16 TXU Info Request Res
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H:I ATTORNEYIJANICE/RESOLUTIONS/CURRENT/Dill Electric - Infonnation Request
AUGUST 9, 2004
RESOLUTION
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS,
PARIS, TEXAS, DIRECTING TXU ELECTRIC DELIVERY COMPANY TO
FILE CERTAIN INFORMATION WITH THE CITY OF PARIS; SETTING
A PROCEDURAL SCHEDULE FOR THE GATHERING AND REVIEW OF
NECESSARY INFORMA TION IN CONNECTION THEREWITH; SETTING
DATES FOR THE FILING OF THE CITY'S ANALYSIS OF THE
COMPANY'S FILING AND THE COMPANY'S REBUTTAL TO SUCH
ANALYSIS; RA TIFYING THE HIRING OF LEGAL COUNSEL AND
CONSULTANTS; RESERVING THE RIGHT TO REQUIRE THE
REIMBURSEMENT OF THE CITY OF PARIS' RATE CASE EXPENSES;
SETTING A PUBLIC HEARING FOR THE PURPOSES OF DETERMINING
IF THE EXISTING RATES OF TXU ELECTRIC DELIVERY COMPANY
ARE UNREASONABLE OR IN ANY WAY IN VIOLATION OF ANY
PROVISION OF LAW AND THE DETERMINATION BY THE CITY OF
PARIS OF JUST AND REASONABLE RATES TO BE CHARGED BY TXU
ELECTRIC DELIVERY COMPANY.
WHEREAS, the City of Paris is a regulatory authority under the Public Utility Regulatory
Act (PURA) and has original jurisdiction over the rates ofTXU Electric Delivery (TXU) to determine
if such rates are just and reasonable; and
WHEREAS, Sections 33.021, 36.003 and 36.151 ofPURA empower a regulatory authority,
on its own motion or on a complaint by any affected person, to determine whether the existing rates
of any public utility for any service are unreasonable or in any way in violation of any provision of
law, and upon such determination, to determine the just and reasonable rates; and
WHEREAS, the City of Paris has reason to believe that TXU is overearning and its rates
are excessive; and
WHEREAS, the City of Paris is a member of the Steering Committee of Cities Served By
TXU;and
WHEREAS, the Steering Committee of Cities Served by TXU has unanimously
recommended that cities pass a resolution that requires TXU to show cause why its transmission and
distribution rates should not be reduced; and
WHEREAS, the City of Paris, and the City Council of the City of Paris, desires, on its own
motion, to exercise its authority under Sections 33.021, 36.003 and 36.151 of PURA; and
WHEREAS, a procedural schedule should be established for the filing of certain information
by TXU, procedures to be followed to obtain and review information from TXU, the filing of an
analysis of such information by the City, the filing of rebuttal information from TXU, and a public
hearing at which time the City shall make a determination whether the existing rates of TXU are
unreasonable or are in any way in violation of any provision oflaw and if such rates should be revised
and just and reasonable rates determined for TXU; NOW THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS,
TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby in all things
approved.
Section 2. That this resolution constitutes notice of the City's intent to proceed with an
inquiry into the transmission and distribution rates charged by TXU. On or before November 30,
2004, TXU shall file with the City of Paris, information that demonstrates good cause for showing
that TXU's transmission and distribution rates should not be reduced. Specifically, TXU shall file with
the City of Paris information for the test year beginning July 1, 2003 and ending June 30,2004,
regarding TXU's cost of service elements, including, but not limited to the elements detailed by the
Public Utility Commission as necessary for the filing of a Statement of Intent to Change Rates.
Section 3. That the City's designated representatives shall have the right to obtain additional
information from TXU through the filing of requests for information, which shall be responded to
within fifteen (15) days from the receipt of such request for information.
Section 4. That the City's designated representatives shall file their analysis of TXU's filing
and information on or before December 29,2004.
Section 5. That TXU shall file any rebuttal to the analysis of City's representatives on or
before January 7, 2005. With its rebuttal, TXU may present whatever additional information it desires
to defend its current rates.
Section 6. That public hearing shall be conducted by the City Council for the City of Paris
on January 10,2005, during the regular council meeting scheduled to commence at 6:00 p.m. At such
hearing a representative ofTXU and a representative of the City of Paris' consultants will each be
allowed to address the City Council and summarize previously filed reports for no more than 15
minutes. Based upon such hearing, a determination ofthe reasonableness ofthe existing rates ofTXU
shall be made by the City Council and, if necessary, just and reasonable rates shall be determined to
be thereafter observed and enforced for all services ofTXU within the City of Paris, Texas.
Section 7. That the City Council may, from time to time, amend this procedural schedule and
enter additional orders as may be necessary in the public interest and to enforce the provisions hereof.
