Ord. 0516 06-23-86ORDINANCE NO. 516
AN ORDINANCE. 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; CONTAINING FINDINGS AND PROVISIONS RELATED TO
THE SUBJECT; PROVIDING FOR A REPEALER AND FOR SEVER -
ABILITY; AND DECLARING AN EMERGENCY.
WHEREAS, on or about March 18, 1986, 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 Resolution No. R86-15, the City Council suspended
the effective date of such proposed rate increase until July 22, 1986;
and
WHEREAS, the City Council, having considered the Company's rate
increase at a public hearing for which proper notice was duly given,
finds that such request is excessive; and
WHEREAS, the City Council having original jurisdiction over the
matter finds that a lesser increase in rates should be prescribed for
the company; 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 requested rates of the Company to be excessive and
unreasonable.
Section 2. The City Council hereby approves and adopts the
rates, adjustments and determinations set out in Exhibit "A", attached
hereto and incorporated herein for all purposes, and additionally
finds and determines the following:
I. Findings
1. Cost of Service
The revenue requirement of the Company is $3,087,698,000.00.
Adjustments were made to Operations & Maintenance Expenses, Fuel
Expenses, Purchased Power, Depreciation Expense, Other Taxes, Federal
Income Taxes, and the Return component.
1
Allowance, a reduction of $64,625,000.00 in Deferred Limestone Cost, a
reduction of $8,880,000.00 in Unrecovered Storm Loss, a reduction of
$29,878,000.00 in Deferred Taxes, and a reduction of $5,280,000.00 in
Other Cost -Free Capital.
4. Revenue Deficiency
The overall non -fuel revenue deficiency is $159,759,000.00.
5. Rate Structure
a. Residential
The rate structure for the residential customer class
is:
250 kwh
250 kwh
Summer: Customer Charge of $9.00 per month, which includes
all kwh over 251 kwh at 6.24600 per kwh
plus: fuel charge of 2.08540 per kwh for all kwh
Winter: Customer Charge of $9.00 per month, which includes
251-1,000 kwh at 6.24600 per kwh
over 1,000 kwh at 2.96550 per kwh
plus: fuel charge of 2.08540 per kwh for all kwh
b. All Other Customer Classes
The rate structure for all customer classes other than
residential is that proposed in the Company's Statement of
Intent and Petition for Authority to Change Rates.
II. Related Issues
1. The City Council hereby authorizes the Company to utilize
the following deferred accounting treatment for certain expenses
related to Limestone Unit 2: Beginning on the commercial in-service
date as defined by the Public Utility Commission of Texas ("commercial
in-service date") for Limestone Unit 2 and continuing for a period of
time ending eighteen (18) months after that in-service date or upon
the effective date of rates set as a result of the Company's .next
filed statement of intent to change rates, whichever ending date is
sooner, the Company may place into a deferred account all depreciation
expense, tax expense, and operation and maintenance expense incurred
during that time period by the Company related to Limestone Unit 2,
3
shall forward to the Company an invoice or invoices for such costs
together with a request for reimbursement. The Company shall
reimburse the City for such costs incurred within thirty days after
having received each such request.
III. Conclusions
1. The City has original jurisdiction over this case pursuant
to Section 43 of the Public Utility Regulatory Act.
2. The Company has the burden of establishing its revenue
deficiency under its present rates and of establishing the amount of
such deficiency that will be collected under its proposed rates
pursuant to Section 40 of the Public Utility Regulatory Act.
3. The rates prescribed herein will allow the Company to
recover its operating expenses together with a reasonable return on
its invested capital, pursuant to provision of Section 39 of the
Public Utility Regulatory Act.
4. The rates prescribed herein will permit the Company a
reasonable opportunity to earn a reasonable return upon the invested
capital used and useful in rendering service to the public over and
above its reasonably necessary operating expenses as provided by
Section 39(a) of the Public Utility Regulatory Act.
5. The rates for electric service set forth herein provide
just and reasonable and not unreasonably preferential, prejudicial, or
discriminatory rates, and are sufficient, equitable, and consistent in
application to each class of consumer, as provided by Section 38 of
the Public Utility Regulatory Act.
