Ord. 1449 2011-07-11ORDINANCE NO. 1449
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
PEARLAND, TEXAS, REVIEWING THE RATE INCREASE REQUEST
OF CENTERPOINT ENERGY ENTEX; DENYING THE REQUESTED
INCREASE IN RATES; ORDERING THAT NO CHANGE IN RATES
OCCUR; REQUIRING THE REIMBURSEMENT OF RATE CASE
EXPENSES; ESTABLISHING AN EFFECTIVE DATE FOR THIS
ORDINANCE; MAKING SUCH OTHER FINDINGS AND PROVISIONS
RELATED HERETO; CONTAINING A SAVINGS CLAUSE; AND
PROVIDING FOR THE EFFECTIVE DATE THEREOF.
WHEREAS, on or about April 29, 2011 CenterPoint Energy Entex "CenterPoint
filed a request to increase rates by an annual amount of approximately $82,000 within
the Texas Coast Division under the "Cost of Service Adjustment -3" "COSA -3 tariff
approved by the Railroad Commission of Texas; and
WHEREAS, CenterPoint's filing purports to be in compliance with a "Cost of
Service Adjustment -3" "COSA -3 tariff approved by the Railroad Commission of
Texas; and
WHEREAS, the COSA -3 tariff approved by the Railroad Commission of Texas
provides that "[t]he provisions of this Cost of Service Adjustment are to be implemented
in harmony with the Gas Utility Regulatory Act (Texas Utilities Code, Chapters 101-
105)" and that the "Company's annual rate adjustment will be made in accordance with
all applicable laws"; and
WHEREAS, absent the availability of the COSA -3 tariff approved by the Railroad
Commission of Texas, it is highly unlikely that CenterPoint would have initiated a rate
case to recover a change in its cost of service of $82,000, which represents
approximately 0.15 percent (0.15 of its overall cost of service; and
ORDINANCE NO. 1449
WHEREAS, absent the availability of the COSA -3 tariff approved by the Railroad
Commission of Texas, the City would not be expending resources to address an
application to increase rates by the de minimis amount of $82,000; and
WHEREAS, the Railroad Commission of Texas in Gas Utility Docket No. 9910
concluded that a municipality may not suspend the effective date that CenterPoint
proposes in its request to change rates under a COSA application, a conclusion with
which the City disagrees and which issue is pending before the Travis County District
Court; and
WHEREAS, CenterPoint proposed an effective date of August 1, 2011, which in
conjunction with the Railroad Commission of Texas' conclusion that the City may not
suspend CenterPoint's proposed effective date, precludes the City from conducting a
meaningful review of CenterPoint's request to raise rates, thereby denying the City's
counsel and consultants the ability to provide a full review and recommendation to the
Texas Coast Utilities Coalition of Cities "TCUC Cities and
WHEREAS, CenterPoint failed to carry its burden of proof and meet the
requirements of the Gas Utility Regulatory Act as necessary to warrant a change in
rates, by failing to meet the requirements of the Gas Utility Regulatory Act in several
areas of its rate request, including, but not limited to the following areas:
a. CenterPoint's expenses related to its Affiliate Transactions;
b. CenterPoint's proposed cost of capital, including its Return on Equity, its
Cost of Debt, its Capital Structure, and its overall Rate of Return;
c. CenterPoint's proposed Rate Design;
d. CenterPoint's proposed treatment of Accumulated Deferred Income Tax;
e. CenterPoint's proposed calculation of its Cash Working Capital; and
f. CenterPoint's proposed calculation of its Pension Expense; and
WHEREAS, the 345 Judicial District Court of Travis County, Texas in Cause
No. D- 1- GN -09- 000982, Texas Coast Utilities Coalition vs. The Railroad Commission of
Texas, Judge Stephen Yelenosky presiding, issued a Judgment concluding that the
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ORDINANCE NO. 1449
Railroad Commission of Texas did not have the authority to impose the COSA -3 tariff
on the City and did not have the authority to approve a COSA -3 tariff in those areas
where the Railroad Commission of Texas had original jurisdiction; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That the facts contained in the preamble of this Ordinance are
determined to be true and correct and are hereby adopted as part of this Ordinance.
Section 2. That the base rate increase proposed by CenterPoint is denied.
Section 3. That to the extent CenterPoint implements any change in rates in
contradiction of this Ordinance, CenterPoint shall refund to the City any base rate
increase in full, plus interest calculated at the rate being earned on customer deposits,
and shall also remit any and all amounts pursuant to penalties that may apply.
Section 4. That the effective date for this Ordinance is the date of its adoption.
Section 5. If there is an appeal of this Ordinance, the City reserves all rights to
advocate adjustments to the revenue requirement, cost allocation and rate design
proposed by CenterPoint and to fully participate in such appeal, including the
reimbursement of its reasonable rate case expenses.
Section 6. The City is a participant in a coalition of cities known as the Texas
Coast Utilities Coalition of Cities and authorizes intervention in proceedings related to
CenterPoint's rate application before the Railroad Commission of Texas and related
proceedings in courts of law, and subject to the right to terminate employment at any
time, the City authorizes the law firm of Herrera Boyle, PLLC to act as special counsel
with regard to rate proceedings involving CenterPoint before the City, the Railroad
Commission of Texas, or any court of law.
Section 7. All conditions precedent to the adoption of each of the foregoing
sections herein have been complied with under law.
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ORDINANCE NO. 1449
Section 8. CenterPoint shall reimburse the reasonable rate case expenses of
the TCUC Cities upon presentment of invoices received by the City.
Section 9 That if any section or part of any section, paragraph, or clause of
this Ordinance is declared invalid or unconstitutional for any reason, such declaration
shall not be held to invalidate or impair the validity, force, or effect of any other section
or sections, part of section, paragraph, or clause of this Ordinance.
Section 10. That 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, Chapter 551, Texas Government Code; 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. That the City Secretary is hereby directed to send a true and copy of
this Ordinance to Scott E. Doyle, Regional Vice President Gas Operations, CenterPoint
Energy, 1111 Louisiana Street, Houston, Texas 77002 and to Alfred R. Herrera, Herrera
Boyle, PLLC, Suite 1250, 816 Congress, Austin, Texas 78701.
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ORDINANCE NO. 1449
PASSED and APPROVED on First Reading this the 27 day of June, A. D., 2011.
ATTEST:
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PASSED and APPROVED on Second and Final Reading this the 11 day of
July, A. D., 2011.
TTEST:
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Y SE RETARY
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
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TOM REID
MAYOR
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TOM REID
MAYOR