Section 8. That subject to the right to terminate employment at any time, the City of Paris
hereby ratifies the Steering Committee's selection of Geoffrey Gay and Kristen Doyle with the law
firm of Lloyd, Gosselink, Blevins, Rochelle, Baldwin & Townsend as legal counsel to assist the City
of Paris in its ratemaking and to prosecute any appeals to the Texas Public Utility Commission or
court.
Section 9. That fees and expenses of attorneys and consultants assisting the City in the
Steering Committee's review of the reasonableness of TXU's rate will be processed through the
Steering Committee but the City reserves the right to seek reimbursement from TXU pursuant to the
PURA Section 33.023.
Section 10. That it is hereby officially found and determined that the meeting at which this
ordinance was passed was open to the public as required by law, and that public notice of the time,
place, and purpose of said meeting was given as required by Section 551. 041, Texas Government
Code.
Section 11. That this resolution shall be effective from and after its date of passage.
PASSED AND APPROVED this 9th day of August, 2004.
Curtis Fendley, Mayor
ATTEST:
Mattie Cunningham, City Clerk
APPROVED AS TO FORM:
Larry W. Schenk, City Attorney
AGENDA INFO
AT ON SHEET
SUBJECT
Resolution Requiring TXU Electric Del'very t Show Cause for Rates
BACKGROUND
The Steering Committee of Cities Served by TX , of which the City of Paris is member,
has reason to believe the transmission and distri ution (liT &D") rates currently charge by TXU
Electric Delivery ("TXU", formerly known as ncor) re excessive. The purpose of t is agenda
item is to seek authorization to require TXU to how c use to justify the existing T & rates, to
establish a procedural schedule for the review 0 the r te information provided by TX , to hire
and direct legal counsel and consultants, and to s t a pub ic hearing to determine ifTXU s existing
rates are unreasonable.
DESCRIPTION
On July 16, 2004, the Steering Committ e of ities Served by TXU met in A ington to
discuss TXU' s current T &D rates. The Steering ommi tee unanimously recommended that cities
pass a resolution requiring TXU to show cause why it T &D rates should not be red ced. The
Steering Committee also authorized the retent on of ate case attorneys and consu tants and
intervention in any related appeal. Finally, the S eering Committee approved a lO-cent er capita
fee for 2004.
The T &D rates currently charged by T U we e set by the Public Utility Co ission
("PUC") in 2001 in anticipation of the start of r tail el ctric competition. While tradi ional rate
regulation in the public interest is based upon a s apsho of historic costs, the PUC base its 2001
approval of TXU's T&D rates upon projected c sts an expenses for 2002, Enormou changes
have occurred since TXU's T&D rates were app oved, nc1uding significant decreases' the cost
of capital, large reductions in TXU's costs and expen es, mass TXU employee layo fs, and a
complete change in TXU affiliate transactions. s a res It, it is likely that TXU's curr nt T &D
rates are excessive. Since T&D rates typically c prise one-half of the total electric bil , curbing
excessive T&D rates will reduce the high cost f stree lighting and other off-peak 10 d, A rate
review of TXU' s T &D rates also permits the inv tigati n of unfair and/or irrational cos s that are
currently reflected in off-peak tariffs, as well as other ervice standards issues, Addit onally, a
T &D rate case may provide cities served by TX anoth r forum to address the horrible nequities
that would result if a nodal pricing scheme were imple ented.
Some precedent exists for rate review of &D ra es since the deregulation of ret '1 electric
rates. Several cities in South Texas initiated a sh w cau e inquiry at the local level last year that
precipitated a T&D rate proceeding at the PU invol ing their wires company, A - Texas
Central Company ("TCC", formerly CP&L). L'ke T U, TCC's existing T&D rates were set
based upon 2002 inflated cost projections that ne er c e to pass. In the TCC T&D rate case, the
company requested a $67 million increase ove its ex'sting T&D rates. The hearing xaminers
rejected TCC' s rate increase request, and instea reco ended that TCC's Current &D rates
be reduced by more than $30 million. The exami ers' re ommendation is currently pen ing before
the PUc.
Attached is a resolution that will accom lish th following objectives:
1.
It requires TXU to file actual financial a doper tion information for the 12 mo th period
ending June 20, 2004, consistent with he fo mat dictated by the PUC, to ustify the
reasonableness of its existing T &D rates.
2.
It establishes a procedural schedule fo TXU s filing of rate information, he City's
response and recommendation regardi TX 's filing, TXU's rebuttal to he City's
recommendation, a public hearing regar ing th reasonableness ofTXU's exis ing rates,
and if necessary, the setting of new T & rates 0 be charged by TXU.
3.
It ratifies the Steering Committee's select on of 1 gal counsel and affirms the ov rsight and
direction provided by the Steering Co ittee r the attorneys and consultant who will
analyze the reasonableness of TXU's ex sting ates, and represent the City up n related
appeals.