Section 3. The City Council hereby determines, prescribes,
establishes and authorizes the increased rates for sale or supply of
electric service by the Company within the corporate limits of the
City of Pearland as set out in this ordinance. Such increased rates
shall become effective as to each customer on or no later than the
thirtieth day after the date of final passage of this ordinance. The
Company shall be authorized to collect such rates until such time as
they may be changed, modified, amended or withdrawn in accordance with
5
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 other portion hereof, and all provisions of this- ordinance are
declared to be severable for that purpose.
Section 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.
1986) ; 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
City Council further ratifies, approves and confirms such written
notice and the contents and posting thereof.
Section 11. The jurisdictional time restraints existing as a
result of the hearing recently conducted by the coalition of cities on
behalf of the City of Pearland, and by the hearing date set for this
matter before the Public Utility Commission of Texas, constitute a
public emergency affecting the public peace and welfare, and it is so
declared; therefore, this Ordinance shall be passed finally on its
first and only reading, as provided in Article 3, Section 3.10 of the
City Charter of the City of Pearland, Texas.
reading
ATTEST:
PASSED, APPROVED and ADOPTED on this the
pursuant
City Se4fretary
% -3
, A. D., 1986, on first an
day of
my required
to Article 3, Section 3.10 o the Ci y Charter.
nit -6-c/
APPROVED AS T04 FORM:
tia
ty AttS'rney
Mayor
7
SCHEDULE 2
CITY OF HOUSTON
HOUSTON LIGHTING t POWER COMPANY
CALCULATION OF INCREASE
TEST YEAR ENDED DECEMBER 31, 1985
(000's)
LINE RCP CITY CITY TEST YEAR
NO. DESCRIPTION REQUEST ADJUSTMENT RATE ORDER AS ADJUSTED
1 REVENUE REQUIREMENT $3,460,500 ($372,802) $3,087,698 $3,500,255
2 LESS: FUEL REVENUES (1,265,810) 177,158 (1,088,652) (1,651,171)
3 MUNICIPAL STREET USE REVENUES (80,117) 9,069 (71,048) (84,587)
4 OTHER REVENUES (25,090) (1,241) (26,331) (22,589)
5 BASE RATE REVENUE REQUIREMENT $2,089,483 ($187,816) $1,901,667 $1,741,908
6 INCREASE IN BASE RATE REVENUES $159,759
EXHIBIT A
PAGES 0En.
LINE
N0. DESCRIPTION
FUEL EXPENSE
SCHEDULE 4
CITY OF HOUSTON
HOUSTON LIGHTING C POWER COMPANY
SUMMARY OF FUEL COSTS
TEST YEAR ENDED DECEMBER 31, 1985
(000is)
RCP CITY CITY
REQUEST ADJUSTMENT RATE ORDER
1 RECOVERABLE COSTS $875,322 (=121,279) $754,043
2 BASE RATE FUEL 112,832 (14,902) 97,930
3 TOTAL FUEL 988,154 (136,181) 851,973
PURCHASED POWER
4 RECOVERABLE COSTS 390,488 (55,879) 334,609
5 BASE RATE PURCHASED POWER 148,768 14,918 163,686
6 TOTAL PURCHASED POWER 539,256 (40,961) 498,295
7 TOTAL FUEL AND PURCHASED POWER $1,527,410 ($177,142) $1,350,268
8 BASE RATE FUEL $261,600 $16 $261,616
9 FUEL REVENUE 31,265,810 ($177,158) $1,088,652
EXHIBIT A
PAG L OF.�2
WORKING CAPITAL USES
Revenue Requirement
WORKING CAPITAL SOURCES
Fuel
Purchased Power
Other OEM
Federal Income Taxes
Other Taxes
Interest
Preferred Dividends
SCHEDULE 6
CITY OF HOUSTON
HOUSTON LIGHTING t POWER COMPANY
(000's)
SUMMARY OF CASH WORKING CAPITAL
MULTIPLIER
RECOMMENDED (LEAD)/LAG (LEAD)/LAG DAYS
AMOUNT DAYS /365 BAYS
$3,087,698
$851,973
498,295
560,593
160,139
99,407
247,571
29,391
ESTIMATED CAPITAL TO FINANCE THE
NET LEAD IN RECOVER OF COST OF SERVICE
Cash Coaponant
Municipal Franchise Fees
CASH WORKING CAPITAL REQUIREMENT
71,048
36.25 0.0993
CASH WORKING
CAPITAL
REQUIREMENT
$306,655
(29.47) (0.0807) ($68,784)
(37.50) (0.1027) (s1,19s)
(17.54) (0.0481) (26,946)
(99.91) (0.2737) (43,834)
(180.54) (0.4946) (49,169)
(86.13) (0.2350) (58,418)
(46.13) (0.1264) (3,715)
(228.50)
EXHIBIT A
PAGES OF
(0.6260)
4,594
1,636
(44,478)
($38,248)
line
No.
