HomeMy WebLinkAboutOrdinance 18194-07-2008ORDINANCE NO. 18194-07-2008
AN ORDINANCE SUSPENDING IMPLEMENTATION OF THE RATE
SCHEDULE PROPOSED BY ONCOR ELECTRIC DELIVERY COMPANY
LLC, AS REFLECTED IN THE "APPLICATION OF ONCOR ELECTRIC
DELIVERY COMPANY LLC FOR AUTHORITY TO CIiANGE RATES"
FILED BY ONCOR ELECTRIC DELIVERY COMPANY LLC ON JUNE 27,
2008 (i) UNTIL NOVEMBER 6, 2008 OR OTHERWISE FOR THE
MAXIMUM PERIOD PERMITTED BY LAW, OR (ii) THE
EFFECTIVENESS OF A RATE ORDER ADOPTED BY THE CITY
COUNCIL, WIiTCHEVER DATE IS EARLIER; ESTABLISHING RATES
TO BE CHARGED BY ONCOR ELECTRIC DELIVERY COMPANY LLC
DURING THE PERIOD OF SUSPENSION; AUTHORIZING THE
PARTICIPATION IN A STEERING COMMITTEE OF OTHER CITIES
ANALYZING SIMILAR RATE CHANGE FILINGS BY ONCOR ELECTRIC
DELIVERY LLC AND THE HIRING OF CONSULTANTS AND
ATTORNEYS THEREWITH; DIRECTING THAT ONCOR ELECTRIC
DELIVERY COMPANY LLC REIMBURSE THE CITY FOR ALL SUCH
REASONABLE EXPENSES; ADOPTING DECLARATIONS AND
FINDINGS IN PREAMBLE; PROVH)ING A SEVERABILITY CLAUSE;
AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, on June 27, 2008, Oncor Electric Delivery Company LLC ("Oncor"),
successor in interest to TXU Electric Delivery Company ("TXU"), filed with the City Secretary
that certain "Application of Oncor Electric Delivery Company LLC for Authority to Change Rates"
(the "Rate Filing") under which revised rates charged by Oncor would go into effect in the City on
August 8, 2008; and
WHEREAS, the rates proposed in the Rate Filing would result in approximately $275
million in additional revenue for Oncor on a system-wide basis, which additional revenue includes
an approximate 11.9% increase in electricity rates imposed by Oncor in the City of Fort Worth
(which factors in approximately a 17.6% increase in electricity rates imposed by Oncor on
residential customers in the City of Fort Worth) and approximately $24 million in additional
revenue for Oncor from customers in the City of Fort Worth; and
WHEREAS, pursuant to Chapter 36 of the Texas Utilities Code, the City Council is
required to (i) analyze Oncor's Rate Filing; (ii) conduct a public hearing in order to determine the
propriety of the proposed rate changes; and (iii) determine whether the rates proposed in the Rate
Filing are reasonable and lawful, and if not, enter an order establishing the maximum rates that
Oncor shall be permitted to charge; and
WHEREAS, as permitted by Chapter 36 of the Texas Utilities Code, in order to have time
to analyze the Rate Filing thoroughly prior to the public hearing on this matter, it is necessary that
the City suspend implementation of Oncor's proposed rates from August 8, 2008 (i) until
November 6, 2008 or otherwise for the maximum period allowed by law, or (ii) the effective date
of a rate order adopted by the City Council in response to the Rate Filing, whichever date under
subsections (i) or (ii) is earlier; and
WI~EREAS, the City has previously delivered to Oncor a written statement of the City's
reasons for its suspending implementation of Oncor's proposed rate schedule;
NOW, THEREFORE BE IT ORDAINED BY TIIE CITY COUNCIL OF THE CITY
OF FORT WORTH, TEXAS THAT:
SECTION 1.
Pending a public hearing on the merits, a determination by the City Council as to the
propriety of the Rate Filing, and the adoption of a rate order by the City Council that establishes the
rates that Oncor may charge in the City, implementation of the rate schedule outlined in Oncor's
Rate Filing is hereby suspended (i) until November 6, 2008 or otherwise for the maximum period
permitted by law, or (ii) the effective date of a rate order adopted by the City Council in response to
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Council in response to the Rate Filing, whichever date under subsections (i} or (ii) is earlier. Until
the effective date of a rate order adopted by the City Council in response to the Rate Filing or the
date on which the rates proposed by Oncor in its Rate Filing with the City become effective by
operation of applicable law, Oncor shall charge the same rates in the City as those that were in
effect on June 27, 2008.
SECTION 2.
The City Manager or his authorized designee is hereby authorized to cooperate with other
municipalities to participate in a steering committee to hire and direct legal counsel and consultants
to make recommendations to participating municipalities, including the City, regarding the Rate
Filing and similar Rate Filings in such other participating municipalities and to direct any
administrative proceedings or litigation associated with the Rate Filing, subject to the City's right
to terminate such participation at any time by written notice to the steering committee and to act
independently in the exercise of its regulatory authority.
SECTION 3.
In accordance with Section 33.023 of the Texas Utilities Code, as well as that certain
Settlement Agreement by and between Oncor's predecessor, TXU, and the Steering Committee of
Cities Served by TXCT Electric Delivery Company (the "Steering Committee") dated February 22,
2005, as amended by that certain Extension and Modification of Settlement Agreement by and
between TXLT and the Steering Committee dated January 27, 2006, Oncor is hereby directed to
reimburse the City for all reasonable costs and expenses of any rate consultants, accountants,
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consultants, accountants, auditors, attorneys and engineers retained by the City or a steering
committee of which the City is a member and incurred in the course of the City's and/or the
steering committee's review of the Rate Filing.
SECTION 4.
All of the declarations and findings contained in the preamble of this Ordinance are made a
part hereof and shall be fully effective as part of the ordained subject matter of this Ordinance.
SECTION 5.
If any portion, section or part of a section of this Ordinance is subsequently declared
invalid, inoperative or void for any reason by a court of competent jurisdiction, the remaining
portions, sections or parts of sections of this Ordinance shall be and remain in full force and effect
and shall not in any way be impaired or affected by such decision, opinion or judgment.
SECTION 6.
This Ordinance shall take effect and be in full force and effect from and after the date of its
adoption. The City Secretary is hereby directed to deliver a certified copy of this Ordinance to
Oncor.
AND IT IS SO ORDAINED.
ADOPTED AND EFFECTIVE: July 29, 2008
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APPROVED AS TO FORM AND I.,EGALITV:
By: ~~/~vz~1~'
Peter Vaky
Assistant City Attorney
M&C:G-16212
Coty ®f ®-~ ®h, 1"exa~
Mayor and Council Communication
COUNCIL ACTION: Approved on 7/29/2008 -Ord. No. 18194-07-2008
DATE: Tuesday, July 29, 2008
LOG NAME: 130NCOR RATES
REFERENCE NO.: *~`G-16212
SUBJECT:
Adopt Ordinance Suspending the Effectiveness of New Rates Proposed by Oncor Electric Delivery
Company, LLC, and Authorizing Retention of Consultants to Evaluate the Proposed Rates
RECOMMENDATION:
It is recommended that the City Council adopt the attached ordinance which:
1. Suspends the implementation of the proposed rates filed with the City by Oncor Electric Delivery
Company, LLC, on June 27, 2008; and
2. Authorizes the City Manager to cooperate with other cities in the Steering Committee of Cities Served by
Oncor Electric Delivery to hire and direct legal counsel and consultants, negotiate with the Company, make
recommendations to the City regarding reasonable rates, and direct any administrative proceedings or
litigation associated with the Rate Adjustments filed with the City or with the Public Utility Commission.
DISCUSSION:
The City of Fort Worth is a member of a standing coalition of cities known as the Steering Committee of
Cities Served by Oncor Electric Delivery (Steering Committee), originally authorized by the City Council by
M&C G-11549 on July 30, 1996.
On July 15, 2004, the Steering Committee recommended that its member cities adopt a Resolution
requiring Oncor Electric Delivery Company, LLC (Oncor), which at the time was known as TXU Electric
Delivery Company, to show cause why its Transmission and Distribution (T&D) rates should not be
reduced. On September 7, 2004, .the City Council adopted Resolution No. 3119 initiating a ratemaking
proceeding against Oncor.
The Steering Committee and Oncor entered into settlement discussions regarding that ratemaking
proceeding in the fall of 2004. Attorneys for the Steering Committee advised Committee members that a
potential rate reduction could not be passed on to residential customers until after TXU Energy's Price-to
Beat (PTB) rates expired in 2007.
The Steering Committee and Oncor signed a Settlement Agreement on February 22, 2005, subject to
ratification by all member cities that passed ashow-cause resolution. The Settlement Agreement abated
the ratemaking proceeding until July 2006. The City Council adopted Resolution No. 3194-04-2005 on April
19, 2005, (M&C C-20665) ratifying the Settlement Agreement.
Oncor and the Steering Committee continued their dialogue and modified the Settlement Agreement in
January 2006. One of the provisions of the modified Settlement Agreement was that Oncor would file a
new rate case in June 2008. The modified Settlement Agreement was ratified by the City Council on
February 28, 2006 (Resolution No. 3316-02-2006, M&C G-15096).
Logname: 134NCOR RATES Page 1 of Z
In accordance with the modified Settlement Agreement and Section 36.102 of the Texas Utilities Code, on
June 27, 2008, Oncor filed with the City of Fort Worth ("City") a Statement of Intent of Oncor Electric
Delivery Company, LLC, to change rates. The proposed effective date for the new rates is August 8,
2008. Oncor's application requests new rates that would produce an estimated $275,000,000 in additional
revenue per year on a system-wide basis. The Company is requesting an increase in residential rates of
17.6 percent. The total rate increase requested is 11.9 percent.
Under state law, the City has exclusive original jurisdiction over the rates, operations and services of
Oncor in the City. If the City takes no action on this matter, the new rates will automatically take effect on
August 8, 2008. However, state law also allows the City to suspend the effectiveness of the rates for a
period of 90 days so that the City may analyze Oncor's request and, following a public hearing, make a
determination as to whether it is lawful and reasonable. It is recommended that during the period in which
the rates are suspended the City utilize rate consultants hired by the Steering Committee to assist the City
in making such a determination. In accordance with state law and pursuant to the Settlement Agreement,
Oncor is required to reimburse the Steering Committee for reasonable consultant and other regulatory costs
associated with this review.
The attached ordinance suspends the effectiveness of Oncor's requested rates from August 8, 2008, until
the earlier of November 6, 2008, or the effective date of a rate order adopted by the City Council in
response to Oncor's request.
FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that this action will have no material effect on City Funds.
TO Fund/Account/Centers
FROM Fund/Account/Centers
Submitted for City Manager's Office by: Karen Montgomery (6222)
Originating Department Head: Lena Ellis (8517)
Additional Information Contact: Danny Reed (6145)
Logname: 13ONCOR RATES Page 2 of 2