05-L TXU SettlementAGENDA INFORMATION SHEET
PROJECT: Approval of a Compromise, Settlement, and Release Agreement and accompanying amendments
to gas and electric utility franchise agreements in resolution of that litigation styled City of Denton, Texas, et
al. v. Texas Utilities Company, et al.
BACKGROUND: By adoption of Resolution No. 2000-140 on October 9, 2000, City Council authorized
intervention along with other cities in a consolidated lawsuit styled City of Denton, Texas, et al. v. Texas
Utilities Company and Lone Star Gas Company, et al. to litigate the issue of delinquent franchise fees. As
a consequence of that litigation, a proposed settlement agreement has been reached by the attorneys
representing the consolidated cities and is now being presented to the individual cities for approval. That
approval process consists of approving, by resolution, a Compromise, Settlement, and Release Agreement with
the utility companies, accompanied by approval of amendments to the existing gas and electric utility franchise
agreements.
DESCRIPTION: As a consequence of the litigation, the City of Paris will receive $93,208.00 as its share of
TXU's agreed settlement amount, which in turn will be apportioned appropriately over a period of time to
ratepayers customarily assessed franchise fees. In addition, the City will receive another $36,668.00 as the
City's share of a further payment in lieu of recovery of delinquent franchise fees, this portion of which will not
be assessed against ratepayers. Finally, the City will recover $14,651.42, the City's share of a further
settlement sum to reimburse attorneys' fees and costs incurred in the litigation. In sum, when all documents
are finally completed, the City will receive $129,876.00, plus reimbursement of any out-of-pocket attorneys'
fees and costs which the City may have incurred. In addition, certain changes in the existing franchise
agreements have also been agreed to. With regard to the City current electric franchise, the proposed change
should have no substantive impact, since the City already receives the maximum four percent (4%) franchise
fee customarily assessed. The same is generally true with regard to the gas franchise agreement in terms of
the actual four percent (4%) franchise fee, but the definition of "gross revenues" has been expanded in the
amendment to the gas franchise to include other revenues not included before, which should in turn result in
the City of Paris receiving some modest increase in franchise fees over the long term.
In order to initiate the process of approval of this settlement, City Council must approve the resolution
authorizing the Compromise, Settlement, and Release Agreement and approve, at the August 12, 2002,
meeting, the two franchise agreement amendments on first reading. Because of the City's Charter provisions
on franchises, final approval of the franchise amendments cannot be completed until City Council's October
14, 2002, regular Council meeting.
RECOMMENDED ACTION: Consider for approval a resolution authorizing the Compromise, Settlement,
and Release Agreement and franchise amendments to the electric and gas franchise agreements on first reading.
STAFF CONTACT: Larry W. Schenk, City Attorney, and Lisa Wright, Legal Assistant
COST: There should be no cost to the City of Paris in approving this proposed settlement.
SCHEDULE: Consider approval of the Compromise, Settlement, and Release Agreement and the two
franchise amendments on first reading at City Council's regular meeting of August 12, 2002. Subsequent
approval ofthe franchise amendments will be required on second reading at City Council's September 9, 2002,
regular meeting, and on third and final reading at City Council's October 14, 2002, regular Council meeting.
COUNCII, DATE: Consider for approval at City Council's August 12, 2002, Council meeting.
ADDITIONAL MATERIALS: See attached correspondence; Compromise, Settlement, and Release
Agreement; resolution; franchise amendments; and Resolution No. 2000-140, which authorized the City's
intervention in this case.
~ Strasburger
. ATTORNEYS AT LAW
~~~~4\YL810
JUL 26 2002
July 25, 2002
Mr. Larry W. Schenk
City Attorney
City of Paris
P.O. Box 9037
Paris, TX 75461-9037
Re: Cities of Denton, et al v. Texas Utilities Company, et al
C.eu&a Na 2^v00-60iG9-333
Dear Mr. Schenk:
KEVIN J. MA~TORNEY
DirectDial21q.6 TEXAS
Direct Fax: 214-659-4056
kevin.maguire@stresburger.com
We must report to the Court regarding the status of the settlement prior to August 5, 2002.
At your earliest convenience, can you please contact me by mail, phone or e-mail and
advise me of a date by which you anticipate your City Council's approval of the
Compromise Settlement Agreement and Release.
5hould you have any questions regarding the terms of the Compromise Settlement
Agreement and Release or proposed Franchise Ordinance Amendments, please do not
hesitate to contact me.
Finally, I wish to advise you that certain Cities have suggested a slight revision to the
proposed Gas Franchise Amendment. Accordingly, TXU has agreed that the Cities, at
their option, may delete the language in Section 1 B(5)(d) after the words, "City's right of
way." Section 1 B(5)(d) may, at the City's option, now read as follows:
All monies received from the lease or sale of real or personal property,
provided, however, that this exclusion does not apply to a lease of facilities
within the City's right of way.
Thank you in advance for your attention to this matter. I look forward to hearing from you.
Very truly yours,
~
Kevin J. Maguire 7s:~~
KJM:dsh
694482.1 /SPOR91 2 1101 04l07252002
Strasburger & Price, LLP
901 Main Street, Suite 4300 • Dallas, iezas 752023794 • 214.651.4300 tel • 214.651.4330 fax • wwwstmsburgeccom
Aastin • Uallas • Houston • San dntonio • Washington D.L • Mexico Clty
DRAFT
J:\Attorney\Lisa\Resolutions\CiJRRENT\TXU Suit Settlement Res.wpd
August 9, 2002
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS,
PARIS, TEXAS, APPROVING AND AUTHORIZING THE EXECUTION OF
A COMPROMISE, SETTLEMENT, AND RELEASE AGREEMENT IN THE
CAUSE OF ACTION STYLED CITY OF DENTON, TEXAS, ET AL. VS.