CITY OF HOUSTON
HOUSTON LIGHTING C POWER COMPANY
(000's)
REVENUE 8Y RATE CLASS - PER CITT RATE ORDER
Test Year Ending Dece.ber 31, 1985
RATE CLASS
SCHEDULE 8
CITY
RATE ORDER
1 RS - RESIDENTIAL SERVICE $1,153.131
2 MGS - MISCELLANEOUS GENERAL SERVICE 799,810
3 LGS - LARGE GENERAL SERVICE 470,565
4 LOS-A - LARGE OVERHEAD SERVICE (A) 160,990
5 LOS-B - LARGE OVERHEAD SERVICE (8) 326,200
6 TNP - TEXAS -NEW MEXICO POWER COMPANY 58,946
7 IS - INTERRUPTIBLE SERVICE 60,768
8 SPL = STREET AND PROTECTIVE LIGHTING SERVICE 25,394
9 6l - GUARD LIGHTING SERVICE 1,284
10 TOTAL ELECTRIC REVENUES 3,057,090
11 OTHER OPERATING REVENUES 30,608
------------
12 TOTAL OPERATING REVENUES 83,087,698
000000
EXHIBIT A
PAGE.�2._ OF.121.
Section V-Service Rules and Regulations
Terms and Conditions for Sale of Electric Service
HOUSTON LIGHTING & POWER COMPANY
HL&P 90
Sheet No. El
Page 2 of 4
responsible therefor. To the extent allowed by law, ]the customer agrees
to defend, indemnify and hold Company and its agents harmless from and
against all claims, causes of action, liability, the losses, costs and
expenses of any kind for personal injury, death and property damage
arising out of or resulting (a) from the design, installation, operation
or maintenance of the lines, wires, switches or other equipment on the
Customer's side of the point of delivery or (b) from energization by the
Customer of the Company's lines through operation of equipment within the
Customer's control without 24 hours advance notice to the Company's
dispatcher. The obligation to indemnify pursuant to (a) and (b) shall
apply without regard to the negligence of the Company or its agents if the
negligence of both the Customer and the Company or their respective agents
were proximate causes of such personal injury, death or property damage,
but shall not apply when proximately caused by the sole negligence of the
Company or its agents.
4. The Company will supply to one premises only one point of delivery and
only one of the standard types of service listed in the Service Standards
or one of the available transmission voltages, and Customer's installation
is to be so arranged that the Company can measure the Customer's electric
service with one meter. The Company will not install and maintain any
lines and equipment on the Customer's side of the point of delivery except
its meter. The Customer will provide, in accordance with the Company's
Service Standards and free of expense to the Company, locations for the
installation of the Company's meter and other equipment and acceptable
right of way for facilities erected solely to make service available to
Customer. The Customer will install and maintain all his wiring and
apparatus in accordance with good electric practice, all applicable lawful
regulations, and in such condition and manner as not to endanger persons
or property, or to cause impairment of the Company's service to the
Customer, or its other customers; and the Customer will obtain all
necessary permits and certificates of inspection covering his electric
installation. The Customer will not permit any other party to use the
service supplied to the Customer by the Company, or extend or connect his
installation to lines across or under a street, alley, lane, court or
other public or private space in order to obtain service for other
premises, even though such other premises be owned by the Customer, except
in the case of Customer owned street lighting installations.
