CC Resolution No. 2995 RESOLUTION NO. 2995
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS
("CITY") AUTHORIZING SETTLEMENT OF CENTERPOINT ENERGY HOUSTON
ELECTRIC, LLC'S JANUARY 24,2025 REQUEST FOR A FINANCIAL ORDER FOR
SYSTEM RESTORATION COSTS ASSOCIATED WITH THE "DERECHO" STORM
THAT HIT THE HOUSTON AREA IN MAY 2024; MAKING OTHER FINDINGS AND
PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE
DATE THEREOF.
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WHEREAS, on about January 24, 2025, CenterPoint Energy Houston Electric, LLC ("CEHE")
filed an application with the Public Utility Commission of Texas ("PUCT") for approval of a financial
order for system restoration costs ("SRC") associated with the"Derecho" Storm that hit the Houston area
in May 2024; and
WHEREAS, the financing order contemplates a bond structure designed to provide level SRC for
residential customers over the expected life of the system restoration bonds, which is 14 years; and
WHEREAS, to achieve this result, CEHE proposes to increase the amortization with the expected
growth in the residential class in order to provide consistent SRC;and
WHEREAS, PUCT may use a financing order to establish recovery of storm restoration costs
related to the Derecho Storm; and
WHEREAS, the financing order, if approved, would:
1. Authorize CEHE to issue system restoration bonds to securitize the distribution-
related system restoration costs approved by PUCT and other qualified costs
presented in CEHE's application, including carrying costs accrued to the date of
issuance of the bonds;
2. Approve the proposed securitization financing structure; and
3. Approve SRC and related tariffs sufficient to recover the principal and interest on
the system restoration bonds and to recover the ongoing qualified costs of
supporting and servicing the system restoration bonds;
and
WHEREAS, the financing order may be more economical to ratepayers by allowing CEHE to
finance the restoration costs rather than seeking recovery through a more traditional general rate case
because it provides for recovery of costs over a longer period,not unlike a mortgage; and
WHEREAS, CEHE estimates that the total amount the Company will securitize will be
approximately FOUR-HUNDRED,THIRTY-ONE MILLION DOLLARS($431,000,000.00); and
WHEREAS, the City, through its participation in the Texas Coast Utilities Coalition of Cities
("TCUC"), intervened in the proceedings before the PUCT; and
WHEREAS, after evaluation of CEHE's application,the parties in the PUCT proceeding reached a
proposed settlement of CEHE's request; and
WHEREAS,the proposed settlement lowers CEHE's proposed"ongoing servicer fee"from 0.10'o
to 0.0750 o resulting in a savings of approximately ONE-HUNDRED, SEVEN THOUSAND DOLLARS
($107,000.00) to customers, anchors servicing fees in securitization cases in the future, reduces CEHE's
expenses incurred in preparing this filing by ONE-HUNDRED,TWENTY-FIVE THOUSAND DOLLARS
($125,000.00), and caps CEHE's upfront underwriter's fee at 0.400o; and
WHEREAS, the City's Special Counsel in the proceedings before the PUCT recommend that the
City accept the settlement; and
WHEREAS, to avoid the uncertainty, time and expense of further litigation of this proceeding a
settlement is in the better interest of the City and its citizens; and
WHEREAS, the City, in matters regarding applications by CEHE to change rates, has in the past
joined with other local regulatory authorities in the TCUC and hereby continues its participation in TCUC
and in related proceedings before the PUCT; NOW THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,TEXAS:
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 authorizes a settlement of CEHE's pending application before PUCT for
approval of a financial order for SRC associated with the"Derecho"Storm in a manner that lowers CEHE's
proposed "ongoing servicer fee" from 0.10% to 0.0750 o resulting in a savings of approximately ONE-
HUNDRED, SEVEN THOUSAND DOLLARS ($107,000.00) to customers, anchors servicing fees in
securitization cases in the future, reduces CEHE's expenses incurred in preparing this filing by ONE-
HUNDRED, TWENTY-FIVE THOUSAND DOLLARS ($125,000.00), and caps CEHE's upfront
underwriter's fee at 0.40%.
Section 3. 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 8°i day of May, 2025.
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0 0wf v TFf C ARLES JO S , Mayor
ATTEST: •°° 9
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a ;y
ANGELA YACKS gity°Clerk
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APPROVED AS O F
SCOTT LE D, City Attorney
R:Ordinances and Resolutions Resolution Drafts City Council 2025-05-08 Res-DkdS 559 CEHE-Derecho-Approving Settlement doer(SL)