14 Resolution Oncor (2)CITY COUNCIL AGENDA ITEM BRIEFING SHEET
Submittal Date:
Originating Department:
Presented By:
Agenda Item No.:
10-1-2008
Council Date:
10-13-2008
Finance
Gene Anderson
14.
RECOMMENDED MOTION:
Motion to approve a resolution denying Oncor's requested rate increase.
POLICY ISSUE(S):
Fiscal Management
See attached staff report.
BOARD/COMMISSION RECOMMENDATION:
NONE
EXHIBITS:
Staff report and resolution.
ACTION:
BUDGET INFO:
❑ Financial Report ❑ Minute Order
Expense
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❑ Department Report ~ Resolution
Budgeted Amt.
$NA
❑ Presentation ❑ Ordinance
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Acct. Name
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Acct. Number
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FISCAL NOTES:
None
REVIEWED AND APPROVED BY:
Z Administration Z City Clerk ❑ Comm
unity Development ❑ EMS/IT 2 Finance ❑ Fire
❑ Municipal Court Z Legal ❑ Library
❑ Police ❑ Eng./Public Works ❑ Utilities
City of Paris Revised 2/04/08
~ 011U072
DRAFT
Attomey\reswork\current\Oncor Denial Resolution 2008
RESOLUTION N0.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS
FINDING THAT ONCOR ELECTRIC COMPAIVY'S REQUESTED INCREASES
TO ITS ELECTRIC TRANSMISSION AND DISTRIBUTION RATES AND
CHARGES WITHIN THE CITY SHOULD BE DENIED; FIIVDING THAT THE
CITY'S REASONABLE RATE CASE EXPENSES SHALL BE REIMBURSED BY
THE COMPAIVY; FIIVDIIVG 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.
WHEREAS, pursuant to § 33.001 of the Public Utility Regulatory Act ("PURA"), the
City has exclusive original jurisdiction over the electric rates, operations, and services
provided within city limits;
WHEREAS, on or about June 27, 2008, Oncor Electric Delivery Company ("Oncor" or
"Company"), pursuant to PURA 33.001 and 36.001 filed with the City of Paris ("City") a
Statement of Intent to increase electric transmission and delivery rates by $275 million on
a system-wide basis within its service area effective August 8, 2008; and
WHEREAS, pursuant to PURA § 36.108, the Ciry lawfully suspended the August 8,
2008, effective date by resolution to provide time to study the reasonableness of the
Company's application to increase rates; and ,
WHEREAS, the City is a member of the Oncor Cities Steering Committee (Steering
Committee) and has cooperated with 145 similarly situated city members to conduct a
review of the Company's application, to hire and direct legal counsel and consultants, to
prepare a common response to the filing, to negotiate with the Company and to direct any
necessary litigation appealing final city action; and
WHEREAS, the City, in a reasonably noticed meeting that was open to the public,
considered the Company's application; and
WHEREAS, the consultants who were retained by the Steering Committee to
evaluate the merits of the Company's application have determined that the Company's
requested $275 million increase in revenues for its transmission and distribution system is
not supported by evidence; and
WHEREAS, PURA § 33.023 provides that reasonable costs incurred by cities in
ratemaking activities are to be reimbursed by the regulated utility.
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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PARIS, TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby
in all things approved.
Section 2. That the rates proposed by Oncor Electric Delivery Company, to be
recovered through its electric transmission and distribution rates charged to customers
located within the City limits, are hereby found to be unreasonable and shall be denied.
Section 3. That the Company shall continue to charge its existing rates for
transmission and distribution services to customers within the Ciry.
Section 4. That the City's reasonable rate case expenses shall be reimbursed by
Oncor.
Section 5. 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.
Section 6. A copy of this Resolution shall be sent to Oncor, care of Debra
Anderson, Oncor Electric Delivery Company, 1601 Bryan St., Suite 23-055C, Dallas, Texas
75201 and to Geoffrey Gay, General Counsel to the Oncor Cities Steering Committee, at
Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725.
Section 7. That this resolution shall be effective immediately upon passage.
PASSED AND APPROVED, this the 13th day of October, 2008.
