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1980-11-03 CITY COUNCIL PUBLIC HEARING MEETING MINUTES1.27 MINUTES OF A PUBLIC HEARING BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, HELD ON NOVEMBER 3, 1980, AT 7:30 PM AT THE CITY HALL, 2335 N. TEXAS AVENUE, PEARLAND, TEXAS, ON THE PUBLIC UTILITY REGULATORY ACT OF 1978, TITLE I AND TITLE III. The hearing was called to order with the following present: Mayor Councilman/Mayor Pro Tem Councilman Councilman Councilwoman City Manager City Attorney City Secretary Tom Reid Charles R. Mack Al Lentz Terry Gray Fran Coppinger Ronald J. Wicker Bobby J. Williams Dorothy L. Cook City Attorney Bobby J. Williams, at the request of the Mayor, conducted the hearing. TITLE I City Attorney Williams first stated that there must be a formal determination by the Council on the last 5 of these standards. The first 6 of these standards or regulating policies have to be formally considered in writing and reported on by the City Council prior to the 8th day of November, 1981. He then proceeded to cover each of the standards and asked for response from the representatives of the two utilities involved. The following.is, in part, oral comments by Ed Grisham, District Manager of H.L. & P. Company and written comments of Dwight R. Spurlock, Vice President & District Manager of Community Public Service Company. 1. COST OF SERVICE (a) H.L. & P. - Mr. Ed Grisham stated that Section 3 of the act sets out 6 rate standards, and Section 113 sets out 5 policy standards, and Section 114 discusses lifeline rates. Since all of these standards must be considered by the State Public Utility Commission of Texas, it is recommended by H.L. & P. that`your City defer action on the above standards until final action by the P.U.C. (b) Community Public Service - Cost of service is based on an imbedded cost study. With present rates each class moves closer to its cost of service. Further, their cost of service provides for the breakdown of costs between energy, demand, and customer components and can further be used to pro- vide seasonal costs for certain rates. This cost of service does not reflect time differentiated costs. 2. DECLINING BLOCK RATES (a) H.L. & P. - Mr. Grisham stated that the only declining block rates included in H.L. & P.'s proposed tariff is a miscellaneous general service rate, since essentially all the energy components of this rate is recovered through a cost adjustment, the declining block feature and the kilowatt charges of the m.g.s. rate are there to give recognition to the relation- ship of between coincidence factor and load factor in this rate and there- by provide an equatable means of recovering a passing component of the cost allocated to this class. (b) Community Public Service - Declining block rates are being used in resi- dential service, general service, large general service, and oil field service. The residential service and general service rates reflect the seasonal costs to Community (our costs are lower in the winter). The general service, large general service and oil field service rates reflect customer costs being recovered during the first block of the energy charge; customers with larger demands require more expensive equipment (meters, services, transformers, etc.) and thus have higher customer costs. Recovering a portion of the customer cost in the energy charge more closely reflects each individual customer's cost of service. 3. TIME OF DAY RATES (a) H.L. & P. - Mr. Grisham stated that Industrial rates on the H.L.&P.'s system contain price differences based on recognized cost differences over the course of the day. The residential and commercial customers rates do not vary by time of day, because it is the company's position that hour rating and annual load factors indicate that time of day rates for these classes would not be cost beneficial. H.L.&P. recommends that action be deferred on this standard pending further action by the Texas Public Utility Commission. (b) Community Public Service A time -differentiated cost of service is pre- sently underway in connection with the November 1, 1980, PURPA filing deadline. 1 ?18 4. SEASONAL RATES (a) H.L.&P. - Each of H.L.&P's major rate classes obtain the benefit of a seasonal rate feature based on seasonal cost variations. We therefore recommend adoption of this standard. (b) Community Public Service - Seasonal costs are reflected in the residential service, general service, school service and miscellaneous municipal service rates. 5. INTERRUPTIBLE RATES (a) H.L.&P. - Mr. Grisham stated that H.L.&P. currently offers an inter- ruptible rider reflectable to loads of 5,000 k.p.h. or more when taken in conjunction with service received under rate schedule L.O.S.A. or L.O.S.B. They therefore recommend adoption of this standard for large industrial customers and defer its application to all commercial and industrial customers pending any further action by the P.U.C. (b) Community Public Service - Presently they offer an interruptible industrial service rate that is available to anyone receiving service at 69 kvl or greater and an interruptible irrigation service rate is being proposed. 