2651 ORD REVISING FUEL ADJUSTMENT CLAUSE OF TX POWER AND LIGHT COMPANY IN COP
ORDINANCE N0. 2651
AN ORDINANCE REVISING THE FUEL ADJUSTMENT CLAUSE
OF TEXAS POWER AND LIGHT COMPANY IN THE CITY OF PARIS,
TEXAS, PROVIDING FOR AN EFFECTIVE DATE FOR SUCH FUEL
ADJUSTNIENT CLAUSE RATE SCHEDULE, AND PROVIDING CONDITIONS
UNDER WHICH SUCH FUEL ADJUSTMENT CLAUSE RATE SCHEDULE MAY
BE CHANGED, MODIFIED, AMENDED OR WITHDRAWN.
WHEREAS, on July 29, 1982, the District Court of
Travis County, Texas, 200th Judicial District entered a
f inal judgment in f avor of various cities and cooperatives
served by Texas Power and Light Company ("TP&L") and
adverse to TP&L, a copy of which is attached hereto as
Exhibit "I" and incorporated herein for all purposes; and
WHEREAS, the District Court in said judgment ruled
that the fuel adjustment clause used by TP&L and authorized
by the Public Utility Commission of Texas does not meet
the requirements of law; and,
WHEREAS, the City finds that the judgment and all included
findings and conclusions of the District Court shall be complied
with in all regards, and said judgment is hereby adopted and
approved; and
WHEREAS, TP&L did, on December 9, 1981, file a proposed
fuel cost factor tariff for service within the City of Paris
("City") to become effective January 13, 1982, the operation
of which suspended
extensionlbiy thereafter
of the council o
WHEREAS, the City, having considered the attached
proposed modified fuel adjustment clause and procedure
for approval of payments to affiliates finds that the
modified fuel adjustment clause and procedure for approval
of payment of affiliates should be approved and construed
in accordance with the attached final judgment of the
District Court; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS:
l, That the fuel adjustment clause rate schedule of
Texas Power and Light Comapny is hereby amended in accordance
with Exhibit "II". Such Procedure is the one under which TP&L
shall be authorized to collect charges from its customers
for the sale of electric power and energy within the corporate
limits of the City until such time as said fuel adjustment
clause rate schedule may be changed, modified, amended, or
withdrawn, with the approval of the City Council.
2, Such fuel adjustment clause rate schedule, as same
may be modified or amended, shall be effective fromando all
after final passage of this ordinance and shall apply
power and energy used by each customer after the final
passage of this ordinance.
3. That the action of the City Council of the City of
Paris, enacting this ordinance constitutes, on the date of
its final passage, a final determination of the fuel adjust-
ment clause rate of Texas Power and Light Company within the
City of Paris in accordance with Section 43 (e) of the
Public Utility Regulatory Act.
4. That the final judgment of the District Court of
Travis County, Texas, 200th Judicial District, attached
hereto as Exhibit "I" is hereby approved and adopted. The
attached modifieto adjustment procedureinfor
approval of payMents
accordance with said final judgment.
5. The Company shall within 20 days from the passage
hereof file all necessary supporting exhibits and tariff
revisions which shall be identical to those agreed to by
all parties and approved in Public Utility Commission
Docket 4224, all of which shall become a part of the
Company's tariffs.
6. Nothing in this ordinance shall be construed the
or hereafter as limiting or modifying, in any manner,
right or power ofeTexas Power and LightoCompanyte the
rates and charges
Passed and addopted this 13th day of September, 1982.
oe Graham, Mayor
ATTEST:
H. C~ Gre ne, City Clerk
APPROVED AS TO FORM:
T K. ~4Hayne , City Attorney
_T
NO. 277,471
TEX-LA ELECTRIC COOPERATIVE, . IN THE DISTRICT COURT
INC.; C1TY OF WACO, TP&L .
MUNICIPALITIES, ET AL; and .
'fEXAS POWER ac LIGHT COMPANY, .
ET AL •
VS. . OF TRAVIS COUNTY, TEXAS
PUBLIC UTILITY COMMISSION .
