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.
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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.
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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
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