5. Certain types of equipment used by Customers have electrical
characteristics which may cause serious fluctuations of voltage and
interfere with the service of the Company to its Customers. In such cases
the Company may decline to serve such equipment under the Company's
established rate schedules until the Customer having such equipment, has
provided at his expense, suitable apparatus to hold to reasonable limits
the effect of such fluctuations. Circumstances may require such equipment
to be supplied separately from other service, and in such event, the
Company may require additional contract arrangements and construction
charges and may meter and bill such service separately from other service
supplied to the Customer. Where the Customer owns generating equipment
and proposes to operate this equipment in parallel with and concurrent
Revision Number: 8 th Effective:
EXHIBIT A
PAGE22..0FJ,
T
Section V-Service Rules and Regulations
Terms and Conditions for Sale of Electric Service
HOUSTON LIGHTING & POWER COMPANY
HL&P 90
Sheet No. El
Page 4 of 4
pay a delinquent account, failure to comply with deposit or guarantee
arrangements (when required by Customer Credit Policy), or, if a
reasonable opportunity to remedy the situation, violation of Company's
rules pertaining to the use of service in a manner which interferes with
the service of others, endangers persons or property, or is due to the
operation of nonstandard equipment, all guarantees, minimums and other
contract charges for the remainder of the term of the Agreement shall
thereupon become due and payable by Customer. Company agrees to accept
such sum as and for liquidated damages for such losses as Company may
suffer by reason of Customer's breach of the Agreement. An LOS Customer
shall have, as an alternative, the right to make payment of such charges
or billings as they fall due under the terms of the LOS agreement;
provided, however, in the event such LOS Customer shall fail to pay any
such charge or billing in a timely manner, Company may then, at its
option, require payment of all charges or billings in their total sum for
the unexpired term.
11. Upon the expiration of an Agreement for Service, the Company may, without
liability for injury or damage, dismantle and remove all facilities
installed for the purpose of supplying electric service to the Customer,
and shall be under no further obligation to serve the Customer at the
point.
12. Agreements for Service shall inure to the benefit of and be binding upon
the successors and assigns of the Customer and the Company, but no
assignments by the Customer shall be binding upon the Company until
accepted in writing by the Company. "
EXHIBIT A
PAGE 1 Off
Section V-Service Rules and Regulations Sheet No. El
Terms and Conditions for Sale of Electric Service Page 3 of
HOUSTON LIGHTING & POWER COMPANY
HL&P 90
with electric service supplied by the Company, the Customer must obtain
consent from the Company.
6. The duly authorized representatives of the Company are to have access at
all reasonable hours to the Customer's premises for the purpose of
inspecting Company's wiring and apparatus, erecting, removing or replacing
its facilities, reading its meter and for all other purposes . connected
with the supplying of electric service.
7. Company will upon Customer's request test the accuracy of Company's meter
used in the metering of Customer's service. Such test will be free of
charge provided Customer has not requested a similar test within a period
of four years or in any case ifsuch meter is found to be not accurate
within the accuracy standards established by the American National
" Standards Institute, Incorporated. The maximum charge -for testing a
residential Customer's meter shall be fifteen dollars ($15.00).
Additional provisions of Company's Meter Policy, including re -billing, are
contained in Company's Service Rules and Regulations.
8. The Company may require a deposit, if inaccordance with Customer Credit
Policy, the credit of an applicant for service has not been established
satisfactorily to Company. For permanent residential, commercial and
industrial customers, such deposit shall not exceed one -sixth (1/6) of the
Customer's estimated annual billings. Company will pay interest on
required deposits at an annual rate established in accordance with the
provisions of Tex. Rev. Civ.. Stat. Ann. art. 1440a (Vernon's Supp. 1985).
For amounts held on deposit with the Company prior to January 1, 1986, the
annual interest rate shall be 6%.. For amounts held on deposit with the
Company during calendar year 1986, the annual interest rate shall. be
7.29%. If// OJiA/ /000x/' /0 910/0/0,f /Wftyg701/001/0/t0010%/91
opo,i , /m/,isotojC oymiximmoto/ The Company reserves the right
(subject to Customer Credit Policy) to require an additional deposit, when
in accordance with Public Utility Commission rules, the Customer's
deposit is insufficient. Any deposit shallnot preclude the Company
(subject to Service Discontinuance Policy) from terminating the -Agreement
for Service or suspending the supply of electric service to the Customer
for any failure in the performance of the Customer's obligations under the
Agreement for Service. Additional provisions of Company's Customer Credit
Policy are contained in Company's Service Rules and Regulations.
9. Charges for electric service will normally be based on a monthly period of
approximately 30 days but not more than .twelve (12) bills ;.shall be
rendered in any yearly period. .
10. In the event Customer's service under this Agreement is suspended (such
suspension being subject to Company's Service Discontinuance Policy)
because of tampering with Company's meters, bypassing the same, failure to
Revision Number: 8 th
EXHIBIT A
PAGEIL.
Effective:
SCHEDULE 9
It is determined that Sheet No. El, Terms and Conditions for
Sale fo Electric Service in Section V, Service Rules and
Regulations, of the Company's Tarriff for Electric Service shall
read as follows:
"Section V-Service Rules and Regulations
Terms and Conditions for Sale of Electric Service
HOUSTON LIGHTING & POWER COMPANY
HL&P 90
Sheet No. El
Page of 4
TERMS AND CONDITIONS FOR THE SALE OF ELECTRIC SERVICE
APPLICABLE TO RATE SCHEDULES RS, RTD, MGS, LOS, LOS, ISA and ISB
1: Electric service will be supplied in accordance with these terms and
conditions (as supplemented by the Company's Service Standards and Service
Rules and Regulations which are by reference incorporated herein), and any
changes required by law, and in accordance with such applicable rate
schedule or schedules as may, from time to time, be established by the
Company. However, in the case of Customers whose electrical service
requirements are of unusual size or characteristics, additional rate and
contract or service arrangements may be required. These terms and
conditions constitute a selected list of rules from the Company's Service
Rules and Regulations. Upon request, Customer may obtain at any Company
office information on Company's policies regarding the •extension of
service, refusal to serve, service discontinuance, Customer .credit,.
billing and metering.
2. Company will make reasonable provisions to supply steady and continuous
electric service, consistent with the- Customer's class of service, but
does not guarantee the electric service against fluctuations or
interruptions. Company will not be liable for any damages occasioned by
fluctuations or interruptions unless it be shown that Company has not made
reasonable provisions to supply steady and continuous electric service,
consistent with the Customer's class of service, and in the event of a
failure to make such reasonable provisions Company's liability shall be
limited to the cost of necessary repairs of physical damage proximately
caused by the service failure to those electrical facilities of Customer
which were then equipped with the protective safeguards recommended or
required by the then current edition of the National Electrical Code. In
no event shall Company be liable for damage occasioned by fluctuations or
interruptions or failure to begin supplying electric service, caused by an
act of God, the public enemy, unavoidable accident,, fire, explosion,
strike,riot, war, order of any court or judgment granted in any bona fide
adverse legal proceeding, or action or .order of any commission or tribunal
having jurisdiction in the premises, or, without limitation by the
preceding enumeration, any act or thing reasonably beyond its control, or
for. interruptions (when Customer -has been given reasonable notice) which
are necessary for inspection, repair or changes in Company's generating
equipment or its transmission or distribution system. Company may,
without liability therefor, interrupt service to any Customer or Customers
in the event of an emergency arising anywhere on the interconnected system
of which it is a part, which emergency poses a threat to the area power
supply if, in its sole judgment, such action may prevent or alleviate the
emergency condition.
3 For the mutual protection of the Customer and the Company, only:authorized
employees of the Company are permitted to make and energize the
connections between the Company's service wires and the Customer's service
entrance conductors. The Company does not assume any duty of inspecting
the Customer's lines, wires, switches or other equipment and will not be
Revision Number: 8 th
EXHIBIT A
PAGE 9 _OF,
Effective:
Cast of Capital
Houston Lighting & Power Company
(000s)
Percent of
Component Balance Total
Lang Terrn Debt
' ;s
Preferred Stock
Common Equity
ITCs
=======
$2,697,412 (a)
$341,348 (b)
%2, 725, 464 . (c )
$494,082 (d)
========-=
Total $6, 258, 306 (e)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
RFI HOU 7-42. Page 1.
RFI HOU 7-42 Page 1.
RFI HOU 7-42 Page 1..
Response to an -situ interrogatory.
RFI HOU 7-42 Page 1.
RFI HOU 7-42 ,Page 3. •
RFI MOU 7-42 Page 5.
43. 10
5.45%.
43. 55.
7. 89%.
100. 00
Cost
8.76.4 (f)
8.49% (g)
14. 75%
1 1. 58%
SCHEDULE 7
Wt . Av.
Cast of Capital
3.78.4
0. 46%
6. 42 %
0.91%
- 1 1. 58%
SCHEDULE 5
CITY OF HOUSTON
HOUSTON LIGHTING 6 POWER COMPANY
INVESTED CAPITAL AND RETURN
TEST YEAR ENDED DECEMBER 31, 1985
(000,S)
LINE HLCP CITY CITY
MO. DESCRIPTION REQUEST ADJUSTMENT RATE ORDER
1 PLANT IN SERVICE $5,915,823 ($5,496) $5,910,327
2 ACCUMULATED DEPRECIATI0. 1,201,576 0 .1,201,576
3 NET PLANT 4,714,247 (5,496) 4,708,751
4 CONSTRUCTION IN PROGRESS 676,830 1,243 678,073
5 PROPERTY HELD FOR FUTURE USE 3,613 (518) 3,095
6 NUCLEAR FUEL 118,181 (60,370) 57,811
7 FUEL OIL INVENTORY 17,478 (2,713) 14,765
8 WORKING CASH ALLOWANCE 44,454 (82,702) (38,248)
9 MATERIALS AND SUPPLIES 56,662 0 56,662
10 PREPAYMENTS 15,058 (308) 14,750
11 DEFERRED LIMESTONE CHARGES 64,625 (64,625) 0
12 UNRECOYERED STORM LOSSES 8,880 (8,880) 0
13 DEFERRED TAXES (601,625) (29,878) (631,503)
14 PRE-1971 INVESTMENT TAX CREDIT (6,302) 0 (6,302)
15 CUSTOMERS DEPOSITS (32,538) 0 (32,538)
16 CUSTOMER ADVANCES FOR CONSTR. (15,891) - 0 (15,891)
17 RESERVE FOR INJURIES (5,597) 0 (5,597)
18 OTHER COST FREE CAPITAL (33,562) (5,280) (38,842)
19 INVESTED CAPITAL $5,024,513 ($259,527) $4,764,986
-----aaaa-a
20 RATE OF RETURN 12.30% -0.72% 11.58%
-----M-M
21 RETURN $617,823 ($66,209) $551,614
EXHIBIT A
pAGE 5_ OE..12-
1
CITY OF HOUSTON
HOUSTON LIGHTING E POWER COMPANY
OPERATIONS E MAINTENANCE EXPENSE ADJUSTMENTS
TEST YEAR ENDED DECEMBER 31, 1985
(000,S)