6. LOAD MANAGEMENT TECHNIQUES (a) H.L.&P. - Since H.L.&P.'s load pattern is seasonal in nature the company has launched a suitable load management technique on an active basis. A load management group was recently formed to encourage the implementation of innovative load management ideas and to provide a centralized body to coordinate the load management activities that are currently or that have previously been under study. The adoption of this modification of the standard would meet the purpose of encouraging the conservation of energy as stated in Title I. of PURPA. H.L.&P. recommends postponing action on this standard pending action by the Texas Public Utility Commission. (b) C.P.S. Co. - Community has studied air conditioner controls in the south- east division in the past and will continue to do so in the future in order to determine their cost effectiveness. Initial studies were made in the Southeast Division due to the large amount of air conditioning load and H.L.&P.'s 100% ratchet which would make such controls cost- effective in the Southeast Division before any other division. COMMENT BY CITY ATTORNEY: At this time City Attorney Williams stated that this concluded the first 6 rate standards which must be acted on by the City Council on or before November 9, 1981. He then stated to the Council that the following standards must be acted on in some �--� manner by the Council tonight and the report must be sent in to the proper reporting agency on or before November 9, 1980. 7. MASTER METERING (a) H.L.&P. - Mr. Grisham stated that they believe that the company's present practices and rules of the P.U.C. substantially conform with Section 113 standards. Master Metering required that new apartment projects and condominium conversions after January 1, 1978, install separate meters for each dwelling unit. H.L.&P.'s existing tariff requires that all rental premises be separately metered so that the Master Metering standard appears to be substantially in effect on the H.L.&P.'s system. (b) Community Public Service - Rules regarding master metering are being formulated to comply with PURPA. Additionally, the Texas Legislature required that all new apartments and condominium conversions after January 1, 1978, be separately metered. 8. AUTOMATIC FUEL ADJUSTMENT CLAUSES (a) H.L.&P. - H.L.&P.'s only automatic adjustment clause is the fuel com- mitment permitted pursuant to Commission regulations. It is the position of H.L.&P. that the current fuel cost adjustment clause of H.L.&P. approved by the authorities which regulate it is in compliance with the PURPA standard and that the regulatory surveillance outlined by PURPA provides better long term protection to its customers than would a clause which would delay recovery of these costs and result in increased cost from added rate expenses as well as increased borrowing expenses. They recommend acceptance of these P.U.C. rules regarding this standard. (b) Community Public Service - As a distribution company, Community has fuel and purchase power clauses. The fuel adjustment clause is a direct pass through of our fuel adjustment costs from our suppliers. Community makes no direct purchases of fuel but must rely upon our suppliers. The purchased power adjustment takes effect as a result of our supplier being granted a rate increase. The adjustment is reviewed and approved by this Commission before it is implemented. All of the purchased power adjustment clauses in effect will be reviewed during 1980 by this Commission. 9. CONSUMER INFORMATION (a) H.L.&P. - PURPA's standard regarding information to Customers states that a utility shall at a designated time period transmit a clear and concise explanation of the existing rate schedule and any rate schedule applicable toeach customer as well as summaries of all rate schedules applicable to each major consumer class; and upon request provide a statement of the actual consumption of each billing period during the prior year. The company does not provide information to every customer each year concerning the rates because it their belief that the .cost of providing such information to every customer every year would not be cost beneficial. We do provide information at our offices and are in compliance with the state Public Utility Substancy rules which we believe is in with the PURPA standard. r-- (b) Community Public Service - All customers are provided notice of rate changes, and rate information is made available to all customers. THE FOLLOWING TWO ITEMS ARE PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978, TITLE II. 10. TERMINATION OF SERVICE (a) H.L.&P. - The PURPA standard concerning termination of service is intended to ensure that electric service is not terminated without -first giving reasonable notice along with a reasonable opportunity to dispute the reasons for; termination. H..L.