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17-M - TXU Gas Cost CaseAGENDA INFORMATION SHEET PROJECT: Consider a resolution authorizing participation of the City of Paris with other cities, under the auspices of the TXU Gas City Steering Committee, in a major gas cost reconciliation case filed by TXU Gas before the Texas Railroad Commission. BACKGROUND: There is a standing TXU Gas City Steering Committee which is a consorti u m of cities (including in the past the City of Paris) monitoring gas-related matters involving the TXU Gas Company. The Steering Committee has become aware of the intentions of TXU Gas Distribution to file a major gas cost reconciliation case before the Texas Railroad Commission which would potentially involve $1.1 billion dollars in gas costs. It is anticipated this case will be filed at the end of June and will cover some thirty-six (36) months of previously collected gas costs. The City of Paris has been asked by the consortium of cities to continue in its participation with the other cities in fili ng an intervention before the Railroad Commission. The cities are the only entities with authority to participate in reviewing this proposed gas reconciliation. Depending on the outcome, it could mean millions of dollars in refunds for customers of TXU Gas Distribution, including those customers which reside in Paris. Participation expenses are reimbursable and funds are available from the Steering Committee reserve fund to pay the up-front expenses. However, for the City of Paris to participate, the City Council must adopt a resolution supporting such action. DESCRIPTION: Consider adoption of a resolution joining the City of Paris with a consortium of other cities from the TXU Gas Distribution system to intervene in GUD No. 9180, a gas reconciliation case filed by TXU Gas Distribution, to reconcile $1.1 billion in previously incurred and billed gas costs. COST: There will be no direct cost to the City of Paris. RECOMMENDED ACTION: Approval of the resolution authorizing the City’s intervention in the gas utility case. STAFF CONTACT: Larry W. Schenk, City Attorney SCHEDULE: The actual reconciliation case should be filed by or before the end of June 2001. COUNCIL DATE: Consider for approval at City Council’s Monday, June 11, 2001, regular Council meeting. ADDITIONAL MATERIALS: See attached draft resolution approving the Cities intervention a s well as supporting materials from the TXU Steering Committee asking for involvement of the cities. DRAFT ATTORNEY\LINDA\RESOLUTIONS\CURRENT\TXU Gas June 7, 2001 RESOLUTION NO. _______________ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, AUTHORIZING INTERVENTION BEFORE TH E RAILROAD COMMISSION OF TEXAS IN GUD NO. 9180 OR A SUCCESSOR DOCKET; AUTHORIZING PARTICIPATION WI TH OTHER CITIES SERVED BY TXU GAS D ISTRIBUTION IN ADMINISTRATIVE AND COURT PROCEEDINGS INVOLVING TXU GAS COST RECONCI LIATION MATTERS RELATED TO A FILING MADE IN THE SUMMER OF 2001 AS DIRECTED BY A STEERING COMMITTEE OF CITIES; DESIGNATING A REPRESENTATIVE OF THE CITY TO SERVE ON A STEERING COMMITTEE; REQUIRING REIMBURSEMENT OF REASONABLE RATE CASE EXPENSE; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUB J ECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Paris, Paris, Texas, is a customer of TXU Gas Distribution and a regulatory authority with an interest in the rates and charges of TXU Gas; and, WHEREAS, TXU Gas Distribution has represented that it will make a filing at the Railroad Commission of Texas in GUD No. 9180 on or about June 29, 2001, to reconcile $1.1 billion in previously incurred and billed gas costs; and, WHEREAS, ratepayers of TXU Gas Distribution, including the City of Paris and its residents would be entitled to a pro rata port ion of a refund associated with any cost found to have been unreasonable; and, WHEREAS, the City of Paris and its residents could benefit from joint participation with other cities in a review of the reasonableness of TXU Gas Distribution’s gas costs; and, WHEREAS, the reasonable costs associated with the participation of cities in this ratemaking NOW, THEREFORE, proceeding are reimbursable from the Company; BE IT RESOLVED B Y THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section 1. T hat the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That intervention is hereby authorized in GUD No. 9180 or any successor docket at the Railroad Commission of Texas. Section 3. T hat the City designates the City Attorney as a representative to a Cities’ Steering Committee that shall direct the efforts of counsel and consultants and the course of settlement or litigation before the Railroad Commission or on appeal to any court regarding any matter related to the gas cost reconciliation filing that TXU Gas Distribution plan s to make during the summer of 2001. Section 4. T hat TXU Gas Distributi on shall promptly reimburse the City of Paris for any reasonable cost associated with the City’s participation in this ratemaking matter. Section 5. That this resolution shall be effective from and after its date of passage. PASSED AND APPROVED this 11th day of June, 2001. ____________________________________ Michael J. Pfiester, Mayor ATTEST: ____________________________________ Mattie Cunningham, City Clerk APPROVED AS TO FORM: ____________________________________ Larry W. Schenk, City Attorney CITy A I' TXU GAS CITIES STEERING CO~ITTEE JAY DOEGEy, C~IR OF THE STEERING CO~ITTEE PHONE: (817) 459-6878; F~: (817) 459-6897 TO: FROM: SUBJECT: DATE: MEMORANDUM TXU GAS (FORMERLY LONE STAR GAS) CITIES STEERING COMMITTEE Jay B. Doegey, Chair of the Steering Committ~ New Gas Cost Reconciliation Case May 30, 2001 Please review the attached memorandum from our rate case attorney, Geoffrey Gay. TXU Gas is planning to file a major gas cost reconciliation case at the Texas Railroad Commission at the end of June covering thirty-six (36) months and involving $1.1 billion in gas costs. Since there will be an expedited hearing schedule, Geoffrey has asked for authority from cities in advance of the case filing to begin preparations to intervene in the case. Any gas costs found by the Commission to be unreasonably incurred will be refunded to rate payers. Participation expenses are reimbursable and there are already funds available with the Steering Committee to pay up front expenses. Therefore, the only action necessary to participate in this effort is the passage of an intervention resolution similar to the model resolution attached. Please mail a copy of your city's resolution to Geoffrey Gay and me upon its approval. JD/blj Attachment LLOYD, GOSSE:LINK, BLEVINS, F~OCHELLE, BALDWIN ~ TOWNS£ND, P. C. ATTORNIEys AT LAW Ivir. Gay'$ Direct Linc: (512)322-5875 MEMORANDUM TO: FROM: DATE: RE: Cities Served by TXU Gas Geoffrey M. Gay May 23, 2001 Gas Cost Reconciliation At the end of June TXU Gas Distribution will file a gas cost reconciliation proceeding at the Railroad Cormmission. At issue will be the prudence and reasonableness of $1.1 billion in gas costs recovered in the 36 months ending in the fall of 2000. Primary responsibility for review of the Company's gas procurement practices and the reasonableness of gas purchases will rest with Cities. The costs incurred by the Cities are reimbursable from TXU Gas Distribution. The case will require an expedited review by consultants from June 30 through August 30, 2001. Thus, it is critical to have a group of cities prepared to intervene on June 30 and to have consultants available on that date with the resources to commence immediate work. Delaying City action until after the Company makes its formal filing will nullify any effective review. Assuming Cities' consultants identify some issues from their review, settlement discussions will commence. If said discussions do not lead to a resolution, Cities' testimony will be due October 29, 2001 and a hearing will occur in November. Any gas costs found to have been unreasonably incurred will be refunded to ratepayers. The docket in which the case will be filed has been designated as Gas Utilities Docket 9180. A model resolution is attached that authorizes intervention. RESOLUTION NO. A RESOLUTION BY THE CITY OF , TEXAS AUTHORIZING INTERVENTION BEFORE THE RAILROAD COM2MISSION OF TEXAS IN GUD NO. 9180 OR A SUCCESSOR DOCKET; AUTHORIZING PARTICIPATION WITH OTHER CITIES SERVED BY TXU GAS DISTRll3UTION IN ADMINISTRATIVE AND COURT PROCEEDINGS INVOLVING TXU GAS COST RECONCILIATION MATTERS RELATED TO A FILING MADE IN THE SUMMER OF 2001 AS DtR.ECTED BY A STEERING COMMITTEE OF CITIES; DESIGNATING A REPRESENTATIVE OF THE CITY TO SERVE ON A STEERING COMMITTEE; REQUIRING REIMBURSEMENT OF REASONABLE RATE CASE EXPENSE WHEREAS, the City Council of the City of , Texas is a customer of TXU Gas Distribution and a regulatory authority with an interest in the ~'ates and charges of TXU Gas; and WHEREAS, TXU Gas Distribution has represented that it will make a filing at the Railroad Commission of Texas in GUD No. 9180 on or about June 29, 2001 to reconcile $1.I billion in previously incurred and billed gas costs; and WHEREAS, ratepayers of TXU Gas Distribution, including the City of and its residents would be entitled to a pro rata portion of a refund associated with any costs found to have been unreasonable; and WHEREAS, the City of and its residents could benefit from joint participation with other Cities in a review of the reasonableness of TXU Gas Distribution's gas costs; and WHEREAS, the reasonable costs associated with the participation of Cities in this ratemaking proceeding are reimbursable from the Company. THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF , TEXAS THAT: 1. Intervention is hereby authorized in GUD No. 9180 or any successor docket at the Raikoad Commission of Texas. 2. The City designates as a representative to a Cities' Steering Committee that shall direct the efforts of counsel and consultants and the course of settlement or litigation before the Raikoad Commission or on appeal to any court regarding any matter related to the gas cost reconciliation filing that TXU Gas Distribution plans to make during the summer of 2001. 3. TXU Gas Distribution shall promptly reimburse the City of for any reasonable cost associated with the City's participation in this ratemaking matter. Signed this day of ., 2001. Mayor ATTEST: