R2017-063 2017-03-27 RESOLUTION NO. R2017-63
A Resolution of the City Council of the City Of Pearland, Texas
("CITY") denying the application to increase rates filed by
CenterPoint Energy Resources Corp., d/b/a CenterPoint Energy
Entex and Centerpoint Energy Texas gas on or about November 16,
2016; requiring the reimbursement of municipal rate case expenses;
finding that the meeting complies with the open meetings act;
making other findings and provisions related to the subject; and
declaring an effective date.
WHEREAS, CenterPoint Energy Resources Corp., d/b/a CenterPoint Energy
Entex and CenterPoint Energy Texas Gas ("CenterPoint" or "Company") filed a
Statement of Intent with the City on or about November 16, 2016 to increase rates in the
Company's Houston and Texas Coast Divisions and proposed an effective date of
December 21, 2016; and
WHEREAS, the City is a regulatory authority under the Gas Utility Regulatory Act
("GURA") and under § 103.001 et seq. of GURA has exclusive original jurisdiction over
CenterPoint's rates, operations and services within the municipality; and
WHEREAS, by prior Resolution, the City suspended CenterPoint's proposed
effective date for the statutorily allowed time from December 21, 2016, to March 21,
2017; and
WHEREAS, to facilitate negotiations among the City and CenterPoint regarding
its proposed increase in rates, CenterPoint extended its proposed effective date from
December 21, 2016, to January 7, 2017, which results in an extension of the suspension
period from March 21, 2017, to April 7, 2017; and
WHEREAS, CenterPoint proposed to consolidate its current Houston and Texas
Coast Divisions into a single Texas Gulf Division and implement the revised gas tariffs
on a division-wide basis for customers in the Texas Gulf Division; and
WHEREAS, CenterPoint's proposed increase would increase its non-gas base
revenue by approximately $31.0 million, representing an increase in non-gas base
revenue of approximately 10.7%; and
WHEREAS, the City of Pearland is located in the currently existing Texas Coast
Division; and
RESOLUTION NO. R2017-63
WHEREAS, on a customer-class basis, for Texas Coast Division customers, the
impact of CenterPoint's proposed increase is as follows:
Average Current Average Proposed Percentage
Monthly Bill, Proposed Monthly Change Change with
including Gas Monthly Bill, Gas Cost/
Cost including Gas without Gas
Cost Cost
Residential $36.22 $37.32 $1.10 3.0% / 5.0%
General $102.41 $102.90 $0.49 0.5% /-0.9%
Service-Small
General Service $1,316.42 $1,317.74 $1.32 0.1% I-6.5%
— Large Volume
WHEREAS, CenterPoint proposed to increase its customer charges for Texas
Coast Division customers for "General Service — Residential" from $16.17 to $16.75;
increase the customer charge for "General Service — Small" from $17.20 to $18.25; and
increase the customer charge for "General Service — Large Volume" from $56.45 to
$70.00; and
WHEREAS, the CenterPoint sought a Return on Equity (ROE) of 10.25%; a
capital structure weighted toward equity— 55.15% Equity; 44.85% Debt; and
WHEREAS, CenterPoint's rate request consists of a voluminous amount of
information including CenterPoint's rate-filing package, exhibits, schedules, and
workpapers (collectively, its "Rate Filing Package"); and
WHEREAS, the City coordinated its efforts with a coalition of similarly situated
municipalities known as the Texas Coast Utilities Coalition ("TCUC") of cities, to review
CenterPoint's Rate Filing Package; and
WHEREAS, the City engaged speial counsel and consultants to evaluate the
merits of CenterPoint's proposed increase in rates; and
WHEREAS, after review of CenterPoint's Rate Filing Package, the City's special
counsel and consultants determined that CenterPoint failed to establish that its overall
revenue request resulted in no more than an amount that would permit CenterPoint a
reasonable opportunity to earn a reasonable return on the utility's invested capital used
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RESOLUTION NO. R2017-63
and useful in providing service to the public in excess of the utility's reasonable and
necessary operating expenses; and
WHEREAS, CenterPoint failed to establish that its proposed rates and tariffs
were just and reasonable; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. The findings set out in the preamble are in all things approved and
incorporated herein as if fully set forth.
Section 2. CenterPoint's failed to show that its proposed rates are just and
reasonable.
Section 3. The City hereby DENIES CenterPoint's request to increase rates and in
support thereof finds that:
A. The Rate Filing Package fails to provide sufficient information to justify the
requested increase in revenue or to justify the changes set forth in the attached
tariffs;
B. The Rate Filing Package fails to provide sufficient information to justify the
adoption of the rate base, expenses, investment, return on equity, and other rate
issues noted in Utilities Code, Chapter 104.
Section 4. The City hereby orders CenterPoint to reimburse the City's rate case
expenses as provided in the Gas Utility Regulatory Act and that CenterPoint shall do so
on a monthly basis and within 30 days after submission of the City's invoices for the
City's reasonable costs associated with the City's activities related to this rate review or
to related proceedings involving CenterPoint before the City, the Railroad Commission of
Texas, or any court of law.
Section 5. A copy of this resolution shall be sent to CenterPoint Energy, care of Mr.
Thomas Stevens, Director of Regulatory Affairs, CenterPoint Energy P.O. Box 2628,
Houston, Texas 77252-2628; and to Mr. Alfred R. Herrera, Herrera & Boyle, PLLC, 816
Congress Ave., Suite 1250, Austin, Texas 78701.
Section 6. The meeting at which this resolution was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act, Texas Government
Code, Chapter 551.
Section 7. This resolution shall become effective from and after its passage.
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RESOLUTION NO. R2017-63
PASSED, APPROVED and ADOPTED this the 27"' day of March, A. D., 2017.
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TOM REID
MAYOR
ATTEST:
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APPROVED AS TO FORM:
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DARRIN M. COKER
CITY ATTORNEY
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