LINE
NO. DESCRIPTION
1 SALARIES E WAGES
2 EMPLOYEE BENEFITS
3 LIMESTONE OPERATING EXPENSES
4 STORM DAMAGES
5 STORK DAMAGES-5779
6 MUNCIPAL STREET USE FEES
7 RATE CASE EXPENSES
8 EEI DUES
9 R E D
10 AMORT. OF OTHER DEF. CHARGES
11 MANAGEMENT AUDIT
12 LEASE AND RENTAL
13 UNCOLLECTIBLE ACCOUNTS
14 ADVERT., CONTR. E DON.
15 LEGISLATIVE ADVOCACY
16 SOCIAL DUES
17 POWER WHEELING
18 AMORT. OF LIMESTONE DEF. CHRGS
19 OTHER OCR EXPENSES
20 REDUCTION IN GAS OEN EXP.
21 NEW BILLING PROCEDURES
22 ADM. LEGISLATIVE ADVOCACY
23 UNSUPPORTED E EXCESSIVE OFFICER EXP.
24 LEASE E RENTAL EXPENSES
25 FUEL REFUND COSTS
26 MALAKOFF EXP. TO CWIP
27 STP 002 EXP. RECLASS. TO RATE CASE EXP.
28 NON -RECURRING NAIMTE NANCE
29 AFFILATE CHARGES
30 EMPLOYEE STORE EXPENSES
SCHEDULE 3
HLEP CITY
PER BOOKS ADJUSTMENT REQUEST ADJUSTMENT
TOTAL EXPENSES
$226,920
29,511
152
2,076
238
98,711
498
414
11,721
204
0
5,408
14,419
2,803
9
25
8,677
0
192,790
$14,104 $241,024
(488) 29,023
12,330 12,482
(702) 1,374
996 1,234
(19,967) 78,744
757 1,255
(83) 331
1,058 12.779
0 204
978 978
278 5,686
902 15,321
784 3,587
(9) 0
(25) 0
(6,855) 1,822
7,056 7,056
0 192,790
CITY
RATE ORDER
($4,618) $236,406
(816) 28,207
(1,889) 10,593
0 1,374
0 1,234
(7,696) 71,048'
(1,059) 196
(331) 0
0 12,779
0 204
(652) 326
(318) 5,368
(947) 14,374
(13) . 3,574
0 0
0 0
(197) 1,625
(7.056) 0
0 192,790
(9,464) (9,464)
(255) (255)
(17) . (17)
(85) (85)
(51) (51)
(248) (248)
(16). (16)
(100) (100)
(8,550) (8,550)
(538) (538)
(181) (181)
$594,576 $11,114 $605,690 ($45,097) $560,593
EXHIBIT A
PAGE- OF!._
-----..-
EXHIBIT "A"
CITY OF HOUSTON
HOUSTON LIGHTING & POWER COMPANY
REVENUE REQUIREMENT
TEST YEAR ENDED DECEMBER 31, 1985
(000's)
- SCHEDULE 1
LINE HUI) CITY CITY
NO. DESCRIPTION PER BOOKS ADJUSTMENT REQUEST ADJUSTMENT - RATE ORDER
1 ' OPERATION AND MAINTENANCE $594,576 $11,114 $605,690 ($45,097•) $560,593
2 FUEL 1,420,262 (432,108) 988,154 (136,181) 851,973
3 PURCHASED POWER 442,802 96,454 539,256 (40,961) 498,295
4 DEPRECIATION 177,099 - 33,488 210,587 (13,835) 196,752
5 OTHER TAXES 140,185 16,507 156,692 (5,013) 151,679
6 INTER ON CUSTONER DEPOSITS 0 0 2,302 (0) 2,302
7 FEDERAL INCOME TAXES 262,557 77,439 339,996 (65,507)- . 274,489
8 RETURN 495,883 121,940 - : 617,823 (66,209) 551.614
. 9 REVENUE REQUIREMENT $3,533,364 ($75,166) $3,460.500- ($372,802) $3,087,698
EXHIBIT A
PAGE_L.
MMM WIDIMOMIOMM=Mi
applicable statutes and ordinances.
Section 4. The City Council hereby authorizes and directs the
City Secretary to serve the Company with a certified copy of this
ordinance which is the final determination and order of the City.
Section 5. The Company shall, within ten days following the
final passage and approval of this ordinance and thereafter whenever
required by applicable statutes and ordinances and whenever requested
by the Mayor, file a complete schedule of rates and tariffs with the
Mayor setting forth all of the Company's rates and charges for utility
service then in effect. The Mayor is authorized to review, approve
and require revisions to the tariff if he determines it not to be in
accordance with this ordinance.
Section 6. Nothing contained in this ordinance shall be
construed now or hereafter as limiting or modifying, in any mannner,
the right and power of the City under the law to regulate the rates
and charges of the Company.
Section 7. All ordinances or parts of ordinances in conflict
herewith are repealed to the extent of the conflict only.
Section 8. In the event that the Company appeals from this
order setting electric rates for the Company, the City hereby waives
written notice of the hearing before the Public Utility Commission of
Texas on such appeal.
