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Ord. 0610 04-22-91ORDINANCE NO. 610 AN ORDINANCE OF THE CITY OF PEARLAND APPROVING THE SETTLEMENT AGREEMENT FILED WITH THE PUBLIC UTILITY COMMISSION ON FEBRUARY 27, 1991 AND AUTHORIZING THE CITY OF PEARLAND TO BECOME A SIGNATORY TO THE SETTLEMENT AGREEMENT FILED WITH THE PUBLIC UTILITY COMMISSION IN THE HOUSTON LIGHTING & POWER RATE INCREASE REQUEST; AND MAKING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT. WHEREAS, on November 9, 1990, Houston Lighting & Power Company (the "Company") filed with the City of Pearland a Statement of Intent and Petition for Authority to Change Rates relating to electric utility service, and proper notice thereof was duly given; and WHEREAS, by Ordinance No. 602, the City Council suspended the effective date of such proposed rate increase for Step One until March 18, 1991 and Council suspended the effective date of the proposed rate increase for Step Two until October 31, 1991; and WHEREAS, on March 4, 1991, the City Council passed Ordinance No. 607 relating to rates to be charged by Houston Lighting & Power Company for electric utility service within the corporate limits of the City of Pearland, Texas; and WHEREAS, after intense negotiations with other intervenors, PUC staff, and HL&P, a settlement of the issues raised in the case has been achieved; and WHEREAS, a Settlement Agreement was filed with the Public Utility Commission on February 27, 1991; Now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND: Section 1. The City Council of the City of Pearland hereby finds the Settlement Agreement to be reasonable and in the best interest of the City. Section 2. The City Council hereby approves and adopts the "Settlement Agreement" attached hereto as Exhibit "A" and incorporated herein for all purposes. Section 3. The City Council hereby recommends that the Public Utility Commission adopt the Settlement Agreement. Section 4. The City Council hereby authorizes the City of Pearland to become a signatory to the Settlement Agreement. Section 5. The City Council hereby authorizes and directs the City Secretary to serve the Company with a certified copy of this Ordinance. Section 6. Nothing contained in this Ordinance shall be construed now or hereafter as limiting or modifying, in any manner, the right and power of the City under the law to regulate the rates and charges of the Company. $action 7. All ordinances or parts of ordinances in conflict herewith are hereby repealed to the extent of such conflict only. Section 8. In the event that the Public Utility Commission does not adopt this Settlement Agreement setting electric rates for the Company, the City Council hereby authorizes the City Attorney or his designees to represent the City and its citizens in any and all matters in connection with Docket 9850 and to take any and all actions necessary and incidental thereto and to the resolution of such matters, all as may be in the best interests of the City. $action 9. If any provision, section, subsection, sentence, clause, or phrase of this Ordinance, or the application of same to any person or set of circumstances is for any reason held to be unconstitutional, void or invalid, the validity of the remaining portions of this Ordinance or their application to the other persons or set of circumstances shall not be affected thereby, it being the intent of the City Council in adopting this Ordinance that no portion hereof or provision or regulation contained herein shall become inoperative or fail by reason of any unconstitutionality, voidness or invalidity of any portion hereof, and all provisions of this Ordinance are declared to be severable for this purpose. $ection 10. The City Council officially finds, determines, recites and declares that a sufficient written notice of the date, hour, place and subject of this meeting of the City Council was posted at a place convenient to the public at the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Law, TEX.REV.CIV.STAT.ANN. art. 6252-17 (Vernon Supp. 1991); and that this meeting has been open to the public as required by law at all times during which this Ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The 2 City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. PASSED on First Reading this L? day of 1991. ATTEST: PA JONES A.921-A-Laar-2 CITY SECRET PASSED day of ATTEST: PAT'70NES CITY SECRETARY V. COP E�+ G�� C. MAYOR A. D., and APPROVED on the Second and Final Reading this a. U , A. D., 1991. LESTER G. RORICK CITY ATTORNEY -7z• C. V. COPPINGER MAYOR 3 EXHIBIT "A" • DOCKET NO. 9850 APPLICATION OF HOUSTON S LIGHTING & POWER COMPANY S PUBLIC UTILITY COMMISSION FOR AUTHORITY TO CHANGE S OF TEXAS RATES S SETTLEMENT AGREEMENT This Settlement Agreement ("Agreement") is made and entered into by and among Houston Lighting & Power Company ("HL&P") and the other entities whose authorized representatives have signed it. HL&P and such signatories are sometimes hereinafter jointly referred to as the "signatories." Whereas, on November 9, 1990, HL&P•filed with the Public Utility Commission of Texas ("Commission") and with municipalities served by HL&P which have retained original jurisdiction applications to change rates on a systemwide basis, said proposed changes reflecting a total revenue deficiency of 5552,073,000; and Whereas, notice of the rate increase was provided consistent with all statutory and regulatory requirements; and Whereas, except as otherwise specified herein, the signatories desire to resolve all outstanding issues among them concerning HL&P's requested increase in rates, including all issues related to both Step 2 and Step 3 of the Company's pending application in Docket 9850, as well as pending litigation in other dockets; and Whereas, signatories agree that the public interest will be served by the adoption of an order consistent with this Agreement because it provides expeditious implementation of just, 1. Revised Rate Schedules IS -I, IS-10, IS-30 and SBI; 2. New Miscellaneous General Service Rate Schedule Rider GHL; 3. New Supplemental Agreement for State -Owned Educational Institutions; 4. Revised Sheet No. D21, page 4 of 5 of the Standby Electric Service Rate Schedule; 5. Revised Firm Energy Purchase From Qualifying Facilities Rate Schedule; and 6. New NEP Rider B to the Non -Firm Energy Purchase from Qualifying Facilities Rate Schedule. The agreed rates are designed to increase HL&P's base rates by $313 million with no change in its fuel factor. signatories agree that the base rate increase utilized (1) the depreciation rates set by the Commission in Docket 8425, (2) decommissioning expenses of $6 million per year for South Texas Project Units 1 and 2, and (3) amortization of $36.196 million of City of Austin .litigation expenses as set out in Article VI Paragraph B. B. In developing the rates set out on Attachment A both the total franchise revenues and the allocation of those revenues to each rate class subject to Franchise fees were established using the methodology employed by the Company in Schedule P of its Rate Filing Package. Once the rate class franchise obligation was so established, the Attachment A rates were designed to incorporate the costs attributable to the RS, MGS, LGS, CLS and RTD Rate Schedules into the base rate components of those rates. Franchise fees attributable to LOS-A, LOS-B, Interruptible, ERS and Standby customer classes were then assigned directly to customers of these classes located within municipalities. The proposed base rate - 3 - address changed conditions; (3) change fixed fuel factors or otherwise provide for the recovery of fuel costs and the disposition of fuel over- and under -recoveries; or (4) change the Purchased Power Cost Recovery Factor. Except to the extent provided elsewhere in this Agreement, signatories reserve their rights to contest such matters as they choose in any such proceeding. C. If during the Rate Freeze period any proceeding is instituted by the Commission or any other regulatory authority having jurisdiction to reduce HL&P's rates below the levels set out in Attachment A,• nothing in this Article IV shall restrict HL&P's right to defend against a proceeding seeking a rate reduction in any manner it deems appropriate. If in the course of such proceeding, the staff of any regulatory authority expressly seeks a rate reduction to be effective prior to the end of the Rate Freeze, then effective as of the date the