TEXAS UTILITIES COMPANY, ETAL.; MAKING OTHER FINDINGS AND
PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, on March 30, 2000, the 269th District Court awarded actual damages to the
Cities of Wharton, Galveston, and Pasadena of $4.2 million, and on Apri14, 2000, punitive damages
of $30 million against Houston Lighting & Power Co. (HL&P) for underpaying franchise fees by
excluding revenues from the gross receipts upon which such fees are derived; and,
WHEREAS, on December 12, 1999, an audit on behalf of the City of Denton estimated
TXU Electric and Lone Star Gas owed delinquent franchise fees in excess of $1,000,000 based on
findings that revenues similar to those at issue in the HL&P case were excluded from the calculation
of gross receipts/revenues; and,
WHEREAS, the law firms of Strasburger & Price, L.L.P. and Bucek & Frank, L.L.P. have
filed suit against TXU and Lone Star Gas on behalf of the City of Denton in the 393rd District Court
in Denton County for delinquent franchise fees; and,
WHEREAS, in order to reduce duplication of effort and the attendant legal, expert, and court
costs, the City Council of the City of Paris did heretofore, on October 9, 2000, by adoption of
Resolution No. 2000-140, authorize participation in a consolidated action against TXLT and Lone Star
by other cities in their service areas; and,
WHEREAS, the parties have reached a settlement, and it is deemed appropriate that the
Compromise, Settlement, and Release Agreement, attached hereto as Exhibit A, be in all things
approved, and that the Mayor be authorized to execute the same; 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 the form of the Compromise, Settlement, and Release Agreement in Cause
No. 00-9383 in the 134th Judicial District Court of Dallas, County, Texas, styled City of Denton,
Texas, et al. v. TXU Electric Company, et al., attached hereto as Exhibit A, be, and the same is
hereby, in all things approved.
Section 3. That the Mayor be, and he is hereby, authorized and directed to execute, on behalf
of the City of Paris, the Compromise, Settlement, and Release Agreement, under the terms and
conditions and in the form shown in Exhibit A, attached hereto.
Section 4. That this resolution shall be effective from and after its date of passage.
PASSED AND APPROVED this 12th day of August, 2002.
Michael J. Pfiester, Mayor
ATTEST:
Mattie Cunningham, City Clerk
APPROVED AS TO FORM:
Larry W. Schenk, City Attorney
COMPROMISE, SETTLEMENT AND RELEASE AGREEMENT
This Compromise, Settlement, and Release Agreement (the "AgreemenY") is made and
entered into as of the date set forth below by and beriveen the City of Paris (the "City") and TXU
Electric Company n/k/a TXU US Holdings Company ("TXU Electric"), TXU Gas Company
("TXU Gas") and TXLJ Corp. (collectively sometimes referred to as the "TXU Defendants"):
WHEREAS, there is currently pending in the 134"' Judicial District Court ofDallas County,
Texas, in Cause No. 00-9383, a suit styled City ofDenton, Texas et al. vs. TXUElectric Company, et
al. (the "Litigation") which includes claims by the City against the TXU Defendants arising out of
the electric and gas franchise ordinances entered into by and between the City and TXiJ Electric and
TXiJ Gas and, specifically, a dispute with regard to the amount of franchise fees paid to the City by
TXU Electric and TXU Gas;
WHEREAS, the City and the TXU Defendants have compromised and settled all claims
asserted in the Litigation;
NOW, THEREFORE, in order to settle and finally resolve the causes of action asserted in
the Litigation and to fully and finally resolve all disputes and claims arising out of the calculation
and payment of franchise fees to the City by TXU Electric and TXU Gas prior to and through
December 31, 2001, for the mutual promises and covenants set forth in this Agreement, the adequacy
and sufficiency ofwhich consideration is acknowledged, and, without the TXU Defendants having
admitted any of the validity of any aliegations made in the Litigation, the City and the
TXiJ Defendants agree as follows:
1. AMENDMENTS TO THE ELECTRIC FRANCHISE ORDINANCE
As the result of electric industry restructuring, the electric franchise formerly held by
TXU Electric has been assigned to Oncor Electric Delivery Company ("Oncor"), accordingly,
effective January 1, 2002, the City agrees to enter into and TXU Electric agrees to cause Oncor to
COMPROMISE SETTLEMENT AND RELEASE AGREEMENT - Paee 1
EXHIBIT A..
