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.
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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.
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APPROVED AS TO FORM:
NACIO RAMIREZ, SR., Ci ttorney
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RAren\FileslCity Council\Resolutions\2017\March 2MUD10567-CenterPoint-DENIAL Resolution Rate Case 2016-TCUC-030617 (2).doc