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Home My WebLink AboutOrdinance 9414A~tctchrnen~ "Q`~ 4 s, .,4, ~, _ :. ~ A~ _ ORDINANCE NO. ~~~~~ AN ORDINANCE SUSPENDING THE RATE INCREASE PROPOSED IN THE STATEMENT OF INTENT FILED BY LONE STAR GAS COMPANY ON MAY 29, 1985, FOR 90 DAYS BEYOND THE INTENDED EFFECTIVE DATE OF JULY 3, 1985; ADOPTING DECLARATIONS AND FINDINGS IN PREAMBLE; PROVIDING A SEVERABILITY CLAUSE; AND PROVID- ING AN EFFECTIVE DATE. WHEREAS, on May 29, 1985, the Lone Star Gas Company filed with the City Secretary of the City of Fort Worth a Statement of Intent to Change Rates prerequisite to a proposed change in gas rates to become effective July 3, 1985, which change is estimated by the Company to increase its adjusted total operating revenue in the amount of $4,444,718; and c WHEREAS, under Article 1446e, Gas Utilities Regulatory Act, and Article 6050 et. seq. R.C.S., the City Council of the City of Fort Worth is charged with the duty of making a "reasonable determination of rate base, expenses, investment and rate of return within the municipal boundaries," of the City of Fort Worth; and WHEREAS, it is a matter of public necessity that a thorough investigation be conducted and hearings held on such requested major change in rates; and WHEREAS, it is necessary that the proposed rate increase in- tended to become effective on July 3, 1985, be suspended as autho- rized by Article 1446e, R.C.S., for 90 days beyond the date on which the schedule of proposed rates would go into effect; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: eL nmrnwT t That the rate increase of Lone Star Gas Company proposed to become effective on July 3, 1985, be and the same is hereby sus- pended as authorized by Article 1446e (the Gas Utility Regulatory Act), Revised Civil Statutes of Texas, for 90 days beyond such date on which the schedule of proposed rates would otherwise have gone into effect, that is until October 1, 1985. -~rT SECTION II. That all of the declarations and findings contained in the pre- amble of this ordinance are made a part hereof and shall be fully effective as part of the ordained subject matter of this ordinance. CL'('mTl1AT TTT Should any portion, section or part of a section of this ordi- nance be declared invalid, inoperative or void for any reason by a court of competent jurisdiction, such decision, opinion or judgment shall in no way impair the remaining portions, sections or parts of sections of this ordinance, which said remaining provisions shall be and remain in full force and effect. SECTION IV. That this ordinance shall take effect and be in full force and effect from and after the date of its passage, and it is so or-- dained. APPROVED AS TO FORM AND LEGALITY: City Attorney .- g Date: (P ~ ~ 5 ADOPTED: ~~ EFFECTIVE: ~~~~~,~ -2- Mns~fr}~ER Flt,~.,~ C:T:'IVJi±NAGER•1! `!-./~t~ i/f Fort W®rth, ~l"e~oca~ ACCOUNTIJVG•Z '~/ J ~/1,/~ /~ /]~/~ 7R11FJSPORTATION'pUBLIC 11 C s:~j~~~ ~,'~,~j ~~'~,'(,'~,~j'~j~/ ~o~~~~~ILjI(~Q/~j Q/® (/ ~(I ~~°~C-F2 gnpn!NISIRA'fiUN 3' J_dj.~ i GATE REFERENCE SUBJECT Lone Star Gas Company' $ Request PAGE NUMBER to Increase Its Rates in Fort 2 F~y~l~ UT,LITI.3-~~2/85 C-9102 Worth ' ~' - Kecommendatlon It is recommended• 1. That the City Council adopt the proposed ordinance (Attachment A) suspend- i ng the implementation of the proposed gas rates for 90 days from July 3, ` - `1985, to October 1, 1985. 2. That the City Council authorize the City Manager to engage the firm of McMorries and Associates to analyze the Lone Star Gas Company rate in- crease request, at a fee not to exceed $22,500. Background - Historical Discussion Lone Star Gas Company's 1977 rate increase request resulted in an appeal to the Railroad Commission of Texas (RRC) and to the Travis County District Court. Much costly and lengthy litigation ensued, and the RRC finally fixed a Fort Worth rate which became effective in October 1979 and ordered a sur-charge (caused in part by its own delay) which was in effect until June 1981. The next successive local gas rate cases occurred in 1980 and 1982 (M&C G-4664, August 26, 1980, and M&C G5475, November 30, 1982) In these cases consultants were utilized at the utility's expense and rate increases were granted in each case smaller than the company had requested. On May 29, 