OF TEXAS, ET AL . 53RD JUDICIAL DISTRICT
Said Cause being a consolidation of appeals
by Tex-La Electric Cooperative, Inc. and
Texas Power dc Light Company, et al (Cause No. 277,471)
and by the City of Waco and
TP&L Municipalities, et al (Cause No. 292,363)
from the Orders of the Public Utility Commission of Texas
Rendered in Commission Docket Number 1517.
FINAL JUDGMENT
On the 19th and 29th days of December, 1980, came on for hearing the above
styled and numbered cause together with other causes being consolidated herewith
for purposes of hearing only. All parties appeared by and through their attorneys
of record, and announced ready. After having considered the pleadings of the
parties, the certified record of proceedings before the Public Utility Commission
of Texas, and the argument of counsel, the Court finds that substantial rights of
o Tex-La Electric Cooperative, Inc. and the Cities of Waco, Alvarado, Diboll,
r _
~ Farmers Branch, ,~ufkin, Palestine, Paris, Sherman, Tyler, and Woodway, Texas (the
~
F~+►
n "TPdcL Municipalities") and the electric utility ratepayers thereof have been
~
~ prejudiced because the final order of the Public Utility Commission ("Commission")
~
~ issued in Docket Number 1517 is in violation of statutory provisions, in excess of
the statutory authority of the Commission and is affected by error of law, insofar
.as the order:
1. Concludes that Texas Electric Service Company ("TESCO"), Dallas
Power ac Light Company ("DPacL°'), and Texas Power ac Light Company
("TPbcL") are not each affiliated interests and affiliates of each of the
other as the terms affiliated interest and affiliate are defined in
Section 3(i) of the Public Utility Regulatory Act ("PURA") and used in
Section 41(c)(1) of PURA;
2. Authorizes TP&L to collect from ~tqgayers automatically as fuel
adjustment charges payments vJ~`c4C-TP1,nIsm4FesR.,JQ affiliated interests
FINAL JUDGMENT - Page One NO~GD
of amounts which have raot first been reviewed or found to be
reasonable as required by Section 41(c)(1) of PURA; and
3• Authorizes a fuel clause which permits TP&L to unilaterally define and
redefine elements to be included as fuel adjustment charges to rate-
payers and to change the manner of computation thereof without
complying with Section 43 of PURA and to change rates in this fashion
in contravention of Sections 42 and 43(f) of PURA.
It is therefore ORDERED, ADJUDGED AND DECREED
1. That the final order of the Commission in Docket Number 1517 is
REVERSED and REMANDED to the Commission with directions to the
Commission that it:
a. Revise its final order and all tariffs promulgated puFsuant thereto
to delete any fuel adjustment clause, or other rate, bhich allows
the recovery by TP&L from its ratepayers of any Cbst or expense
attributable to, or resulting from, payments by TP&L to affiliates
or affiliated interests except to the extent that the amount
thereof shall have first been found reasonable pursuant to Section
41(c)(1), PURA;
b. Modify its final order and all rates and tariffs, including any fuel
adjustment clause, promulgated pursuant thereto to preclude
recovery by TP&L from its ratepayers of any cost or expense
R
V
attributable to, or resulting from, payments by TP&L to affiliates
or affiliated interests except to the extent that the amount
thereof shall have first been found reasonable pursuant to Section
41(cXl), PURA;
c. Conclude that TESCO, TP&L, and DPdct, and each of them, are
"affiliates" and "affiliated" interests of one another as defined by
Section 3(i) PURA and as used in Section 41(c)(1) of PURA; and
d. Correct its final order to reflect the foregoing.
2. All retief not expressly granted is hereby denied and except as expressly
modified herein said final order in Docket Number 1517 is hereby
affirmed in all respects.
3. That costs of this suit be taxed against Defendants, TP&L and Com-
mission.
FINAL JUDGMENT - Page Two
SIGNED, RENDERED AND ENTERED this, the
day of
, 1982. 4bitting Designation Judge o~th 1
53rd and 200th Judicial District Courts
of Travis County, Texas
AGREED AS TO FORM:
TP&L MUNICIPALITIES
By
TEX-LA ELECT~tC COOP " TIVE, INC.