&P.'s tariff provides termination procedures which appeartoconform with the procedures suggested in PURPA. They recommend_ adoption of State Public Utility Commission substantive rule which they believe conforms with the procedures suggested by PURPA., (b) Community Public Service - Community's termination rules comply with the Commission's'Substantive-Rule 052.02.04.044 and PURPA. 11. ADVERTISING (a) H.L.&P. - The PURPA standard _.concerning Advertising says that the .share holders will bear the expense of promotional or political advertise- ments. These'rules which H.L.&P. are in -Compliance With appear to conform with PURPA's standards. (b) Community Public Service Company - Community Public Service does not include any political or promotional advertising expenses in 0&M expenses paid by ratepayers Mr. Dwight Spurlock then made a short statement on behalf of Community Public Service Company. He stated that except for their filling which will be in the hands of the City .within the next few days and associated testimony thereto, the position of Community Public Service, being a minority sujapl.ier of electricity within the City of Pearland,_would be the same as that of Houston Lighting & Power Company. It is their understanding, however, that action by this authority need not be taken by November 8, the date of filing, but that a filing on that date simply has to state that the intention of the City of Pearland to take action before the deadline of November 8, 1981. He thought that this could be substantiated by the Public Utility Commission's plans to hold their hearing in March of 1981. He stated that in preparation for meeting the final deadline of November 8, 1981, we will have to take some final action on these issues. At this point in the hearing, City Attorney Bobby Williams conducted a Question and Answer Period between the City Council and the representatives of the two Utilities on the rate making, service standards, and principals which had been discussed. COMPLETE TAPE & TRANSCRIPT OF THE PUBLIC HEARING ON FILE IN THE OFFICE OF THE CITY SECRETARY. TITLE III City Attorney Williams stated that the Hearing on Title III would proceed basically with the requirements that are similar or the same as the requirements that we had with the electric utilities, but this Title III affects only those utilities that supply gas or fuel oil service to the City, and the City is asked to consider and make an official determination as to whether either or neighte of two standards should be adopted as a matter of policy in order to carry out the three objectives of PURPA and the establish- ment of utility rates that are equitable for consumers. 1. TERMIN.ATION OF SERVICE Roy Baer of Entex, Inc. stated that currently, procedures for termination of service are included in the Company's Rules and Regulations which are on file with the City and the Texas Railroad Commission. The standards conform with those promulgated by the Railroad Commission under its Substantive Rule 051.04.03.024 (Exhibit I). Importantly, the standards require written notice be given the customer prior to termina- tion. The notice must state the reason for termination, what the customer must do to prevent termination, and in the case of a past due bill, the amount past due and the address where payment may be made. In addition to the notice requirement, Entex may not terminate service unless it has made a reasonable effort to offer the customer the option of paying a delinquent bill in installments. rC The primary difference between the federal guidelines for termination and the rules currently effective in Texas is that the federal guidelines explicitly prohibit termination when it would be "especially dangerous" to the customer's health and the customer is unable to pay for service or only pay in installments. The local regulatory authority has responsibility for establishing parameters for determining when termination would be especially dangerous to health. The Texas Railroad Commission has recently concluded PURPA hearings on termination standards. Should the Commission amend its current rules, these amendments will be incorporated in Entex's Rules and Regulations. Otherwise, it has been, and shall remain, the policy of Entex to consider all extenuating circumstances brought to its attention by the customers, prior to the termination date, in establishing a deferred payment plan. 2. ADVERTISING Roy Baker of Entex, Inc. stated that on December 17, 1979, after exhaustive public hearings, the Texas Railroad Commission promulgated special Substantive Rule 051.04.03.037 on advertising, contributions and donations (Exhibit II.) The Railroad Commission with certain limitations and exceptions, allows gas utilities to include in the cost of service (rates) advertising expense in amounts up to two-tenths of one percent (0.20) of the gross receipts of the utility. CONCLUSION PURPA I AND III HEARINGS Mr. Williams stated that Resolutions for determination by the City Council would be taken up at the next regular meeting of the City Council. Minute approved as submitted and/or corrected this the ,� day of A.D., 1980. .4461Mayor ATTEST: ity Secretary