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CC Resolution No. 2467RESOLUTION NO. 2467 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, DENYING THE APPLICATION TO INCREASE RATES FILED BY CENTERPOINT ENERGY RESOURCES CORP., D/B/A CENTERPOINT ENERGY ENTEX AND CENTERPOINT ENERGY TEXAS GAS ON OR ABOUT NOVEMBER 16, 2016; REQUIRING THE REIMBURSEMENT OF MUNICIPAL RATE CASE EXPENSES; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ************************************************************************************* WHEREAS, CenterPoint Energy Resources Corp., d/b/a CenterPoint Energy Entex and CenterPoint Energy Texas Gas ("CenterPoint" or "Company") filed a Statement of Intent with the City on or about November 16, 2016, to increase rates in the Company's Houston and Texas Coast Divisions and proposed an effective date of December 21, 2016; and WHEREAS, the City is a regulatory authority under the Gas Utility Regulatory Act ("GURA") and under § 103.001, et seq. of GURA has exclusive original jurisdiction over CenterPoint's rates, operations and services within the municipality; and WHEREAS, by Resolution No. 2453, the City suspended CenterPoint's proposed effective date for the statutorily allowed time from December 21, 2016, to March 21, 2017; and WHEREAS, to facilitate negotiations among the City and CenterPoint regarding its proposed increase in rates, CenterPoint extended its proposed effective date from December 21, 2016, to January 7, 2017, which results in an extension of the suspension period from March 21, 2017, to April 7, 2017; and WHEREAS, CenterPoint proposed to consolidate its current Houston and Texas Coast Divisions into a single Texas Gulf Division and implement the revised gas tariffs on a division -wide basis for customers in the Texas Gulf Division; and WHEREAS, CenterPoint's proposed increase would increase its non -gas base revenue by approximately $31.0 million, representing an increase in non -gas base revenue of approximately 10.7%; and WHEREAS, the City of Baytown is located in the currently existing Texas Coast Division; and WHEREAS, on a customer -class basis, for Texas Coast Division customers, the impact of CenterPoint's proposed increase is as follows: Residential $36.22 $37.32 $1.10 3.0%/5.0% General Service- $102.41 $102.90 $0.49 0.5%/-0.9% Small General Service — $1,316.42 $1,317.74 $1.32 0.1%/-6.5% Lar e Volume ; and WHEREAS, CenterPoint proposed to increase its customer charges for Texas Coast Division customers for "General Service — Residential" from $16.17 to $16.75; increase the customer charge for "General Service — Small" from $17.20 to $18.25; and increase the customer charge for "General Service — Large Volume" from $56.45 to $70.00; and WHEREAS, the CenterPoint sought a Return on Equity (ROE) of 10.25%; a capital structure weighted toward equity — 55.15% Equity; 44.85% Debt; and WHEREAS, CenterPoint's rate request consists of a voluminous amount of information including CenterPoint's rate -filing package, exhibits, schedules, and workpapers (collectively, its "Rate Filing Package"); and WHEREAS, the City coordinated its efforts with a coalition of similarly situated municipalities known as the Texas Coast Utilities Coalition ("TCUC") of cities, to review CenterPoint's Rate Filing Package; and WHEREAS, the City engaged special counsel and consultants to evaluate the merits of CenterPoint's proposed increase in rates; and WHEREAS, after review of CenterPoint's Rate Filing Package, the City's special counsel and consultants determined that CenterPoint failed to establish that its overall revenue request resulted in no more than an amount that would permit CenterPoint a reasonable opportunity to earn a reasonable return on the utility's invested capital used and useful in providing service to the public in excess of the utility's reasonable and necessary operating expenses; and WHEREAS, CenterPoint failed to establish that its proposed rates and tariffs were just and reasonable; 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: CenterPoint failed to show that its proposed rates are just and reasonable. Section 3: The City hereby DENIES CenterPoint's request to increase rates and in support thereof finds that: A. The Rate Filing Package fails to provide sufficient information to justify the requested increase in revenue or to justify the changes set forth in the attached tariffs; and B. The Rate Filing Package fails to provide sufficient information to justify the adoption of the rate base, expenses, investment, return on equity, and other rate issues noted in Utilities Code, Chapter 104. Section 4: The City hereby orders CenterPoint to reimburse the City's rate case expenses as provided in the Gas Utility Regulatory Act and that CenterPoint 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 CenterPoint before the City, the Railroad Commission of Texas, or any court of law. Section 5: A copy of this resolution shall be sent to CenterPoint Energy, care of Mr. Thomas Stevens, Director of Regulatory Affairs, CenterPoint Energy, P.O. Box 2628, Houston, Texas 77252-2628; and to Mr. Alfred R. Herrera, Herrera & Boyle, PLLC, 816 Congress Ave., Suite 1250, Austin, Texas 78701. Section 6: This resolution shall take effect immediately from and after its passage by the City Council of the City of Baytown. /) INTRODUCED, READ and PASSED, by the Baytown this the 23'd day of March, 2017. c APPROVED AS TO FORM: NACIO RAMIREZ, SR., Ci ttorney SpYT0WQ s • P �9TFOF�i� y of RAren\FileslCity Council\Resolutions\2017\March 2MUD10567-CenterPoint-DENIAL Resolution Rate Case 2016-TCUC-030617 (2).doc