By:
~ J
TEXAS POWER ac LIGHT COMPANY,
TEXAS ELE.CTRIC SERVICE COMPANY,
and DAL POWER dt LIGHT COMPANY
~
By
PUBLIC UTILITY OMMISSION OF TEXAS
ey -
,
FINAL JUDGMENT - Page Three
~
PROCEDURE FOR APPROVAL OF PAYMENTS TO AFFILIATES
Because Texas Electric Service Company, Texas Power b Light
Company, and Dallas Power & Light Company ("the Companies")
purchase fuel and fuel services from affiliates and affiliated
interests and purchase power from each other, and because prices
paid to affiliates and affiliated interests may be charged to the
Companies' ratepayers only if found to be reasonable in compli-
ance with Section 41(c)(1) of the Public Utility Regulatory Act
(the "Act"), the fuel cost factor tariff schedules of the Compa-
nies may be utilized to recoup those expenses which are incurred
by the Companies by reason of payments made to affiliates and
affiliated interests only upon the following additional terms and
conditions:
1. Znsofar as fuel costs as used in calculation of the
fuel cost factor arise by reason of payments to
affiliates, all estimates of same submitted to the
Commission under this Procedure shall include only
those items within the definitions set forth in the
Chart of Accounts of the affiliates, Texas Utilities
Generating Company (TUGCO) and Texas Utilities Fuel
Company (TUFCO), being attached hereto as Exhibits A(5)
and A(6), respectively. The Chart of Accounts for
Dallas Power & Light Company, Texas Power & Light
Company, and Texas Electric Service Company are the
Uniform System of Rccounts for Class A Utilities as
required by the Public Utility Commission's Substantive
Rules. That an item is within the definitions set
forth in the charts of Account of TUGCO, TUFCO, or the
,
Companies does not establish that the cost of the item
is reasonable or should be charged to ratepayers or
should be passed through the fuel clause rather than
being recouped throuqh base rates.
2. Charges will not be included in the calculation of the
.Ir
PROCEDURE FOR APPROVAL OF PAYMENTS TO AFFILIATES
Because Texas Electric Service Company, Texas Power 6 Light
Company, and Dallas Power & Light Company ("the Companies")
purchase fuel and fuel services from affiliates and affiliated
interests and purchase power from each other, and because prices
paid to affiZiates and affiliated interests may be charged to the
Companies' ratepayers only if found to be reasonable in compli-
ance with Section 41(c)(1) of the Public Utility Regulatory Act
(the "Act"), the fuel cost factor tariff schedules of the Compa-
nies may be utilized to recoup those expenses which are incurred
by the Companies by reason of payments made to affiliates and
affiliated interests only upon the following additional terms and
conditions:
1. Insofar as fuel costs as used in calculation of the
fuel cost factor arise by reason of payments to
affiliates, all estimates of same submitted to the
Commission under this Procedure shall include only
those items within the definitions set forth in the
Chart of Accounts of the affiliates, Texas Utilities
Generating Company (TUGCO) and Texas Utilities Fuel
Company (TUFCO), being attached hereto as Exhibits A(5)
and A(6), respectively. The Chart of Accounts for
Dallas Power & Light Company, Texas Power & Light
Company, and Texas Electric Sezvice Company are the
Uniform System of Rccounts for Class A Utilities as
required by the Public Utility Commission's Substantive
Rules. That -an item is within the definitions set
forth in the charts of Account of TUGCO, TUFCO, or the
Companies does not establish that the cost of the item
is reasonable or should be charged to ratepayers or
should be passed through the fuel clause rather than
being recouped through base rates.
2. Charges will not be included in the calculation of the
quarter or quarters for which approval is
saught.
(B) An affidavit, executed by an officer or designated
representative of the Companies attesting:
(1) That the factual matters set forth in the
Initial Request are true and correct and that
the estimates set forth therein ref lect the
Companies' best estimates and are made in
good f aith;
(2) That the estimated prices are reasonable and
are estimated to be no higher than the price
of TUGCO or TUFCO for fuel related services
to any other affiliated or non-affiliated
person or corporation during the period of
time stated in the Znitial Requests; and
(3) That the Initial Request reflects no items
which are not within the definitians set
forth in the Chart of Accounts of the
affiliates.
(4) That there have been no changes in the
accounting methodologies, the rates and/or
practices of depreciatian or amoritization or
calculation of interest charges, or other
methods of computation in any affiliate
charges except as specifically noted in the
Request.
The filing of such affidavit and the aforesaid Sched-
ules shall not relieve the Companies' of their burden of
proving the rsasonableness of payments made to affiliates
and charged to the Companies' ratepayers in accordance with
Paragraph 3 of this procedure in any hearing relating to
this procedure or in any rate cases as described herein.
5. Unless an extension of time is ordered by the Commis-
sion or a hearing examiner of the Commission, the
Commission shall review the Initial Request and, within
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ninety (90) days of the receipt of same, shall conduct
a hearing thereon, and shall, on or before August 15,
1982, approve by written order such prices as it
determines are reasonable and comply with this
Procedure. Such order shall:
(A) Establish prices per MMBtu for "fuel related
services" supplied by TUFCO (separately for fuel
gas related services and for fuel oil related
services) and by TUGCO, separately by generating
units as shown on Exhibit A(2), and such prices
shall be charged through each Company's fuel cost
factor tariff schedules in the billing months
corresponding with the calendar quarter or
quarters for which approval is sought. As used
herein, the price for "fuel related services"
shall be based upon TUFCO or TUGCO expenses,
within the definitions contained in the Charts of
Accounts of said affiliates, including those
chargeable to each Company on account of TUFCO's
or TUGCO's acquiring, transporting, causing to be
transported, producing causing to be produced,
storing, mining, or handling of fuel consumed in
electric power generating plants, or which produce
power for the Companies to the extent the
Commission finds said expenses to be reasonable,
and that said expenses should be charged to
customers through the fuel a3justment clause, but
shall specifically exclade:
(1) Interest payments on the Senior
Notes and other debt of TUFCO or TUGCO.
Znterest on debt to Texas Utilities Company
shall be at a rate equal to the daily
weighted cost of all outstanding short-term
indebtedness of Texas Utilities Company,
including any fees incurred in connection
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with the maintenance of the credit
arrangement and, at times when Texas
Utilities Company has no short-term
indebtedness outstanding, the interest rate
will be equal to the rate published daily in
the Wall Street Journal for "high grade
unsecured notes sold through dealers by major
corporations for thirty days;"
(2) The cost of natural gas and fuel oil acquired
by TUFCO from non-affiliated interests and
consumed in the operation of the TUFCO system
of pipelines or in electric power generating
plants which produce power for the Campanies;
and
(3) Depreciation and depletion charges on
producing wells computed on successful
efforts method incurred by TUFCO on behalf of
DP&L, TP&L, and TESCO in developing natural
gas resources and attributable to such
Company's share of production thereform.
Unsuccessful exploration and development
costs shall not be passed through the fuel
adjustment clause.
(B) The Commission shall in such Order provide
the opportunity for each Company to recover those
actual Gosts incurred for fuel and fuel-related
services found reasonable by the Commission up to
the date of implementation of the prices
established hereunder through their fuel cost
factor tariff schedules to the extent that the
Commission finds it appropriate to charge these
costs through the fuel adjustment clause.
6. Companies may, pending further order of the Commission,
charge to and collect from their ratepayers those fuel
and fuel related expenses incurred from non-affiliated
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interests and also those which are described in
Subparagraphs (1), (2), and (3) of paragraph 5(A)
above. In subsequent rate cases and other proceedings
involving such matters, the companies shall have the
burden of proving the amounts so charged and collected
are reasonable. All amounts so charged and collected
shall be refunded except to the extent that they are
found reasonable and in accordance with this procedure.
7. Within twenty-five (25) days after the end of each
calendar quarter, Companies shall determine whethl~r or
not the established prices as charged for such
calendar quarter exceeded or were less than the actual
prices incurred by TUFCO and/or TUGCO for all such fuel
related services for such quarter. Zf the actual
prices of fuel related services rendered during said
quarter be less than the price so established by the
Commission for such calendar quarter, then
the Companies shall report same to the Commission
and shall refund to their customers the overrecovery
resulting from the difference between such actual
prices and the prices so established, such refund to be
.applied to the fuel cost factors for the billing months
corresponding with the second succeeding calendar
quarter following the overrecovery. In the event
that the prices established and charged for such
calendar quarter be less than the actual price
of fuel related services provided to such Companies
by TUFCO and/or TUGCO, resultinq in an underrecovery
of the actual cost incurred for such fuel related
services, then in such event, the Companies shall
be entitled to recover through their fuel cost factor
schedules in each of the billing months corresponding
with the second succeeding calendar quarter the
underrecovery resulting from the difference between
the actual prices and the prices as established, but
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only to the extent that the Commission has by written
order made a preliminary determination that such
difference is reasonable, as provided for in Paragraph
8 below. Such preliminary finding of reasonableness
shall not be binding on the Commission or any party in
Companies' succeeding rate cases or other proceedings.
