates Suspension
Packet — Updated Effective Date
ACTION REQUIRED TO SUSPEND THE EFFECTIVE DATE BY AUGUST 10 2022
On Friday, May 13, 2022, Oncor filed a Statement of Intent to Increase Rates with all cities in its
service area that retain original jurisdiction. The Company is seeking to increase rates by approximately
$251 million over rates currently in place, or approximately 4.5% over present revenues. Residential
customers would see an 11.2% increase in rates. If approved, a residential customer using 1,300 kWh per
month would see a bill increase of about $6.02 per month. Additionally, the Company proposes to
increase street lighting rates by 1.6%.
The rate increase requested by Oncor will become effective on August 1, 2022, unless the city
takes action to suspend the effective date. By statute, cities are permitted to extend the effective date by
up to 90 days in order to study the filing. The city must take action to suspend the effective date by
August 1, 2022. If your city does not have a regular council meeting scheduled before August 11t or is
otherwise unable to take action on the suspension resolution August 1st, please contact us as soon as
possible.
Attached to this memo is a model suspension resolution and staff report. In the past, Oncor local
managers have provided cities with a model denial resolution and may recommend that the city
immediately deny the rate request. If this occurs, we do not recommend that you deny the request at this
time. Suspending the effective date allows cities more time to review the application and decide on the
final action, including settlement or denial of Oncor's requested rate increase.
If you have any questions, please feel free to contact us:
Thomas —u v�, a a D a.n. �a� �r: / 512-322-5857
Jamie —gci�xn+i��c?r°ij�,llawfl�a.a.l:..�°r:ax /512-322-5890
Roslyn —a��fxrzVl,r 512-322-5802
1669/35/7314214.1
Lloyd Gosselink Blevins Rochelle & Townsend, P.C.
MODEL STAFF REPORT
***ACTION MUST BE TAKEN TO SUSPEND THE EFFECTIVE DATE ON OR
BEFORE AUGUST 1, 2022***
PURPOSE
Oncor Electric Delivery Company ("Oncor" or "the Company") filed an application on or
about May 13, 2022 with cities retaining original jurisdiction seeking to increase system -wide
transmission and distribution rates by about $251 million or approximately 4.5% over present
revenues. The Company asks the City to approve an 11.2% increase in residential rates and a
1.6% increase in street lighting rates. If approved, a residential customer using 1,300 kWh per
month would see a bill increase of about $6.02 per month.
The resolution suspends the August 1, 2022 effective date of the Company's rate increase
for the maximum period permitted by law to allow the City, working in conjunction with the
Steering Committee of Cities Served by Oncor, to evaluate the filing, determine whether the
filing complies with law, and if lawful, to determine what further strategy, including settlement,
to pursue.
The law provides that a rate request made by an electric utility cannot become effective
until at least 35 days following the filing of the application to change rates. The law permits the
City to suspend the rate change for 90 days after the date the rate change would otherwise be
effective. If the City fails to take some action regarding the filing before the effective date,
Oncor's rate request is deemed administratively approved.
DISCUSSION
The City of Paris is a member of a 169 -city coalition known as the Steering Committee of
Cities Served by Oncor ("Steering Committee"). The Steering Committee has been in existence
since the late 1980s. It took on a formal structure in the early 1990s when cities served by the
former TXU gave up their statutory right to rate case expense reimbursement in exchange for
higher franchise fee payments. Empowered by city resolutions and funded by per capita
assessments, the Steering Committee has been the primary public interest advocate before the
Public Utility Commission, the Courts, and the Legislature on electric utility regulation matters
for the last 30 years.
Although Oncor has increased rates many times over the past few years, this is the first
comprehensive base rate case for the Company since March 2017.
Ex :lavation of "Be It Resolved" Para gra hs:
Section 1. The City is authorized to suspend the rate change for 90 days after the date
that the rate change would otherwise be effective for any legitimate purpose. Time to study and
investigate the application is always a legitimate purpose. Please note that the resolution refers
to the suspension period as "the maximum period allowed by law" rather than ending by a
specific date. This is because the Company controls the effective date and can extend the
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deadline for final city action to increase the time that the City retains jurisdiction if necessary to
reach settlement on the case. If the suspension period is not otherwise extended by the
Company, the City must take final action on Oncor's request to raise rates by August 1, 2022.