accept an amendment to the cunent electric franchise ordinance substantially in the form of the
t
amendment attached as Exhibit A which amendment shall, at the election of the City, provide that
the Discretionary Services Charges identified in Section 6.1.2 of the Tariff for Retail Delivery
applicable to Oncor which are directly paid by the customer and which are those chazges identified
as items DD 1 through and inclusive of DD24 in said tariff, shall be subj ect to an additional franchise
fee based on 4% oF such charges which additional franchise fee shall be paid to the City pursuant to
the terms of the amendment attached as Exhibit A. The City acknowledges that Oncor may file with
the Texas Public Utility Commission and/or the City a tariff amendment in compliance with the
terms of this agreement, which will provide that Oncor shall have the right to collect from the
customer the franchise fee on such Discretionary Service Charges such that the customer shall bear
100% of the franchise fee on such Discretionary Service Charges. The City aclrnowledges that
Oncor is an intended third-party beneficiary of this agreement and agrees to cooperate with Oncor in
order for Oncor to pass through to customers the entire franchise fee on such Discretionary Service
Charges by taking the following actions: (i) to the extent the City acts as regulatory authority, by
adopting and approving that portion of any tariff in compliance with the terms of this Agreement
which provides for 100% recovery of such franchise fees; (ii) in the event the City intervenes in any
regulatory proceeding before a federal or state agency in which the recovery of the franchise fees on
such Discretionary Service Charges is an issue, the City will take an affirmative position supporting
the 100% recovery of such franchise fees by Oncor and; (iii) in the event of an appea] of any such
regulatory proceeding in which the City has intervened, the City wiil take an affirmative position in
any such appeals in support of the 100% recovery of such franchise fees by Oncor. The City further
agrees not to take any action to prevent the recovery of the franchise fees on such Discretionary
Service Charges by Oncor and to take other action which may be reasonably requested by Oncor to
provide for the 100% recovery of such franchise fees by Oncor.
COMPROMtSE SETTLEMENTANDRELEASEAGREEMENT-Paee2
2. AMENDMENTS TO THE GAS FRANCHISE ORDINANCE
t
Effective January 1, 2002, the City agrees to enact and TXiJ Gas agrees to accept an
amendment to the cunent gas franchise ordinance substantially in the form of the amendment
attached as Exhibit B to provide that, at the election of the City, the franchise fee will increase to a
maximum of 4.00% of the applicable franchise fee payment base and, at the election of the City, the
franchise fee payment base shall be amended to include miscellaneous fees, contributions in aid of
construction, bad debt expense, transportation revenues and third-party gas sales and gross receipts
fees as well as a favored nations clause with respect to franchise fee payments and franchise fee
calculations, substantially in the form of the provisions in Exhibit B. The City acknowledges that
TXU Gas has the right to recover from its ratepayers such additional franchise fee payments to the
City and the City agrees to cooperate with TXU Gas in order for TXU Gas to pass through to its
ratepayers the entire franchise fee payment, as amended, by taking the following actions: (i) as
regulatory authority, by adopting and approving the ordinance, rates or tariff which provide for
100% recovery of such franchise fees as part of TXU Gas' rates; (ii) in the event the City intervenes
in any regulatory proceeding before a federal or state agency in which the recovery of TXiJ Gas'
franchise fees is an issue, the City will take an affirmative position supporting 100% recovery of
stich franchise fees by TXU Gas and; (iii) in the event of an appeal of any such regulatory
proceeding in which a City has intervened, the City will take an affirmative position in any such
appeals in support of the 100% recovery of such franchise fees by TXil Gas. The City further agrees
not to take any action to prevent the recovery of such franchise fees by TXU Gas and to take other
action which may be reasonably requested by TXU Gas to provide for the 100% recovery of such
franchise fees from TXU Gas' ratepayers.
COMPROMISE cETTLEMFNTANDRELEASEACREEMENT-Paee3
3. PAYMENTS TO THE CITY
~
Upon execution and delivery of a fully executed and notarized original of this Agreement and
conditioned upon the dismissal of the Litigation with prejudice as provided by Paragraph 5:
A. TXiJ Gas agrees to pay to the City by payment to its attomeys, Strasburger & Price,
the sum of $93,208.00 the same being City's share of an aggregate sum of exactly
$2,000,000.00 which TXU Gas agreed to pay to the Plaintiffs in the Litigation, which
$2,000,000.00 amount is calculated by multiplying the general business revenues
received by TXU Gas in the calendar year 2000 in the City in which TXLJ Gas did
business in the aggregate amount of $165,591,132.80 by a factor equal to
0.0120779414. The City acknowledges that TXU Gas has the right to and shalt
recover the portion of the $2,000,000.00 amount actually paid to the Plaintiffs in
connection with the settlement of the Litigation from its ratepayers pursuant to the
tax adjustment clause applicable to TXLT Gas, by applying a surchazge to the monthly
bills rendered to its ratepayers, provided that the recovery of such surcharge shall be
limited as follows: (1) the surcharge shall be amortized over a period not less than
three years, and (2) the accrual balance will not be subject to interest. TXU Gas
agrees that the franchise fee paid to the City and recovered from ratepayers under this
Agreement will not include any amounts collected in the past from ratepayers.
B. TXU Electric agrees to pay or cause Oncor to pay the City, by payment to its
attorneys, Strasburger & Price, the sum of $36,668.00 the same being City's shaze of
an aggregate sum of exactly $1,000,000.00 which TXLJ Electric agreed to pay to the
Plaintiffs in settlement of the Litigation, which $1,000,000.00 is calculated by
multiplying the general business revenues received by TXiJ Electric in the calendar
MMPROMISE SETTLEMENTANDRELEASEAGREEMENT-Paee4
yeaz 2000 in the City in which TXU Electric did business in the aggregate amount of
i
$1,149,561,767.63 by a factor equal to 0.000869897.
C. The TXiJ Defendants agree and expressly represent that none of the amounts set
forth in paragraphs 3(B) and 4 shall be recovered from ratepayers pursuant to a tax
adjustment clause or by applying a surcharge to the monthly bills rendered to
ratepayers, or otherwise "passed thru" to ratepayer(s).