Jesse James Freelen, Mayor
ATTEST:
Janice Ellis, City Clerk
APPROVED AS TO FORM:
W. Kent McIlyar
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Oncor Cities Steering Committee
Addison
Flower Mound
Allen
Forest Hill
Alvarado
Fort Worth
Andrews
Frisco
Anna
Frost
Archer City
Gainesville
Argyle
Garland
Arlington
Glenn Heights
Bedford
Grand Prairie
Bellmead
Granger
Belton
Grapevine
Benbrook
Gunter
Big Spring
Haltom City
Beverly Hills
Harker Heights
Breckenridge
Heath
Bridgeport
Henrietta
Brownwood
Hewitt
Buffalo
Highland Park
Burkburnett
Honey Grove
Burleson
Howe
Caddo Mills
Hurst
Cameron
Hutto
Canton
Iowa Park
Carrollton
Irving
Cedar Hill
Jolly
Celina
Josephine
Centerville
Justin
Cleburne
Kaufman
Colleyville
Keller
Collinsville
Kerens
Coahoma
Lake Worth
Comanche
Lakeside
Commerce
Lamesa
Coppell
Lewisville
Copperas Cove
Lindale
Corinth
Little Elm
Crowley
Little River Academy
Dallas
Malakoff
Dalworthington Gardens
Mansfield
De Soto
McKinney
DeLeon
Mesquite
Denison
Midland
Duncanville
Midlothian
Early
Murchison
Eastland
Murphy
Edgecliff Village
Nacogdoches
Euless
New Chapel Hill
Everman
North Richland Hills
Fairview
O'Donnell
Farmers Branch
Oak Leaf
Fate
Oak Point
Odessa
Ovilla
Palestine
Pantego
Paris
Plano
Prosper
Pottsboro
Ranger
Rhome
Richardson
Richland Hills
River Oaks
Roanoke
Robinson
Rockwall
Rosser
Rowlett
Sachse
Saginaw
Seagoville
Sherman
Snyder
Southlake
Springtown
Stephenville
Sulphur Springs
Sunnyvale
Sweetwater
Temple
Terrell
The Colony
Tyler
University Park
Venus
Waco
Watauga
Waxahachie
White Settlement
Wichita Falls
Willow Park
Woodway
Wylie
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STAFF REPORT
***ACTION MUST BE TAKEN TO DENY THE REQUESTED RATE INCREASE ON
OR BEFORE NOVEMBER 6, 2008***
PURPOSE
Oncor Electric Delivery Company ("Oncor" or "the Company") filed an application on or
about June 27, 2008 with cities retaining original jurisdiction seeking to increase system-wide
transmission and distribution rates by $275 million. (Until last year, Oncor was known as TXU
Electric Delivery Company.) The Company asks the City of Paris to approve a 17.6% increase
in residential rates, a 9.1 % increase in commercial rates, and a 5.8% increase in street lighting
rates. According to Oncor, annual rates would increase by approximately $60 for an average
residential customer. Oncor's request has been assigned Public Utility Commission Docket No.
35717.
The resolution denies the Company's requested rate increase and requires that the
Company's current rates be maintained for all customers within the City of Paris.
DISCUSSION
The City of Paris, pursuant to § 33.001 of the Public Utility Regulatory Act, has
exclusive original jurisdiction over the electric rates charged by the Company. In accordance
with that authority, the City of Paris lawfully suspended the August 8`h effective date for 90 days
to review the Company's requested rate increase.
The City's review of Oncor's rate increase request is coordinated by the Oncor Cities
Steering Committee ("Steering Committee"). The City of Paris is a member of the 145-city
Steering Committee. 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 20 years.
To conduct the review and any necessary litigation of Oncor's requested rate increase, the
Executive Committee of the Steering Committee retained lawyers and consultants with expertise
in regulatory rate making issues. Legal efforts are being directed by Geoffrey Gay, Kristen
Doyle and Thomas Brocato with the law firm of Lloyd Gosselink Rochelle & Townsend. All
reasonable consulting and legal fees incurred by the Steering Committee are reimbursable by the
Company.
The major components underlying Oncor's requested $275 million increase include an
increase for depreciation expense ($131 million), a substantial increase to the Company's storm
reserve ($81 million) and additional costs for pension and post retirement benefits ($36 million).
Based upon the analysis of the Company's filing and review of discovery responses, the Steering
Committee's consultants have determined that the Company's increase cannot be substantiated by
evidence. In particular, Steering Committee experts have identified problems with the evidence
offered by the Company supporting its requested rate of return, cash working capital,
depreciation expense, consolidated taxes, federal income taxes, storm damage reserve and
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pension and post retirement benefits. The preliminary analysis indicates that Cities will likely be
proposing cumulative reductions to the Company's requested rate increase in excess of $200
million. In addition, Cities' experts will file testimony regarding the rate design and cost
allocation proposals made by Oncor.
The action taken by the City of Paris to deny Oncor's rate increase will be appealed by
the Company to the Public Utility Commission ("PUC") of Texas. The appeals of all individual
city actions will be consolidated into the current proceeding at the PUC, Docket No. 35717. The
Steering Committee is already actively involved in Docket No. 35717 and will file testimony
challenging the Company's support for the rate increase. The hearing regarding Oncor's
requested rate increase will begin January 13, 2009 and is expected to last three weeks. In an
effort to avoid litigation if at all possible, parties to the proceeding have scheduled meetings with
the Company to investigate the possibility of settlement.
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