staff takes such action, the Rate Freeze shall terminate as to geographic areas subject to the jurisdiction of the regulatory authority. ARTICLE V. Fuel Reconciliation A. Not later than five (5) days after the effective date of this Agreement, signatories shall file a joint motion requesting that all fuel reconciliation issues be severed from Docket 9850 and that a separate docket be established to reconcile fuel costs and revenues through March 31, 1990. All signatories 5 1. Utility Fuels, Inc. costs related to W.A. Parish and Limestone Electric Generating stations including: a. operating expenses of the handling and mining facilities; b. depreciation; c. ad valorem taxes; d. return on net investment in facilities serving Parish and Limestone; and e. income taxes relating to return on investment. 2. Ash disposal costs at Parish and Limestone; and 3. Costs associated with operation of HL&P's fuel pipeline supply system. Nothing in this Agreement shall prejudice any right a party may otherwise have to contend that North Dayton storage costs should be classified as non -reconcilable for any period before or after the period covered by this Paragraph B. Moreover, nothing in this Agreement shall prejudice any right a party may otherwise have to contend that any other fuel costs should be classified as non - reconcilable for any period after the period covered by this Paragraph B. C. Any class of fuel -related costs that are not expressly addressed by this Agreement or the final order in Docket 8425 will be classified consistently with the Commission rules in effect at the time the cost was first incurred. If HL&P enters into any new gas storage arrangements, HL&P may petition the Commission for a determination of the ratemaking treatment of costs of the new arrangements. This Article shall not prejudice the right of any signatory to contend that the costs of any new gas - 7 - contest the Trinity Mine costs on the grounds that they should not be capitalized but nothing in this Article VI shall prejudice any right a party may otherwise have to contest HL&P's right to recover Trinity Mine costs in future rate proceedings on other grounds. ARTICLE VII. Share Program HL&P currently sponsors a matching program ("SHARE") of customer and shareholder contributions to certain disadvantaged customers. HL&P agrees that it will continue through April 30, 1993, to encourage customer participation in the SHARE program by means of an advertising program that is at least as extensive as the program scheduled for 1991. In addition, HL&P agrees that during the Rate Freeze period, HL&P will match on a dollar for dollar basis all customer contributions to the SHARE program, up to a total of $1.5 million each year. ARTICLE VIII. Demand Side Manaaement Programs A. Effective on the date the Attachment A rates become effective, HL&P shall begin capitalizing the demand side management expenditures indicated herein pursuant to Substantive Rule 23.22 (d)(4). Specifically, HL&P shall capitalize direct incentives, material, contract services, direct consulting and other amounts paid to third parties and associated with demand side management programs that are designed to reduce coincident peak demand. HL&P shall not capitalize HL&P labor, advertising or administrative support costs associated with those programs. Signatories agree 9 B. Within 'sixty days after it has acquired twelve months of data, HL&P will provide PAR with a complete analysis of the results of the State of Texas load study that is currently being performed pursuant to Commission order in Docket No. 8425. At the time HL&P makes its next filing to change base rates, HL&P will provide PAR sufficient information to permit PAR to develop a separate rate class for State of Texas accounts and to calculate rates for State accounts based on a unity relative rate of return. The State of Texas class cost of service information will be based on the specific costs imposed on HL&P by State loads and either be in, or allow presentation in, the same format as that required by Schedules P and Q of the rate filing package, including all instructions thereto. C. HL&P agrees to take the following steps in connection with its calculation of system