Section 2. This provision authorizes the Steering Committee, consistent with the City's
resolution approving membership in the Steering Committee, to act on behalf of the City at the
local level in settlement discussions, in preparation of a rate ordinance, on appeal of the rate
ordinance to the PUC, and on appeal to the Courts. Negotiating clout and efficiency are
enhanced by the City cooperating with the Steering Committee in a common review and
common purpose. Additionally, rate case expenses are minimized when the Steering Committee
hires one set of attorneys and experts who work under the guidance and control of the Executive
Committee of the Steering Committee.
Section 3. The Company will reimburse the Steering Committee for its reasonable rate
case expenses. Legal counsel and consultants approved by the Executive Committee of the
Steering Committee will submit monthly invoices that will be forwarded to Oncor for
reimbursement. No individual city incurs liability for payment of rate case expenses by adopting
a suspension resolution.
Section 4. This section merely recites that the resolution was passed at a meeting that
was open to the public and that the consideration of the Resolution was properly noticed.
Section 5. This section provides that both Oncor and Steering Committee counsel will be
notified of the City's action by sending a copy of the approved and signed resolution to certain
designated individuals.
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RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PARIS, TEXAS SUSPENDING THE AUGUST 1, 2022
EFFECTIVE DATE OF ONCOR ELECTRIC DELIVERY
COMPANY'S REQUESTED RATE CHANGE TO PERMIT
THE CITY TIME TO STUDY THE REQUEST AND TO
ESTABLISH REASONABLE RATES; APPROVING
COOPERATION WITH THE STEERING COMMITTEE OF
CITIES SERVED BY ONCOR TO HIRE LEGAL AND
CONSULTING SERVICES AND TO NEGOTIATE WITH
THE COMPANY AND DIRECT ANY NECESSARY
LITIGATION AND APPEALS; FINDING THAT THE
MEETING AT WHICH THIS RESOLUTION IS PASSED IS
OPEN TO THE PUBLIC AS REQUIRED BY LAW;
REQUIRING NOTICE OF THIS RESOLUTION TO THE
COMPANY AND LEGAL COUNSEL FOR THE STEERING
COMMITTEE
WHEREAS, on or about May 13, 2022, Oncor Electric Delivery Company (Oncor),
pursuant to PURR §§ 33.001 and 36.001 filed with the City of Paris a Statement of Intent to
increase electric transmission and distribution rates in all municipalities exercising original
jurisdiction within its service area effective August 1, 2022; and
WHEREAS, the City of Paris is a member of the Steering Committee of Cities Served
by Oncor ("Steering Committee") and will cooperate with the 169 similarly situated city
members and other city participants in conducting a review of the Company's application and to
hire and direct legal counsel and consultants and to prepare a common response and to negotiate
with the Company prior to getting reasonable rates and direct any necessary litigation; and
WHEREAS, PURR § 36.108 grants local regulatory authorities the right to suspend the
effective date of proposed rate changes for ninety (90) days after the date the rate change would
otherwise be effective; and
WHEREAS, PURR § 33.023 provides that costs incurred by Cities in ratemaking
proceedings are to be reimbursed by the regulated utility,
THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PARIS, TEXAS:
1. That the August 1, 2022 effective date of the rate request submitted by Oncor on
or about May 13, 2022, be suspended for the maximum period allowed by law to permit
adequate time to review the proposed changes and to establish reasonable rates.
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2. As indicated in the City's resolution approving membership in the Steering
Committee, the Executive Committee of Steering Committee is authorized to hire and direct
legal counsel and consultants, negotiate with the Company, make recommendations regarding
reasonable rates, and to intervene and direct any necessary administrative proceedings or court
litigation associated with an appeal of a rate ordinance and the rate case filed with the City or
Public Utility Commission.
3. That the City's reasonable rate case expenses shall be reimbursed by Oncor.
4. That it is hereby officially found and determined that the meeting at which this
Resolution is passed is open to the public as required by law and the public notice of the time,
place, and purpose of said meeting was given as required.
5. A copy of this Resolution shall be sent to Oncor, Care of Howard V. Fisher,
Oncor Electric Delivery Company LLC, 1616 Woodall Rodgers Freeway, Dallas, Texas 75202
and to Thomas Brocato, Counsel to the Steering Committee, at Lloyd Gosselink Rochelle &
Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725.
PASSED AND APPROVED this the 11TH day of JULY, 2022.
Paula Portugal, Mayor, City of Paris
ATTEST:
Janice Ellis, City Clerk
APPROVED AS TO FORM:
Stephanie H. Harris, City Attorney
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