COST
The City will not be obligated for any 1 gal or consulting bills incurred purs ant to the
review of TXU rate information and for appeal relate to City action on TXU's exis ing T&D
rates. All rate case expenses incurred in this proce ding will be absorbed by th Steering
Committee. The City is responsible for the per c pita fe assessed the City for member hip in the
Steering Committee of Cities Served by TXU. F r 200 , the membership assessment is a ten-cent
per capita fee (approximately $2,700.00 + to th City fParis). To the extent permitt d by law,
the Steering Committee and TXU Cities reserv the ri ht to seek reimbursement fro TXU for
rate case expenses incurred in this matter.
SCHEDULE
Adoption of the resolution at the August 9, 200 . Council Meeting. The resol tion will
require the City Council to conduct a public hea ing du ing its January 10,2005, regul r council
meeting. All other matters will be coordinated y city staff with the Steering Commit ee.
STAFF CONTACT
City Attorney, Larry W. Schenk.
SUPPLEMENTARY MATERIALS
See attached correspondence from the St ering ommittee and the proposed re olution.
At the time the Agenda was prepared, T U was offered the opportunity to prov de written
materials for inclusion in the Agenda packet in eply t the materials included from e Steering
Committee. TXU already has a copy of the Ste ring ommittee materials from anoth r city. In
response to that offer, TXU declined the oppor nity to include the materials, choosing to present
the materials for the first time at City Council's meet' g when this matter is delibera ed. TXU
would provide the materials for inclusion in the acket i the City Attorney agreed that y further
rebuttal material from the Steering Committee ould ikewise be revealed to TXU i advance.
Because of time contingencies, it was impossible to eve determine whether or not furth r rebuttal
materials from the Steering Committee could be orthco ing, and hence it was impossib e to agree
to TXU's request. As a consequence, the T U mat rials will not be available unt 1 the City
Council meeting.
Alternatively, TXU requested that the Ci y post one consideration of this matter until such
time as TXU could meet with City Council m mbers privately and individually to iscuss the
materials. It is the City Attorney's positio that t delay this matter essentiall to avoid
discussing it in a public forum is not conduciv with iving fair consideration to the issue and
allowing the general public the opportunity to h e an nderstanding of the issue. Con equently,
the City Attorney declined to agree administrati ely to delay consideration of the mat er.
RECOMMENDATION
The City Attorney recommends the City Coun il adopt the attached resolution requiring
TXU to show cause regarding the reasonablen ss of i s existing T & D rates, inclu ing street
lighting service; establishing a procedural sche ule fo the rate review process; and iring and
directing legal counsel and consultants to revie TXU s rate information and represe t the City
on related appeals.
TXU ELECTRIC STAN ING
MEMO ND
To:
Members of the TXU Electric St ding teering Committee
From:
Jay Doegey, Chair of Standing S eering ommittee
Date:
July 21,2004
Subject:
Steering Committee Recommend Initiat'on of Transmission and Distri tion
Rate Inquiry
On July 16, 2004, the Steering Committee met d disc ssed the need for an inquiry int the
reasonableness of TXU's transmission and distri ution &D) rates set by the PUC in 2 01 in
anticipation of the start of retail electric competi 'on. T e regulated T &D rates are the ires
charges collected by TXU Electriç Delivery Co pany, ormerly Oncor. When the T &D rates
were approved by the PUC in 2001, they were b sed up n a projection made in 2000 0 costs
anticipated in 2002, rather than upon historic tes year c sts. Since the T &D rates were approved
in 2001, enormous changes have occurred, such s larg reductions in the cost of capita, large
reductions in TXU costs, mass TXU employee I yoffs, orporate reorganizations, and a complete
change in TXU affiliate transactions stemming om the sale of numerous assets and bu inesses.
As a result, the Steering Committee has reason t belie e that TXU's existing T &D rat s are
excessive. The inflated T &D rates are largely re ponsi Ie for the high cost of electricit for
street lighting and other off-peak load. Furtherm re, las year cities in South Texas took legal
action that precipitated a T &D rate proceeding i volvin Texas Central Company ("TC "). TCC,
the wires company, requested a $67 million incr ase, b the hearing examiner is reco ending
a $30 million T &D rate reduction.
The Steering Committee unanimously recom ende that cities pass a resolution t
requires TXU Electric Delivery Company (T U) to how cause why its T &D rate
not be reduced. The Steering Committee also uthor zed the retention of rate case
attorneys and consultants and intervention in any re ated appeal. Finally, the Stee ing
Committee approved a 10 cents per capita fee for 20 4 (according to the respectiv city's
population listed in the most recent Texas Mu idpal League Directory of Texas Ci
Officials. A model resolution initiating a rate rev ew is ttached. Also, cities passing thi
resolution should advise the Committee's rate ca e atto ey Geoffrey Gay and Committ e Chair
Jay Doegey of when your city has placed the res lution tem on the city council agenda nd
provide them a copy of the resolution.
Attachments
c/o Jay Doegey, City Attorney. Box 90231. Arlington, T xas 76 04-3231.817-459-6878 (Metro 817) 265-3311.
FAX(817)459-687