losses. First, HL&P will accumulate KVA and KWH data on a monthly basis from all meters installed at HL&P facilities. The consumption as measured by these meters will not be included in the system losses reflected in fuel reconciliation and base rate proceedings initiated after Docket 9850. This consumption data will be made available to the Commission Staff at the time HL&P makes its next filing to reconcile fuel costs or to increase base rates. Second, in order to permit parties to test HL&P calculations of transmission system losses, HL&P agrees to use its energy control system to accumulate all data necessary to permit transmission system losses to be calculated from recorded data. Third, HL&P will use this data to franchise fees attributable to each municipal signatory's account that are located within that municipality. ARTICLE XII. Unbilled Revenues HL&P may record unbilled revenues during the Rate Freeze. If it does so, such revenues may not be considered as an offset to revenue requirements for ratemaking purposes in subsequent proceedings. ARTICLE XIII. Other Commitments by HL&P A. HL&P agrees to have heat rate monitoring equipment fully operational and in use at its Limestone plant by the end of calendar year 1991. B. HL&P agrees to repair the motor bay rusting problem at the Limestone plant. C. HL&P agrees to segregate financial data on Parish Units 1, 2, 3 and 4 from the financial data on Parish Units 5, 6, 7 and 8 commencing with accounting periods beginning not later than January 1, 1992. - 13 - for any purpose other than as a ceiling for payments to owners of PURPA qualified facilities under contracts entered into after (1) the date of the final order in Docket No. 7931 and before (2) the date of a final order establishing a new level of avoided costs. Therefore, the signatories agree that the 7931 AC should not be utilized to prevent or discourage HL&P from pursuing lower cost sources of capacity or energy, including, but not limited to, construction of HL&P-owned facilities. ARTICLE XVI. Other Provisions A. All signatories shall fully support this Agreement in all particulars and use their best efforts to obtain prompt adoption of a final order consistent therewith, such support to include discussions, presentations, hearings, testimony, argument, briefs and appeal processes, unless and until signatories are released pursuant to the terms hereof. Further, all signatories agree that, in the event of any collateral attack upon the terms of this Agreement, each will defend all the terms herein. 8. Any and all exhibits and testimony to be submitted by signatories willrbe offered for the limited purpose of supporting this Agreement. In the event any exhibits or testimony are admitted in this proceeding or in any other proceeding for any other purpose by any party which is not a signatory to this Agreement, then signatories reserve their full rights to challenge such exhibits and testimony, including objections to admission, rebuttal testimony and the right of cross-examination. - 15 - signatory in this proceeding. To the extent that such differences exist, signatories agree that their support of this Agreement does not waive any prior positions taken in this proceeding, but the same are expressly reserved in the event the 9850 Final Order does not adopt the compromise agreed to herein. E. The provisions herein have resulted from extensive negotiations among signatories, and the terms and conditions herein are interdependent. Therefore, if the 9850 Final Order is inconsistent with this Agreement in any material respect, then any signatory adversely affected by that modification reserves the right to withdraw its consent to this Agreement, thereby becoming released from all commitments and obligations, and to advance any positions its desires as if it had not been a signatory. F. The titles assigned to each Article are for convenience only, are not part of this Agreement and shall not be considered in the resolution of any dispute or question arising with respect to this Agreement. G. Each signatory warrants that (s)he is authorized to sign this Agreement on behalf of the party represented. H. Execution of this Agreement by or on behalf of any municipality does not constitute action on HL&P's rate request in such municipality's capacity as a regulatory authority. I. This Agreement may be executed in multiple counterparts. J. HL&P will be bound by this Agreement on the date that both the General Counsel of the Public Utility Commission of - 17 - &Jr Houston Lighting i Power Company Date: Zf40/ kXj()C� Genial Counsel of the Public "'tint Commission of Taxas Data:j1, Occ dental Chsm cal Corporat on The Stilts d Tomas ts: 2137/g7 ' ling Office of Public Utility Counsel Departmnt of Ens Date: Date: S Af //g 1 Date: 2 - 24 - !