4. FEES AND EXPENSE REIMBURSEMENT
Upon execution and delivery of a fully executed and notarized original ofthis Agreement and
conditioned upon the dismissal of the Litigation with prejudice as provided by Pazagraph 5, the
TXiJ Defendants agree to pay and/or cause Oncor to pay the City, by payment to its attorneys,
Strasburger & Price, the sum of $14,651.42 the same being City's share of an aggregate sum of
exactly $915,000 which the TXU Defendants agreed to pay to the Plaintiffs to reimburse the
Plaintiffs for attomeys' fees and expenses incurred in the Litigation.
5. DISMISSAL OF THE LITIGATION
The parties recognize and agree that this settlement is a full settlement of all claims asserted
or which could have been asserted by the City against TXLJ Electric, TXU Gas and TXU Corp. in the
Litigation related to the calculation or payment of franchise fees prior to and through December 31,
2001 and the parties agree that, in connection with such settlement, they will jointly file with the
Court having jurisdiction of the Litigation appropriate pleadings in order to dismiss the Litigation
with prejudice as to the City, with the order of dismissal to provide that costs of court will be taxed
against the party incurring the same and be substantially in the form of the Agreed Order attached as
Exhibit C.
COMPROM[SE SETTLEMENTANDRELEASEAGREEMENT-PaeeS
6. RELEASE OF THE TXU DEFENDANTS BY THE CITY
Except for claims arising out of a breach of this Agreement, the City of Paris, on behalf of
itself and its successors and assigns and any and all persons, entities or municipalities claiming by,
through or under them, hereby RELEASES, DISCHARGES AND ACQUITS, forever and for all
purposes, TXLT Electric Company (now known as TXLT US Holdings Company), its successor Oncor
Electric Delivery Company, TXU Gas Company, including its division TXU Gas Distribution,
TXU Corp. and each of their respective agents, employees, officers, directors, shareholders, partners,
insurers, attomeys, legal representatives, successors and assigns as well as their affiliated
corporations, including TXLT Business Services Company and TXU Energy Company LLC and its
subsidiaries, from and against any and all liability which they now have, have had or may have, and
all past, present and future actions, causes of action, claims, demands, damages, costs, expenses,
compensation, losses and attorneys' fees of any kind or nature whatsoever, or however described,
whether known or unknown, fixed or contingent, in law or in equity, whether asserted or unasserted,
whether in tort or contract, whether now existing or accruing in the future arising out of or related to
the payment, calculation or rendition of franchise fees to the City on or before December 31, 2001
and all claims which were asserted against the TXU Defendants in the Litigation or which could
have been alleged against the TXiJ Defendants in the in the Litigation in any way related to the
payment, calculation or rendition of franchise fees by the TXU Defendants on or before
December 31, 2001. This release is intended to only release claims related to the payment,
calculation or rendition of franchise fees by the TXU Defendants on or before December 31, 2001
and is not intended to release any other claim or cause of action that any party to this Agreement has,
known or unknown, or which accrues in the future.
rnrApROMISE SETTLEMENTANDRELEASEAGREEMENT-Paee6
7. WARRANTY AS TO OWNERSHIP OF CLAIMS AND AUTHOffiTY
1
A. The City warrants and represents that it is the owner of the claims being
compromised, settled, dischazged and released pursuant to this Agreement and each
further warrants and represents that it has not previously assigned all or any part of
such claims to another entity or person. The City warrants and represents that there
are no ]iens of any nature, assignments or subrogation interests in or to the money
paid to the City under the terms of this Agreement.
B. The TXU Defendants warrant that the person(s) executing this Agreement on their
behalf has authority to bind the entity for whom such person signs this Agreement.
8. NO ADMISSION OF LIABILITY
This Agreement is made to compromise, terminate and to constitute an accord and
satisfaction of all of the claims released by this Agreement and the TXU Defendants admit no
liability, fault or wrongdoing of any nature or kind whatsoever and expressly deny and disclaim any
liability, fault or wrongdoing alleged or which could have been alleged with regard to the claims
aEserted in the Litigation.
9. RECOVERY OF DAMAGES DUE TO BREACH
In the event of breach by any party of the terms and conditions of this Agreement, a non-
breaching party shall be entitled to recover all expenses as a result of such breach, including, but not
limited to, reasonable attomeys' fees and costs.
MISCELLANEOUS PROVISIONS
~
10. It is understood and agreed that all agreements and understandings by and between the parties
to this Agreement with respect to the Litigation, the settlement of the Litigation and the payment of
franchise fees are expressly embodied in this Agreement and that this Agreement supersedes any and
all prior agreements, arrangements or understandings between the parties relating to the claims
COMPROMISE SETTLE'NENT AND RELEASE AGREEMENT-Peee 7
released pursuant to this Agreement or any matters related thereto executed by the parties, including
t
the Memorandum of Understanding dated January 31, 2002 signed by counsel for the Plaintiffs and
the TXiJ Defendants.
11. The parties acknowledge and agree that the terms of this Agreement are all contractual and
not mere recitals.
12. The parties acknowledge that they have read this Agreement, understand its terms, and that
?his Agreement is entered into voluntarily, without duress, and with full knowledge of its legal
significance.
13. This Agreement may not be modified in any manner, nor may any rights provided for herein
be waived, except by an instrument in writing signed by each party.
