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herewith are hereby repealed to the extent of such conflict only.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 -
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Houston Lighting i Power Company
Date: Zf40/
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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/
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Dow Chemical
Energy, Inc.
Data: ,t 2L-f/
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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
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energy, Zno. Date
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Date:
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Date: Oates
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&sea,
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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
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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
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$45
$40
$35
130
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r
$20
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242
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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