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Resolution No. 2836RESOLUTION NO.2836 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN,TEXAS ("CITY")DENYING THE DISTRIBUTION COST RECOVERY FACTOR RATE REQUEST OF CENTERPOINT ENERGY HOUSTON ELECTRIC.LLC.AND ITS INCREASE IN RATES UNDER ITS "RIDER TEEEF"APPLICATION MADE ON OR ABOUT APRIL 5,2023;AUTHORIZING PARTICIPATION IN A COALITION OF SIMILARLY SITUATED CITIES;AUTHORIZING PARTICIPATION IN RELATED RATE PROCEEDINGS;REQUIRING THE REIMBURSEMENT OF MUNICIPAL RATE CASE EXPENSES;AUTHORIZING THE RETENTION OF SPECIAL COUNSEL;FINDING THAT THE MEETING COMPLIES WITH THE OPEN MEETINGS ACT;MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT;AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. WHEREAS, on about April 5, 2023, CenterPoint Energy Houston Electric, LLC ("CEHE") filed an application for approval to amend its Distribution Cost Recovery Factor ("DCRF")with the City that will increase CEHE's rates effective September I, 2023. by about $84.6 million; and WHEREAS,on about April 5,2023,CEHE filed an application for approval to amend its mobile- generation rates("Rider TEEEF")with the Citythat will increase CEHE's rates by about $187.9 million annually;and WHEREAS,the Cityis a regulatory authority underthe Public Utility Regulatory Act ("PURA") and under Chapter 33,§33.001 et seq. of PURA has exclusive original jurisdiction over CEHE's rates, operations,and services within the municipality,including overits requested amendment to its DCRF under Chapter 36,§36.210;and WHEREAS,CEHE seeks to include in rates a profit related to its incremental investment in distribution assets it has made from January 1,2019,through December 31,2022,and more specifically, in itsapplicationof April 5,2023,recovery of profitforincrementalinvestmentin distributionassets made from January I,2022, through December 31,2022; and WHEREAS,the inclusionof CEHE'sprofiton its investmentin distributionassetsin rates, has the effect of increasing CEHE's revenue requirement by approximately $84.6 million related to investments made from January 1,2022, through December 31, 2022; and WHEREAS,the jurisdictional deadline for the Cityto act in this rate matter is 60 days from the application date,or June 4,2023;and WHEREAS,the City will require the assistance of specialized legal counsel and rate experts to review the merits of CEHE's application to increase rates; and WHEREAS,in order to maximize the efficient use of resources and expertise in reviewing, analyzing and investigating CEHE's rate request,itis prudent to coordinate theCity's efforts witha coalition of similarly situated municipalities; and WHEREAS,the City,in matters regarding applications by CEHE to change rates,has in the past joined with other local regulatory authorities to form the Texas Coast Utilities Coalition of Cities ("TCUC") and hereby continues its participation in TCUC; and 1 of 3 WHEREAS, CEHE simultaneously filed an application for approval of a DCRF with the Public Utility Commission of Texas, and therefore the decision of the Public Utility Commission of Texas will have an impact on the rates paid by the City and its citizens who are customers in CEHE's service territory, and in order for the City's participation to be meaningful, it is important that the City promptly intervene in such proceeding at the Public Utility Commission of Texas; and WHEREAS, CEHE failed to show that its proposed rate change in its DCRF rates is reasonable; and,therefore, the City has concluded that CEHE's proposed rate change is unreasonable; and WHEREAS, CEHE also filed an application to amend its rates to recover its recent acquisition of mobile generation via a tariff CEHE refers to as its "Rider TEEEF," which if approved as filed, would increase CEHE's revenue requirement by about an additional $187.9 million related to CEHE's acquisition of mobile-generation facilities; and WHEREAS, CEHE failed to show that its proposed rate change in its "Rider TEEEF" rates is reasonable; and, therefore, the City has concluded that CEHE's proposed rate change is unreasonable; and WHEREAS,pursuant to the Public Utility Regulatory Act(PURA) § 33.025, the City has standing to participate in ratemaking proceedings at the Public Utility Commission of Texas; and WHEREAS,pursuant to the Public Utility Regulatory Act(PURA) § 33.023, CEHE's applications are ratemaking proceedings; and WHEREAS, it is crucial for the City, as part of the Texas Coast Utilities Coalition of Cities to intervene in proceedings at the Public Utility Commission of Texas to exercise its due diligence both as an affected ratepayer, and on behalf of its citizens. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,TEXAS,THAT: Section 1: The findings set out in the preamble are in all things approved and incorporated herein as if fully set forth. Section 2: The City DENIES the rate increases CEHE requested on or about April 5, 2023, in CEHE's DCRF and "Rider TEEEF" ratemaking applications. Section 3: The City authorizes intervention in proceedings related to CEHE's application for approval of its DCRF and its "Rider TEEEF" before the Public Utility Commission of Texas and related proceedings in courts of law as part of the coalition of cities known as the Texas Coast Utilities Coalition of Cities ("TCUC"). Section 4: The City hereby orders CEHE to reimburse the City's rate-case expenses as provided in the Public Utility Regulatory Act and that CEHE shall do so on a monthly basis and within 30 days after submission of the City's invoices for the City's reasonable costs associated with the City's activities related to this rate review or to related proceedings involving CEHE before the City,the Public Utility Commission of Texas, or any court of law. Section 5: Subject to the right to terminate engagement at any time, the City retains and authorizes the law firm of Herrera Law & Associates, PLLC to act as Special Counsel with regard to rate proceedings involving CEHE before the City, the Public Utility Commission of Texas,or any court of law 2 of 3 and to retain such experts as may be reasonably necessary for review of CEHE's rate application subject to approval by the City. Section 6: The City,through its participation in TCUC,shall review the invoices of the lawyers and rate experts for reasonableness before submitting the invoices to CEHE for reimbursement. Section 7: A courtesy copy of this resolution shall be sent to CenterPoint Energy Houston Electric, LLC, care of Ms. Denise Gaw, 1111 Louisiana Street, Houston, Texas 77002; and to Mr. Alfred R. Herrera, Herrera Law & Associates, PLLC, 4400 Medical Parkway, Austin,Texas 78756. Section 8: The meeting at which this resolution was approved was in all things conducted in strict compliance with the Texas Open Meetings Act,Texas Government Code, Chapter 551. Section 9: This resolution supersedes any prior inconsistent or conflicting resolution or ordinance. Section 10: This resolution shall take effect immediately from and after its passage by the City Council of the City of Baytown,Texas. INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the City of Baytown this the 27'h day of April, 2023. G4aYT�cb.^!fh ANDON CAPETILLO, ayor A TEST: `:14' `— JI ANGELA CKS ity Clerk ci- =.Rylt1, APPROVED AS TO • 'M: a. ... pr SCOTT LEMON b, I ity Attorney R:\Karen Anderson\RESOLUTIONS\CITY COUNCIL\202312023 04 27\Dkt542H5-CEHE-DCRF-DENIAL Resolution-CEHE-FINAL-041023.docx 3 of 3