8. A Company seeking recovery of costs incurred which
exceed the prices established for a previous quarter
or the establishment of new prices per MMBtu for a
future quarter or quarters for any such fuel related
services as defined in Paragraph 5(A) above, shall
within twenty-five (25) days following the close of
such previous quarter, file with the Commission a
written Request (hereinafter referred to as the
"Quarterly Request") for the collection of such
underrecovery, if any, and for such new prices, and
in such Quarterly Request shall set forth the amount
of the underrecovery, if any, and shall set forth
specifically and in detail the basis upon which such
Company contends that such additional costs should be
so recovered, or new prices for fuel related services
,as described in Paragraph 5(A) above should be
established. The burden of pxoof shall be upon the
Companies to establish that the costs so incurzed
which exceed the price established for the previous
quarter and the new prices which it estimates to
be incurred in such future quarter or quarters are
reasonable and comply with this Procedure. The
Commission shall act upon each such Quarterly Request
within sixty (60) days from receipt thereof by final,
appealable written order establishing such prices
as it determines on a preliminary basis are
reasonable and comply with this Procedure. Such
preliminary finding of reasonableness shall not be
binding on the Commission or any party in subsequent
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rate cases or proceedings relating to fuel charges and
shall not relieve the CornPany of its burden of proving
in subsequent rate cases and proceedings that the
amounts so charged and collected are reasonable.
9. Each Company shall in each general, systemwide rate
case have the burden of proving that all amounts
collected from ratepayers pursuant to paragraphs
5, 6, 7, and 8 of this Procedure since the end of
the test year of the Company's preceding general,
systemwide rate case are reasonable as defined in
paragraph 3 of this Procedure and comply in
all respects with this Procedure. The final order
of the Commission in each generai, systemwide rate
case of each Company shall inclu3e a finding of
the extent to which amaunts collected from
ratepayers pursuant tQ this Procedure are reasonable.
Such finding of reasonableness sha11 include specific
statements setting forth the cost to the affiliate
of each service, property, right, or thing, or class
tnereof, charged to rat.epayers pursuant to this
Procedure and that the grice chargQd to the Company
-is no higher than thP price charqed by the supplying
affiliate to other aff iliates or divisions for the
same item or items, or to unaffiliated persons or
corporations. All amaunts cailected in excess of
the amounts found in compliance with this procedure and
reasonable by the Comntission shall be refunded in the
next quarter following the entry of the final order
making the determinatian of r.easonableness.
10. Nothing in this Procedure shail be construed to deny to
the Companies the right to recover all fuel service
expenses actually incurred by them to the extent that
same are found by the Commission to be reasonable or to
permit the Companies to recover more than those actual
fuel service expenses which are found reasonable by the
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Commission. All charges collected pursuant to this
procedure are subject to review and refund in subse-
quent rate cases and other proceedings. All amounts
hereafter charged by affiliates and collected from the
Companies' ratepayers through the fuel adjustment
clause other than those specifically authorized by this
Procedure and found reasonable by the Commission shall
be refunded.
11. Notwithstanding anything to the contrary herein, any
municipal regulatory authority exercising original
jurisdiction over any one or more of the Companies
(A) shail have the right to conduct any investigation
relating to a Company's Request which such author-
ity deemed advisable; and
(B) shall have the right to intervene before the
Commission, to obtain discovery and to participate
in any meeting or hearing held pursuant to the
above provisions; and
(C) shall have the right to employ, collectively, an
outside accounting firm to review the quarterly
filings and substantiating data for approval to
determine whether they comply with the Procedure,
the cost of which review will be paid by the
Companies to the extent that said cost is recover-
able by the Companies as a rate case expense.
12. Any customer of the Companies shall have the right to
intervene, participate, and obtain discovery concerning
any Quarterly Request filed pursuant to this Procedure
to the extent provided in this Commission's Rules of
Practice and Procedures.
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