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CC Resolution No. 2516RESOLUTION NO. 2516 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, DENYING THE DISTRIBUTION COST RECOVERY FACTOR RATE DECREASE OF CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC FILED ON OR ABOUT APRIL 4, 2018; 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; MAKING OTHER FINDINGS AND PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ****************************************************************************** WHEREAS, on about April 4, 2018, CenterPoint Energy Houston Electric, LLC ("CenterPoint") filed an application for authority to amend its Distribution Cost Recovery Factor ("DCRF") and proposed an effective date of September 1, 2018; and WHEREAS, the City as a regulatory authority under the Public Utility Regulatory Act ("PURA") §33.001 has exclusive original jurisdiction over CenterPoint's rates, operations, and services within the municipality; and WHEREAS, the U.S. Congress enacted the Tax Cut and Jobs Act of 2017, which among other things, changed federal income-tax laws by reducing the corporate, federal -income tax rate from 35% to 21%; and WHEREAS, absent the change in federal tax law, CenterPoint's application would seek an increase in its DCRF revenues of about $32 million per year; and WHEREAS, the change in federal tax revenue requirement, and results in a proposed approved DCRF revenue requirement; and law has the effect of reducing CenterPoint's decrease of about $7.1 million to its currently WHEREAS, the jurisdictional deadline for the City to act in this rate matter is 60 days from the application date or June 3, 2018; and WHEREAS, the City will require the assistance of specialized legal counsel and rate experts to review the merits of CenterPoint's application to increase rates; and WHEREAS, in order to maximize the efficient use of resources and expertise in reviewing CenterPoint's rate request, it is prudent to coordinate the City's efforts with a coalition of similarly situated municipalities; and WHEREAS, the City, in matters regarding CenterPoint rates, has in the past joined with other local regulatory authorities to form the Texas Coast Utilities Coalition ("TCUC") of cities and hereby continues its participation in TCUC; and WHEREAS, CenterPoint simultaneously filed an application to amend its DCRF with the Public Utility Commission of Texas; therefore, the decision of the Public Utility Commission of Texas will affect the rates paid by the City and its citizens who are customers in CenterPoint's service territory; and WHEREAS, CenterPoint failed to show that its proposed rate change is reasonable, therefore, the City has concluded that CenterPoint's proposed rate change is unreasonable; and WHEREAS, 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, given state law and the procedures applicable to CenterPoint's application, the most expeditious manner to effect CenterPoint's proposed rate change is to deny CenterPoint's request; 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 DENIES the rate change CenterPoint requested on or about April 4, 2018. Section 3: The City authorizes intervention in proceedings related to CenterPoint's application to amend its DCRF before the Public Utility Commission of Texas and related proceedings in courts of law as part of the coalition of cities known as Texas Coast Utilities Coalition ("TCUC"). Section 4: The City hereby orders CenterPoint to reimburse the City's rate case expenses as provided in the Public 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 Public Utility Commission of Texas, or any court of law. Section 5: Subject to the right to terminate employment 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 CenterPoint before the City, the Public Utility Commission of Texas, or any court of law and to retain such experts as may be reasonably necessary for review of CenterPoint's rate application subject to approval by the City. Section 6: The City, through its participation in Texas Coast Utilities Coalition of cities, shall review the invoices of the lawyers and rate experts for reasonableness before submitting the invoices to CenterPoint for reimbursement. 2 Section 7: A copy of this resolution shall be sent to CenterPoint Energy, care of Ms. Denise Gaw, CenterPoint Energy Service Company, LLC, 1111 Louisiana Street, Houston, Texas 77002; and to Mr. Alfred R. Herrera, Herrera Law & Associates, PLLC, 816 Congress Ave., Suite 950, Austin, Texas 78701. Section 8: This resolution shall take effect immediately fromafter its passage by the City Council of the City of Baytown. INTRODUCED, READ and PASSED, by the affirmative voter�Q ty Council of the City of Baytown this the 12"' day of April, 2018. 14 DONCARLOS, ATTEST: / :A1ALA;K — LETICIA BRYSCH, City Clerk La* 55 APPROVED AS TO FORM: ej `NACIO RAMIREZ, SR., City orney RAKarenTilesTity CouncihResolutions\2018\April 121M48226-CenterPoint 2018 DCRF-Denial Resolution-TCUC-Electric-FINAL-040517.doc 3