/ Texas -New Mexico Power Company Date: a - a` gel/ cskiat&eran,/ cos-- as I dusty al Ener onsumers Date: ot—a4-4/ gee..4 Dow Chemical Energy, Inc. Data: ,t 2L-f/ • /Destsc City of Houston Date: The Metropolitan Organization Date: Ths Woodlands Corporation Date: Industrial Intervenors Data: Biq Three Industries, Ias-Wirer Date:4.44.1l Coalition of Cities with Original Jurisdiction Date: City of Lake Jackson Date: Sharpstown Center Association Date: - 19 - ouston 4 t ng r Datet Y nsra s _ Utility Oa►ission or Texas Oates Date a Ca oa orpora On W. a o exa0 Date i wi... 0e0 O t Y J! •xaa- Caw ex ao Z'�wJts DatesYani' mans r = II 1 Dates a.es we wwi yr Tana 2haustrial cast* constants ajTi'35Eli us Dates tt es, no. hAit Ohewinik\ Pwwrar..ln- . �rmstt /Dcetsi otil �.s of rf ti.. vi Qlna1 energy, Zno. Date isaiotion Date: City or Houston —' City of Loa Taokson Date: Oates 3'be Nstropolitav Ornanintian &sea, rho �eoglinas Corporation Dates saJlat✓.wy Lunt= Mee e.•*. 0 • •la• Ms. Marianne Carroll Mr. Richard S. O'Connell Norton & Blair 301 Congress Avenue, Suite 1900 Austin, Texas. 78701 (512) 472-5997 Mr. Iry Kowenski Occidental Tower P. 0. Box 809050 Dallas, Texas 75380 (214) 404-3446 Mr. Paul Phillips 1000 Independence Ave. SW RM. 6-D-033 Washington, D.C. 20585 (202) 586-6958 D. Swan Dr. Charles Johnson Exeter Associates 10801 Lockwood Drive Suite 350 Silver Spring, MD 20901 (301) 681-4600 Mr. Michael G. Shirley Texas -New Mexico Power Johnson & Gibbs, P.C. Company 100 Congress Avenue Suite 1400 Austin, TX 78701 (512) 322-8000 Ms. Peggy Wells Dobbins, Esq. Industrial Intervenors 915 Aduana Avenue Coral Gables, Florida 33146 (305) 666-9729 Mr. Kenneth Eisdorfer Industrial Intervenors Cook, Eisdorfer & Associates, Inc. Suite 205 2258 Schuetz Road St. Louis, Missouri 63146 (314) 432-4004 Occidental Chemical Corp. Occidental Chemical Corp. Department of Energy FEDERAL EXPRESS Mr. Jonathan Day Mr. Rex D. VanMiddlesworth Mr. Frederick D. Junkin Mayor, Day & Caldwell 700 Louisiana, Suite 1900 Houston, Texas 77002 (713) 225-7000 2 Department of Energy FEDERAL EXPRESS Texas Industrial Energy Consumers Ms. Martha Williams City Secretary P. 0. Box 75 Kemah, Texas 77565 Ms. Bettye C. Wallace City Secretary 6309 Edloe Houston, Texas 77005 Ms. Karen B. Schrom City Secretary 215 Halbert Richwood, Texas 77531 Ms. Elaine Herff City Secretary 12002 Southwest Freeway Suite 3225 Meadows, Texas 77477 Ms. Cindy Logan City Secretary 601 Shoreacres Blvd. Shoreacres, Texas 77571 Ms. Deborah A. Sutherland City Secretary P. O. Box 118 West Columbia, Texas 77486 Ms. June Jansky City Secretary 101 W. Burleson Wharton, Texas 77488 Ms. Joyce Owen City Secretary 802 Tiki Drive Galveston, Texas 77554 Ms. Norma O. Rodriguez City Secretary 300 West Walker League City, Texas 77573 Ms. Sandra L. Reily Acting City Secretary 3218 Takwood Dickinson, Texas 77539 4 City of Clear Lake Shores City of Southside Place City of Richwood City of Meadows City of Shoreacres City of West Columbia City of Wharton Village of Tiki Island City of League City City of Dickinson 1 CITY OF H&UfON Finance & Administration Department Regulatory Affairs Division Post Office Box 1562 Houston, Texas 77251 713/247-1814 Kathryn J. Whitmire, Mayor CITY COUNCIL MEMBERS: Lorry McKoskle Ernest McGowan. Sr. Vince Ryan Alfred J. Calloway Fronk O. Mancuso John G. Goudner Christin Hartung Dole M. Gorczynski Ben T. Reyes Beverley Clark Eleanor Tinsley Jim Greenwood Sheila Jackson Lee Judson Robinson. Jr. CITY CONTROLLER: George Greanios Albert E. Haines Chief Administrative Officer March 4, 1991 To: Members of the Coalition of Cities Re: HL&P Rate Case Settlement City of Pearland RECEIVED MAR -71991 CIT_Y_ ATTORNEY Settlement negotiations with intervening parties and HL&P have culminated in several parties, including the Coalition of Cities, signing a settlement agreement to resolve issues raised in _ the current case. Our signature on this agreement means that members of the coalition have agreed to propose the adoption of the settlement to their City Councils. Attached is a memo sent to Houston City Councilmembers which describes the major points of the settlement, as well as a copy of the agreement itself. There will be a meeting of the Coalition Steering Committee on Friday, March 8, 1991, at 2:00 p.m., in the Concourse Room, of the Central Library, 900 McKinney, to discuss the settlement in more detail and to outline further action which needs to be taken on behalf of member cities. (Enclosed for your convenience is a map of downtown Houston.) We encourage any city which is a member of the Coalition to send a representative, should you desire to confirm your attendance at this meeting, please contact Kathy Mosley at (713) 247-1814. If you are unable to attend and have questions about the settlement, please do not hesitate to call Kathy or myself. Sincerely, Maxie L. Patterson Deputy Director Finance and Administration MLP/lmr Attachment H-30491.rcg pla174 MAR 6 1991 CITY of PEARLAND CITY SECRETARY'S OFFICE - 4 .:4 ALI seri ..catok, ‘rigrevilla .4k" At4 ciZf. 1--L'-f-' Ri- , CONGRESS c.... z • 0 AC PREST S. 2 ..... 2 cic,50G55. g4 r,o4 IIJ PRAIRIE g TEXAS -Dr : Z Z CO 900 ",45n .. X. (2.3° : po ir IP4a “"Wport 2 r""pporne: pse- CAP TOL • 4.= C".. CrIzri 112 • k51= 1.1 IN .1 G.L7hriii: 500 400 703 e® 4"" Mpo 1 •P• HADDDIDFIrl 40 our flDEflErna 44° Want=1 "AA papa ri raw 0 GtE ;7" spfthl EF9 :E._ -• +°\ Fin,. WHOA n E:ED BREMONO -, • fiats NAN .T—T-Proa aim • ]an x gr. -cc. caVIMIecni ?Ned cols. HADLEY .700 RUNN Honorable Mayor & City Council Page 2 February 27, 1991 Other major points of the proposal are compared to the City's position and to HL&P's request in the attached Schedule 1. A comparison of the effects of rate design on each position is illustrated on Schedule 2. As shown on these schedules, the settlement as it relates to revenue requirements and cost allocation and rate design is comparable to the City's hearing position. Additionally, there are certain items that can be obtained in the settlement process that will benefit the city that are not available in hearing. We continue to believe in the necessity for public input in this process and therefore recommend that a public meeting be held in Houston for such a purpose. This meeting would also address a concern of TMO, which has intervened both at the local level and at the PUC. Additionally, we concur with TMO's request that the PUC be represented at the public meeting. Nothing in the settlement would preclude presentation of evidence to the PUC; in fact, that must be done. We fully anticipate having an opening hearing on this matter before the full PUC. In that hearing we would, along with others, present evidence as to why the settlement is in the best interest of the public, and that evidence would be subject to. full cross examination by the parties. Since the proposed resolution of issues as it relates to revenue requirements is equal to the City's position and cost allocation and rate design is comparable to the City's hearing position, and since certain other benefits to the city and its ratepayers can only be obtained in the settlement process, it has been recommended that the City move forward with the proposal subject to a public hearing, City Council approval and approval by the Coalition of Cities. Albert E. Haines AEH/kdm Attachment cc: Clarence West Max Patterson h-273 jc �w cuu.L G $45 $40 $35 130 x $ $25 r $20 115 110 15 10 32M 30x 262 26x 242 22x 20% tax tall 14% 12x toll all 62 42 HOUSTON LIGHTING & POWER COMPANY COMPARISON OF IMPACT ON TYPICAL MONTHLY BILLS OF INSIDE CITY RESIDENTIAL CUSTOMERS 200 I 400 I 600 1 600I 1000 I 1250 1 2000 I 3000 300 500 700 900 1100 1500 2500 Monthly KWM Usoq. 0 Mitre Step 3 + COMB Step 3 o S.ttt*m.nt 200 I 400 I 600 I 600 I 1000 I 1250 I 2000 13000 300 500 700 900 1100 1500 2500 Monthly KWH Usage 0 HL.tPs Step 3 + COM's Step 3 0 Settlement