14. This Agreement shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns.
15. Should any term or any provision of this Agreement be declared invalid by a court of
competent jurisdiction, the parties agree that all other terms ofthis Agreement are binding and have
full force and effect as if the invalid portion had not been included.
16. The parties represent and warrant that no party has been induced to enter this Agreement by a
statement, action or representation of any kind or character made by the persons or entities released
under this Agreement or any person or persons representing them, other than those expressly made in
this Agreement.
17. It is understood and agreed that this Agreement may be executed in a number of identical
counterparts, each of which shall be deemed an original for all purposes.
18. The headings contained herein are for convenience and reference only and are agreed, in no
way, to define, describe, extend or limit the scope or intent of this Agreement or its provisions.
19. This Agreement shall be construed in accordance with the laws of the State of Texas.
CnnanannnIcF CFTTI FMFNT AND RELEASE AGREEMENT- Paee 8
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date
set forth.
THE CITY OF PARIS, TEXAS
By:
Its:
Date: Aueust 72 2002
TXU ELECTRIC COMPANY n/k/a TXU
US HOLDINGS COMPANY
By:
Its:
Date:
TXU GAS COMPANY
By:
Its:
Date:
TXU CORP.
By:
Its:
Date:
COMPROMISE SETTLEMENT AND RELEASE ACREEMENT - Paee 9
STATE OF TEXAS §
§
COUNTY OF LAMAR §
August
This instrument was acknowledged before me on the 12th day of ~ 2002,
by Michael i. pfi ester, as mayor on behalf of the City of Paris, Texas.
Notary Public, State of Texas
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on the day of June 2002,
by , of TXU Electric Company n/k/a TXLT US Holdings Company, on behalf
of said corporation.
Notary Public, State of Texas
COMPROMISE SETTLEMENTANDRELEASEAGREEMENT-Paee10
STATE OF TEXAS §
I §
COUNTY OF DALLAS §
This instrument was acknowledged before me on the day of June 2002,
, of TXiJ Gas Company, on behalf of said corporation.
Notary Public, State of Texas
STATE OF TEXAS §
§
COUNTY OF DALLAS §
This instrument was acknowledged before me on the day of June 2002,
by , of TXU Corp., on behalf of said corporation.
Notary Public, State of Texas
rnMPROMtc SETTLEMENTANDRELEASEACREEMENT -Paeell
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PARIS,
PARIS, TEXAS, AMENDING THE EXISTING ELECTRIC FRANCHISE
BETWEEN THE CITY AND ONCOR ELECTRIC DELIVERY COMPANY,
TO PROVIDE FOR A DIFFERENT CONSIDERATION; PROVIDING FOR
ACCEPTANCE BY ONCORELECTRIC DELIVERY COMPANY; MAHING
OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT;
FINDING AND DETERMINING THAT THE MEETING AT WHICH TffiS
ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY
LAW; AND DECLARING AN EFFECTIVE DATE.
WHEREAS, Oncor Electric Delivery Company, successor in interest to TXU Electric
Company (hereinafter called "Oncor") is engaged in the business of providing electric utility
service within the city and is using the public streets, alleys, grounds, and rights-of-ways within
the city for that purpose under the terms of a franchise ordinance heretofore duly passed by the
governing body of the City and duly accepted by Oncor; and,
WHEREAS, the City and Oncor desire to amend said franchise ordinance to provide for
a different consideration; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS,
TEXAS:
Section 1. That the findings set out in the preamble to this ordinance are hereby in all
things approved.
Section 2. The existing electric franchise ordinance between the City and Oncor Electric
Delivery Company is amended as follows:
A. Effective Januazy 1, 2002, the franchise fee due from Oncor shall be a sum
comprised of the following:
(1) a charge, as authorized by Section 33.008(b) of PURA, based on each
kilowatt hour of electricity delivered by Oncor to each retail customer
whose consuming facility's point of delivery is located within the City's
municipal boundaries and as specified by Oncor to the City by letter dated
January 21, 2002.
(a) The franchise fee due pursuant to Section 33.008(b) of PURA shall
be payable in accordance with the existing electric franchise; and
EXHIBIT A
Page 1 of 4
(2) a sum equal to four percent (4 of gross revenues received by Oncor from
servicgs identified in its "Taziff for Retail Delivery Service," Section 6.1.2,
"Discretionary Service Chazges," items DD1 through DD24, that are for
the account or benefit of an end-use retail electric consumer.
(a) The franchise fee amounts based on "Discretionary Service
Charges" shall be calculated on an annual calendaz yeaz basis, i.e.,
from January 1 through December 31 of each calendar year.
(b) The franchise fee amounts that aze due based on "Discretionary
Service Chazges" shall be paid at least once annually on or before
April 30 each year based on the total "Discretionazy Service
Chazges" received during the preceding calendar year.
B. Oncor Franchise Fee Recovery Tariff
(1) Oncor may file a tariff amendment(s) to provide for the recovery of the
franchise fee on Discretionary Service Charges.
(2) City agrees (i) to the extent the City acts as regulatory authority, to adopt
and approve that portion of any tariff which provides for 100% recovery of
the franchise fee on Discretionary Service Chazges; (ii) in the event the City
intervenes in any regulatory proceeding before a federal or state agency in
which the recovery of the franchise fees on such Discretionary Service
Charges is an issue, the City will take an affirmative position supporting the
100 % recovery of such franchise fees by Oncor and; (iii) in the event of an
appeal of any such regulatory proceeding in which the City has intervened,
the City will take an affirmative position in any such appeals in support of
the 100% recovery of such franchise fees by Oncor.
(3) City agrees that it will take no action, nor cause any other person or entity
to take any action, to prohibit the recovery of such franchise fees by Oncor.
Section 3. That, in all respects, except as specifically and expressly amended by this
ordinance, the existing effective franchise ordinance heretofore duly passed by the governing body
of the City and duly accepted by Oncor shall remain in full force and effect according to its terms
until said franchise ordinance terminates as provided therein.
Section 4. That Oncor shall, within thirty (30) days from the passage of this ordinance,
file its written acceptance of this ordinance with the Office of the City Clerk in substantially the
following form:
Page 2 of 4
To the Honorable Mayor and City Council:
Oncor Electric Delivery Company, acting by and through the
undersigned authorized officer, hereby accepts in all respects, on
this the day of , 20 , Ordinance No.
amending the current electric franchise between the
City and Oncor and the same shall constitute and be a binding
contractual obligation of Oncor and the City.
Oncor Electric Delivery Company
By:
Vice President
Section 5. Introduced, read, and passed on first reading on August 12, 2002, at a regular
meeting of the City Council of the City of Paris; read and passed on second reading on September
9, 2002, at a regular meeting of the City Council of the City of Paris; and, read and passed on
third and final reading on October 14, 2002, at a regular meeting of the City Council of the City
of Paris, the same being three (3) separate regular meetings of the City Council of the City of
Pazis, and the last reading being not less than thirty (30) days from the first.
Section 6. That this ordinance shall become effective in accordance with the terms and
provisions of the City Charter of the City of Paris, and shall be effective for a period of time as
stated herein.
Section 7. That it is hereby officially found and determined that the meeting at which this
Ordinance is passed is 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.
PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY
OF PARIS, PARIS, TEXAS, on third and fmal reading this the 14th day of October, 2002, at
which meeting a quorum was present and voting.
Michael J. Pfiester, Mayor
ATTEST:
Mattie Cunningham, City Clerk
Page 3 of 4
APPROVED AS TO FORM:
Larry W. Schenk, City Attorney
Page 4 of 4
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PARIS,
PARIS, TEXAS, AMENDING THE EXISTING GAS FRANCHISE BETWEEN
THE CITY AND TXU GAS COMPANY, TO PROVIDE FOR A DIFFERENT
CONSIDERATION AND TO AUTHORIZE THE LEASE OF FACILITIES
WITEiIN THE CITY'S RIGHTS-OF-WAY; PROVIDING FOR
ACCEPTANCE BY TXU GAS COMPANY; MAHING OTHER FINDINGS
AND PROVISIONS RELATED TO THE SUBJECT; FINDING AND
DETERMINING THAT THE MEETING AT WHICH THIS ORDINANCE IS
PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; AND
DECLARING AN EFFECTIVE DATE.
WHEREAS, TX-U Gas Company (hereinafter called "TXiJ Gas") is, through its TX-U Gas
Distribution division, engaged in the business of furnishing and supplying gas to the general public
in the city, including the transportation, delivery, sale, and distribution of gas in, out of, and through
the city for all purposes, and is using the public streets, alleys, grounds, and rights-of-ways within
the city for that purpose under the terms of a franchise ordinance heretofore duly passed by the
goveming body of the City and duly accepted by TXU Gas; and,
WHEREAS, the City and TX-U Gas desire to amend said franchise ordinance to provide for
a different consideration and to authorize the lease of facilities within the City's rights-of-way;
NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS,
TEXAS:
Section 1. That the findings set out in the preamble to this ordinance and hereby in all things
approved.
Section 2. That the existing gas franchise ordinance between the City and TXLT Gas
Company is amended as follows:
A. Effective January 1, 2002, the consideration payable by TXiJ Gas for the rights and
privileges granted to TXU Gas by the franchise ordinance heretofore duly passed by
the governing body of this City and duly accepted by TX-U Gas is hereby changed
to be four percent (4%) of the Gross Revenues, as defined in Section 23. below,
received by TX-U Gas.
B. "Gross Revenues" shall mean all revenue derived or received, directly or indirectly,
by the Company from or in connection with the operation of the System within the
corporate limits of the City and including, without limitation:
EXHIBIT B
Page 1 of 5
(1) all revenues received by the Company from the sale of gas to all classes of
customers within t~e City;
(2) all revenues received by the Company from the transportation of gas through
the pipeline system of Company within the City to customers located within
the City;
(3) the value of gas transported by Company for Transport Customers through
the System of Company within the City ("Third Party Sales"), with the value
of such gas to be reported by each Transport Customer to the Company,
provided, however, that should a Transport Customer refuse to furnish
Company its gas purchase price, Company shall estimate same by utilizing
TXLT Gas Distribution's monthly industrial Weighted Average Cost of Gas,
as reasonably near the time as the transportation service is performed; and
(4) "Gross revenues" shall include:
(a) other revenues derived from the following'miscellaneous chazges':
i. charges to connect, disconnect, or reconnect gas within the
City;
ii. chazges to handle returned checks from consumers within the
City;
iii. such other service chazges and chazges as may, from time to
time, be authorized in the rates and charges on file with the
City; and
iv. contributions in aid of construction° ("CIAC");
(b) revenues billed but not ultimately collected or received by the
Company; and,
(c) gross receipts fees.