With respect to any such appeal, 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 such appeal
and to take any and all actions necessary and incidental thereto and
to the resolution of the matters subject to such appeal, all as may be
in the best interests of the City.
Section 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 unconsti-
tutional, void or invalid, the validity of the remaining portions of
this ordinance or their application to other persons or sets of cir-
cumstances shall not be affected thereby, it being the intent of the-
and upon review, approval, and adjustment of such deferred expenses by -
the City in the proceeding considering the Company's next filed
statement of intent to change rates, these deferred amounts shall be
amortized over a period of ten years from the commercial in -service -
date of Limestone Unit 2.
The City Council herebyorders the Company, upon the commercial
in-service date for Limestone Unit 2, to transfer its total investment
in Limestone Unit 2 from Construction Work in. Progress to Plant in
Service. The City reserves the right to exclude. from rate base or.
other recovery any portion of the expenditures from the plant, AFUDC,
capitalized expenses, capitalized depreciation or other. capitalized
costs related to Limestone Unit 2 that the City determines is not used
and useful, has been imprudently spent or incurred, or is in any other
way not lawfully includable in rate base or other recovery. The -City
further reserves the right to determine the reasonableness .and
prudence of any deferred expenses in the rate order in which rate base
treatment for Limestone Unit 2 is requested.
The City Council finds that all of the Company's investment in
Limestone Unit 2 as of December 31, 1985, is presently in rate base as
Construction Work in Progress.
The City Council hereby orders that the Company shall not,
after the date of final passage of this ordinance, accrue any AFUDC on
any Limestone Unit 2 investment.
2. The City Council hereby orders the Company, after the date
of final passage of this ordinance, to include in reconcilable fuel
expense for any fuel purchased from an affiliate only fuel prices at
cost, and to exclude any returns on or of equity.
3. The City has incurred expenses for the purpose of
conducting investigations, presenting evidence, advising and
representing the governing body, and assisting with litigation in
connection with the request of the Company to change its rates. The
Company shall reimburse the City for the reasonable costs of such
services pursuant to Section 24(a) of the Public Utility Regulatory
Act, TEX.REV.CIV.STAT.ANN. art. 1446c (Vernon Supp.-1986). The Mayor
4
a. Operations and Maintenance Expenses
Adjustments to the Company's Operation and Maintenance Expenses
amounted to $45,097,000.00. The major adjustments include a reduction
in Salaries and Wages expense of $4,618,000.00, a reduction of
Limestone Operating Expenses of $1,889-,000.00, a reduction in
Municipal Street Use Fees of $7,696,000.00, a reduction in Rate Case
Expenses of $1,059,000.00, elimination of EEI dues of $331,000.00, a
reduction in Gas Operation and Maintenance Expense of $9,464,000.00,
and a.reduction for Non -Recurring Maintenance of $8,550,000.00.
b. Fuel Expenses and Purchased Power
The adjustment of Fuel Expenses is a ,reduction of
$136,181,000.00. The adjustment to Purchased Power is a reduction of
$40,961,000.00. The Overall Fixed Fuel Factor per KWH is $0.020386,
the Distribution Level Fixed Fuel Factor per KWH is $0.020854, and. the
Transmission Level Fixed Fuel Factor per KWH is $0.019713.
c. Depreciation
The total adjustment to Depreciation Expense is a reduction of
$13,835,000.00.
d. Other Taxes
The total adjustment for all Taxes other than Federal Income
Taxes is a net reduction of $5,013,000.00.
e. Federal Income Taxes
The adjustment to the Cost of, Service for Federal Income Taxes
is a reduction of $65,507,000.00.
f. Return
The rate of return on equity is 14.75 percent. The rate of
return on invested capital is 11.58 percent.
2. Invested Capital
The invested capital is determined to be $4,764,986,000.00.
3. Adjustments to Invested Capital
The adjustments to invested capital include a reduction of
$5,496,000.00 in Plant in Service, an increase of $1,243,000.00 in
Construction Work in Progress, a reduction of $2,713,000.00 in Fuel
Oil Inventory, a reduction of $82,702,000.00 in Working. Cash
2