R2018-153 2018-08-27 RESOLUTION NO. R2018-153
A Resolution of the City Council of the City of Pearland, Texas ("City"),
approving a reduction in rates charged by Centerpoint Energy Resources
Corporation, d/b/a Centerpoint Energy Entex and Centerpoint Energy Texas
Gas — Texas Coast Division ("CenterPoint") related to the reduction in the
federal corporate tax rate; finding the reduction in CenterPoint's rates to be
just and reasonable; finding that the meeting complied with the open
Meetings Act; declaring an effective date; and requiring delivery of the
resolution to the company and special counsel.
WHEREAS, the City of Pearland, Texas ("City") is a regulatory authority under the Gas
Utility Regulatory Act ("GURA") and under § 103.001 of GURA has exclusive original jurisdiction
over CenterPoint Energy Resources Corporation, d/b/a CenterPoint Energy Entex and
CenterPoint Energy Texas Gas — Texas Coast Division ("CenterPoint" or "Company")
rates, operations, and service of a gas utility within the municipality; and
WHEREAS, on about May 23, 2017, the Railroad Commission of Texas in Gas Utility
Docket No. 10567 ("GUD No. 10567)," approved an increase in annual revenue for
CenterPoint; and
WHEREAS, the City participated in CenterPoint's general rate case at the Railroad
Commission of Texas in GUD No. 10567; and
WHEREAS, the corporate tax rate on federal income included in CenterPoint's current
rates and made part of the increase in revenue approved by the Railroad Commission of Texas,
was based on a federal-income-tax rate of 35%; and
WHEREAS, the corporate tax rate on federal income included in CenterPoint's current
rates and approved by the Railroad Commission of Texas in GUD No. 10567, was based on a
federal-income-tax rate of 35%; and
WHEREAS, effective January 1, 2018, the corporate tax rate on income is 21%; and
WHEREAS, CenterPoint seeks administrative approval under Utilities Code § 104.111 to
reduce its annual revenue by approximately $2.3 million; and
Resolution No. R2018-153
WHEREAS, CenterPoint's proposed decrease in rates comprises a change in rates thus
invoking GURA § 103.022, which requires CenterPoint to reimburse the City's reasonable
expenses associated with reviewing CenterPoint's proposal to change rates; and
WHEREAS, the City's Special Counsel and consultants engaged to review
CenterPoint's calculation of the effect of the reduction in the corporate federal-income-tax rate
from 35% to 21% has on CenterPoint's rates, have confirmed that CenterPoint's calculation of
the reduction in CenterPoint's revenue is mathematically accurate; and
WHEREAS, the reduction in CenterPoint's annual revenue is limited to the tax expense
related to the change in the corporate tax rate from 35% to 21%, and thus will need to be
adjusted further in a future proceeding to account for excess deferred income taxes resulting
from the Tax Cut and Jobs Act of 2017; and
WHEREAS, by approving the reduction in CenterPoint's rates, the City, in future
proceedings or in other jurisdictions, is under no obligation to take the same positions with
regard to the methodology resulting in a reduction in rates, as the methodology underlying the
reduction proposed by CenterPoint, nor shall the City's approval of the reduction in
CenterPoint's rates, be used against the City in any future proceeding with respect to different
positions the City may take with regard to setting CenterPoint's rates; and now therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. The findings set forth in this Resolution are hereby in all things approved and
incorporated herein.
Section 2. 'CenterPoint shall submit to the City within fourteen days from the effective
date of this Resolution, amended tariffs reflecting the reduction in revenue noted above.
Section 3. CenterPoint is directed to reimburse the City's expenses related to review of
CenterPoint' proposal to change rates within thirty (30) days from submission to CenterPoint of
the City's invoices related to such expenses.
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Resolution No. R2018-153
Section 4. To the extent any Resolution previously adopted by the City Council is
inconsistent with this Resolution, it is hereby superseded.
Section 5. 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 6. If any one or more sections or clauses of this Resolution is judged to be
unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining
provisions of this Resolution and the remaining provisions of the Resolution shall be interpreted
as if the offending section or clause never existed.
Section 7. This Resolution shall become effective from and after its passage; rates
approved by this Resolution shall have an effective date of September 1, 2018.
Section 8. A copy of this Resolution shall be sent to CenterPoint, care of Perrin Wall,
Manager of Regulatory Affairs, CenterPoint Energy Corporation, 1111 Louisiana Street,
Houston, Texas 77002-5231, and to Mr. Alfred R. Herrera, Herrera Law & Associates, PLLC,
816 Congress Avenue, Suite 950, Austin, Texas 78701.
PASSED, APPROVED and ADOPTED this the 27th d7 of Aug t, A. 2018.
TOM REID
MAYOR
ATTEST:
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