(5) "Gross revenues" shall not include:
(a) the revenue of any Person including, without limitation, an affiliate,
to the extent that such revenue is also included in Gross Revenues of
the Company;
(b) sales taxes; and
(c) any interest income earned by the Company; and
Page 2 of 5
(d) all monies received from the lease or sale of real or personal
property, provided, however, that this exclusion does not apply to the
lease of facilities within the City's right of way.
C. Calculation and Payment of Franchise Fees Based on CIAC
(1) The franchise fee amounts based on "Contributions in aid of Construction"
("CIAC") shall be calculated on an annual calendaz year basis, i.e., from
January 1 through December 31 of each calendaz yeaz.
(2) The franchise fee amounts that aze due based on CL4C shall be paid at least
once annually on or before April 30 each yeaz based on the total CIAC
recorded during the preceding calendar yeaz.
D. Effect of Other Municipal Franchise Ordinance Fees Accepted and Paid by TXLT Gas
(1) If TXiJ Gas should at any time after the effective date of this Ordinance
agree to a new municipal franchise ordinance, or renew an existing municipal
franchise ordinance, with another municipality, which municipal franchise
ordinance deterntines the franchise fee owed to that municipality for the use
of its public rights-of-way in a manner that, if applied to the City, would
result in a franchise fee greater than the amount otherwise due City under this
Ordinance, then the franchise fee to be paid by TXU Gas to City pursuant to
this Ordinance shall be increased so that the amount due and to be paid is
equal to the amount that would be due and payable to City were the franchise
fee provisions of that other franchise ordinance applied to City.
(2) The provisions ofthis Subsection D apply only to the amount ofthe franchise
fee to be paid and do not apply to other franchise fee payment provisions,
including without limitation the timing of such payments.
E. TX-U Gas Franchise Fee Recovery Tariff
(1) TX-U Gas may file with the City a tariff amendment(s) to provide for the
recovery of the franchise fees under this amendment.
(2) City agrees that (i) as regulatory authority, it will adopt and approve the
ordinance, rates or tariff which provide for 100% recovery of such franchise
fees as part of TXiJ Gas' rates; (ii) if the City intervenes in any regulatory
proceeding before a federal or state agency in which the recovery of TX-U
Gas' franchise fees is an issue, the City will take an affirmative position
supporting 100% recovery of such franchise fees by TX-U Gas and; (iii) in
the event of an appeal of any such regulatory proceeding in which the City
has intervened, the City will take an affirmative position in any such appeals
in support of the 100% recovery of such franchise fees by TXiJ Gas.
Page 3 of 5
(3) City agrees that it will take no action, nor cause any other person or entity to
take any action, to prohibip the recovery of such franchise fees by TXU Gas.
F. Lease of Facilities Within City's Rights-of-Way. TXU Gas shall have the right to
lease, license or othenvise grant to a party other than TXU Gas the use of its
facilities within the City's public rights-of-way provided: (i) TXIJ Gas first notifies
the City of the name of the lessee, licensee or user; the type of service(s) intended
to be provided through the facilities; and the name and telephone number of a contact
person associated with such lessee, licensee or user and (ii) TXU Gas makes the
franchise fee payment due on the revenues from such lease pursuant to Sections 2.A.
and 2.13. of this Ordinance. This authority to Lease Facilities Within City's Rights-
of-Way shall not affect any such lessee, licensee or user's obligation, if any, to pay
franchise fees.
Section 3. That, in all respects, except as specifically and expressly amended by this
ordinance, the existing effective franchise ordinance heretofore duly passed by the governing body
of the City and duly accepted by TXU Gas shall remain in full force and effect according to its terms
until said franchise ordinance terminates as provided therein.
Section 4. That TXU Gas shall, within thirty (30) days from the passage of this ordinance,
file its written acceptance of this ordinance with the Office of the City Clerk in substantially the
following form:
To the Honorable Mayor and City Council:
TXU Gas Distribution, a division of TXU Gas Company, acting by
and through the undersigned authorized officer, hereby accepts in all
respects, on this the _ day of , 20_,
Ordinance No. amending the current gas franchise
between the City and TXiJ Gas and the same shall constitute and be
a binding contractual obligation of TXU Gas and the City.
TXU Gas Dish-ibution
A division of TXU Gas Company
By:
Vice President
Section 5. Introduced, read, and passed on first reading on August 12, 2002, at a regulaz
meeting of the City Council of the City of Paris; read and passed on second reading on September
9, 2002, at a regular meeting of the City Council of the City of Paris; and, read and passed on
third and final reading on October 14, 2002, at a regular meeting of the City Council of the City
of Paris, the same being three (3) separate regular meetings of the City Council of the City of
Paris, and the last reading being not less than thirty (30) days from the first.
Page 4 of 5
Section 6. That this ordinance shall become effective in accordance with the terms and
provisions of the City Charter of the City of Paris, and shall be effective for a period of time as
stated herein.
Section 7. That it is hereby officially found and determined that the meeting at which this
Ordinance is passed is 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.
PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY
OF PARIS, PARIS, TEXAS, on third and fmal reading this the 14th day of October, 2002, at
which meeting a quorum was present and voting.
Michael J. Pfiester, Mayor
ATTEST:
Mattie Cunningham, City Clerk
APPROVED AS TO FORM:
Larry W. Schenk, City Attorney
Page 5 of 5
NO. 009383
CITY OF DENTON, TEXAS,
§ IN THE DISTRICT COURT
et al.,
§
Plaintiffs,
§
§
vs.