1985, Lone Star Gas Company filed its "Statement of Intent to Change Rates" with Fort Worth and the sixteen other cities which comprise the "Fort Worth Distribution System." The proposed effective date for the new rates is July 3, 1985, thirty-five days after filing. The Company's application requests new rates that would produce an additional $4.445 million, an increase of 6.6~. On test-year commercial and residential revenues of $67.385 millio n in the 1982 case, the Company had requested $7.039 million, a 13~ increase. The rate schedul a proposes different rates for summer and winter seasons, as fol- lows: Present Rate Structure* Proposed Rate Structure 7 Mo. 5 Mo. 7 Mo. 5 Mo. Winter Summer Winter Summer Nov-Apr M i-Oct Nov-Apr M~-Oct Residential $5.00 $5.00 - customer charge - $ 6.50 $4.50 $4.1223 $4.1223 - All consumption - $ 5.3795 $5.0295 per Mcf Commercial $8.00 $8.00 - Customer charge - $10.50 $6.50 $4.1223 $4.1223 - All consumption - $ 4.1223 $4.1223 per Mcf *Contains no seasonal differential cF DATE REFERENCE SUBJECT Lone Star Gas Company' S Request PAGE NUMBER to Increase its Rates in Fort 2 2 7/2/85 C-9102 W or Included in the above rate structure is an increase in the "base city gate rate from the old of $3.1847/Mcf/month to the gaterate established by the Texas Railroad Commission last case of $4.0'100/Mcf/month, an increase of $83.53~/Mcf. The City of Fort Worth has "Origi nal Jurisdiction" over gas utilities operating within its boundaries. The timetable established by the Gas Utility Regulatory Act (G.U.R.A. -Art. 1446e, R.C.S.) must be complied with or the proposed rates will go into effect automatically on the 35th day after filing. The G.U.R.A. provides that the requested rate increase can be suspended for 90 days (October 1, 1985). If no final determination is reached after 90 days, the pro- posed rates are deemed to be approved and can be placed into effect under bond. The Act permits the use and employment of consultants to assist the cities in their study and analysi s of the propriety and effect of the proposed rate increases and provides for reimbursement to the cities for reasonable con- sultant and other regulatory costs. Background information on gas regulation was provided to the City Council in Informal Report No. 7025 on June 4, 1985. The Utilities Supervisor has been in contact with representatives of McMorries & Associates, Amarillo, concerning this rate request, and they have indicated their willingness to perform the technical analysis of the need of the increase and the propriety of the request and to work with the City in these matters in a timely manner, for a fee not to exceed $22,500. The McMorries firm has been the City's consultant in several cases in past years, including the last gas case in 1982, and has performed satisfactorily. This firm is a long-established utility rate consultant and represents primarily cities and governmental entities before the Public Utility Commission and Railroad Commission. If the City Council concurs in retaining a consultant, as i t has in the past, i t i s anticipated that the expertise wil l be utilized to analyze the request and report to the Counc i 1 . Along with such report, hearing s should be scheduled at several Council meetings to gather citizen input and Company comment on the proposed rate increase. Thereafter, but prior to October 1, 1985, the Council could take action on the proposed/requested rate i ncrease. if the Company i s not satisfied with the actions taken by the City Council, it could appeal that decision to the Railroad Commission in Austin. An ordinance suspending the proposed local gas rate increase fora period of 90 days to facilitate the expert analysis, report, hearings and appropriate actions has been prepared and will be found at Attachment "A". Financing: Funds to engage McMorries and Associates are available in Account No. 90-55-00. The expenditure will be recorded in I.C. 328005. gppRO~ED BY CITY COUNCIL RHA:izzz Attachment JUf- 2 1985 ~~ SUBMITTED FOR THE CITY MANAGER'S OFFICE BY DISPOSITION BY COUNCIL. City SeO=et ^ APPROVED City Of F`OIt ~ y ~~t~ESSEO BY Y~y,T@Kp~ ORIGINATING Wade Adkins L7 OTHER (DESCRIBE) DEPARTMENT HEAD CITY SECRETARY CONTACTTIONAL IN FORMAiJDNAUghi nbaugh Ext. 7698 `` ~~f//(/~/ (j~pted ~rd~na~e~ I~O. /~/:!/ p , DATE