§ DALLAS COUNTY, TEXAS
§
TXU ELECTRIC COMPANY,
§
et al.,
§
§
Defendants.
§ 134T" JUDICIAL DISTRICT
AGREED ORDER OF DISMISSAL WITH PREJUDICE
AS TO THE CITY OF PARIS
On this day, came on to be considered the above-referenced cause and Plaintiff, the City
of Paris, and Defendants, by and through their respective attorneys of record, announced that the
parties have compromised and settled their disputes and moved that this action be dismissed with
prejudice as to the City of Paris;
IT IS, THEREFORE, ORDERED, ADNDGED AND DECREED that the above-styled
and numbered cause of action is dismissed with prejudice to the refiling of same as to the City oF
Paris, that all costs incurred are taxed against the party incurring same, and that any and all relief
requested by the City of Paris not expressly granted herein is denied.
SIGNED this _ day of
2002.
NDGE PRESIDING
EXHIBIT C
APPROVED AND AGREED AS TO FORM AND CONTENT:
STRASBURGER & PRICE, L.L.P.
By:
Kevin J. Maguire
State Bar No. 12827900
ATTORNEY FOR PLAINTIFF
HUNTON & WILLIAMS
By:
David P. Poole
State Baz No. 16123750
ATTORNEY FOR DEFENDANTS
TXU ELECTRIC COMPANY
TXU GAS COMPANY APID
TXU CORP.
w['uFED ORDER OF DISMISSAL - Page 2
RESOLUTION NO. 2000- 140
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS,
PARIS, TEXAS, AUTHORIZING THE PARTICIPATION OF THE CITY OF
PARLS, PARIS, TEXAS, IN THAT CAUSE OF ACT'ION STYLED THE CITY
OF DENTON. TEXAS VS. TEXAS UTII.ITIES COMPANY AND LONE
STAR GAS COMPANY, OR SUCH OTHER CAUSES OF ACTION AS THE
"STEERING COMMITTEE OF CITIES PARTICIPATING IN THE TXU
FRANCHISE LiTIGATION" MAY DETERMINE, SEEKING DELINQUENT
FRANCHISE FEES FROM TXU, LONE STAR GAS, AND OTAER
ENTITIES ASSOCIATED WITH TXU; AUTHORIZING THE
EXPENDITURE OF FUNDS FOR ATTORNEY AND EXPERT WITNESS
FEES; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, on March 30, 2000, the 269th District Court awarded actual damages to the
Cities of Wharton, Galveston, and Pasadena of $42 million and on Apri14, 2000, punitive damages
of $30 million against Houston Lighting .@ Power Co. (HI.&P) for underpaying franchise fees by
excluding revenues from the gross receipts upon which such fees are derived; and,
WHEREAS, on December 12, 1999, an sudit on behalf of the City of Denton estimated
TXU Electric and Lone Star Gas owed delinquent franchise fees in excess of $1,000,000 based on
findings that revenues similar to those at issue in the HL&P case were excluded from the calculation
of gross receipts/revenues; and,
WHEREAS, the law fircns of Strasburger & Price, L.L.P. and Bucek & Frank, L.L.P. have
filed suit against TXU and Lone Star Gas on behalf of the City of Denton in the 393rd District Court
in Denton County for delinquent franchise fees; and,
WHEREAS, a consolidated action by cities in the TXiJ service area seeking delinquent
franchise fees will reduce duplication of effort and the attendant legal, expert, and court costs; NOW,
TFIEREFORE,
BE TT RESOLVED BY THE CITY COUNCIL OF TAE CITY OF PAR[S, 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 City of Paris, Paris, Texas, agrees to participate with other similarly
situated Texas cities in the TU/Lone Star Gas system and join the City of Denton in pursuing causes
of action against Texas Utilities Company, Lone Star Gas Company, and other entities associated
with TXCT to collect delinquent franchise fees.
Section 3. That the City of Paris, Paris, Texas, agrees to contribute $1.00 for each individual
residing within its corporate limits based on the 1990 U. S. Census (except for such portion of its
population that may not be residing within the TU/Lone Star Gas service area), to undenvrite the cost
of legal and expert witness fees and related costs to be expended on behalf of the cities in this matter,
$.50 being due on or before October 31, 2000, and the other $.50, ifassessed, being due and payable
on the date the Steering Committee ofCiries Participating in the TXLJFranchise Litigation suthorizes
such assessment.
Section 4. That Larry W. Schenk, City Attomey, or his designee, shall be the City's primary
contact and liaison in this matter and such individual shall be eligible to serve on the "Steering
Committee of Cities Participating in the TXLT Franchise Litigation" if he/she is elected by the cities
participating in this litigation. Notices to the City should be addressed as follows:
Larry W. Schenk, City Attomey
City of Paris
P. O. Box 9037
Paris, Texas 75461-9037
(903) 785-751 l Ext. 255 FAX (903) 782-9721
Section 5. That the liaison named above is authorized to take those steps reasonable and
necessary to comply with the intent of this resolution.
Section 6. That this resolution shall be effective from and after its date of passage.
PASSED AND APPROVED this 9th day of October, 2000.
A~ &e4r,6
Michael P] fiestc, Ma}p
AITEST:
' hr~~,
Mattie Cunningham, City Clerk ~
APPROVED AS TO FORM:
. ~.7
S ep nie H. Hanis, Asst. City Attorney