Ordinance No. 4,49460710 -1
ORDINANCE NO. 4494
AN ORDINANCE SETTING RATES TO BE CHARGED BY HOUSTON
LIGHTING AND POWER COMPANY FOR ELECTRIC UTILITY SERVICE
WITHIN THE CORPORATE LIMITS OF THE CITY OF BAYTOWN,
TEXAS; CONTAINING FINDINGS AND PROVISIONS RELATED TO THE
SUBJECT; PROVIDING FOR THE REPEAL OF INCONSISTENT
ORDINANCES; CONTAINING A SAVINGS CLAUSE; AND PROVIDING
FOR THE EFFECTIVE DATE HEREOF.
WHEREAS, on or about March 18, 1986, Houston Lighting and Power Company
(the "Company "), filed with the City of Baytown a Statement of Intent and Petition
for Authority to Change Rates relating to electric utility service, and proper notice
thereof was duly given; and
WHEREAS, by Ordinance No. 4424, the City Council suspended the effective
date of such proposed rate increase until July 23, 1986; and
WHEREAS, the City Council, having considered the Company's rate increase
at a public hearing for which proper notice was duly given, finds that such request
is excessive; and
WHEREAS, the City Council having original jurisdiction over the matter finds
that a lesser increase in rates should be prescribed for the Company; NOW
THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1: The City Council of the City of Baytown hereby finds the
requested rates of the Company to be excessive and unreasonable.
Section 2: The City Council hereby approves and adopts the rates,
adjustments, determinations, and recommendations of the set out in Exhibit "A,"
attached hereto and incorporated herein for all purposes, and additionally finds and
determines the following:
I. Findings
1. Cost of Service
The revenue requirement of the Company is $3,087,698,00U.00. Adjustments
were made to operations and Maintenance, Fuel Expenses and Purchased Power,
Depreciation expense, Other Taxes, Federal Income Taxes and the Return
component.
a. Operations and Maintenance Expenses
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Adjustments to the Company's O & M expenses amounted to $45,097,000.00.
the major adjustments include a reduction in Salaries and Wages expense of
$4,618,000.00, a reduction of Limestone Operating Expenses of $1,889,000.00, a
reduction in Municipal Street Use Fees of $7,696,000.00, a reduction in Rate Case
Expenses of $1,059,000.00, elimination of EEI dues of $331,000.00, a reduction in
Gas Operation and Maintenance Expense of $9,464,000.00, and a reduction for
Non - Recurring Maintenance of $8,550,000.00.
b. Fuel Expenses and Purchased Power
The adjustment of Fuel Expenses is a reduction of $136,181,000.00. The
adjustment to Purchased Power is a reduction of $40,961,000.00. The Overall Fixed
Fuel Factor per KWH is $0.020386, the Distribution Level Fixed Fuel Factor per
KWH is $0.020654, and the Transmission Level Fixed Fuel Factor per KWH is
$0.019713.
c. Depreciation
The total adjustment to Depreciation Expense is a reduction of
$13,835,000.00.
d. [ether Taxes
The total adjustment for all Taxes Other than Federal Income Taxes is a net
reduction of $5,013,000.00.
e. Federal Income Taxes
The adjustment to the Cost of Service for Federal Income Taxes is a
reduction of $65,507,000.00.
f. Return
The rate of return on equity is 14.75 percent. The rate of return on invested
capital is 11.58 percent.
2. Invested Capital
The invested capital is determined to be $4,764,986,000.00.
3. Adjustments to Invested Capital
The adjustments to invested capital include a decrease of $5,496,000.00 in
Plant in Service, an increase of $1,243,000.00 in Construction Work in Progress, a
reduction of $2,713,000.00 in Fuel Oil Inventory, a reduction of $82,702,000.00 in
Working Cash Allowance, a reduction of $64,625,000.00 in Deferred Limestone Cost,
a reduction of $8,880,00.00 in Unrecovered Storm Loss, a reduction of $29,878,000.00
in Deferred Taxes, and a reduction of $5,280,000.00 in other Cost -Free Capital.
4. Revenue Deficiency
The overall revenue deficiency is $159,759,000.00.
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5. Rate Structure
a. Residential
The rate structure for the residential customer class is:
Summer: Customer Charge of $9.00 per month, which includes 250 kwh
all kwh over 251 kwh at 6.2460 cents per kwh
plus: fuel charge of 2.0854 cents per kwh for all kwh
Winter: Customer Charge of $9.00 per month, which includes 250 kwh
251 -1,000 kwh at 6.2460 cents per kwh
over 1,000 kwh at 2.9655 cents per kwh
plus: fuel charge of 2.0854 cents per kwh for all kwh
b. All Other Customer Classes
The rate structure for all customer classes other than residential is that
proposed in the Company's Statement of Intent and Petition for Authority to Change
Rates.
II. Related Issues
1. The City Council hereby authorizes the Company to utilize the following
deferred accounting treatment for certain expenses related to Limestone Unit 2:
Beginning on the commercial in- service date as defined by the Public Utility
Commission of Texas ( "commercial in- service date ") for Limestone Unit 2 and
continuing for a period of time ending eighteen (18) months after that in- service
date or upon the effective date of rates set as a result of the Company's next filed
statement of intent to change rates, whichever ending date is sooner, the Company
may place into a deferred account all depreciation expense, tax expense, and
operation and maintenance expense incurred during that time period by the Company
related to Limestone Unit 2, and upon review, approval, and adjustment of such
deferred expenses by the City in the proceeding considering the Company's next
filed statement of intent to change rates, these deferred amounts shall be amortized
over a period of ten years from the commercial in- service date of Limestone
Unit "2.
The City Council hereby orders the Company, upon the commercial in- service
date for Limestone Unit 2, to transfer its total investment in Limestone Unit 2 from
Construction Work in Progress to Plant in Service. The City reserves the right to
exclude from rate base or other recovery any portion of the expenditures from the
plant, AFUDC, capitalized expenses, capitalized depreciation or other capitalized
costs related to Limestone Unit 2 that the City determines is not used and useful,
has been imprudently spent or incurred, or is in any other way not lawfully
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includable in rate base or other recovery. The City further reserves the right to
determine the reasonableness and prudence of any deferred expenses in the rate
order in which rate base treatment for Limestone Unit 2 is requested.
The City Council finds that all of the Company's investment in Limestone
Unit 2 as of December 31, 1985, is presently in rate base as Construction Work in
Progress.
The City Council hereby orders that the Company shall not, after the date of
final passage of this ordinance, accrue any AFUDC on any Limestone Unit 2
investment.
2. The City Council hereby orders the Company, after the date of final
passage of this ordinance, to include in reconcilable fuel expense for any fuel
purchased from an affiliate only fuel prices at cost, and to exclude any returns on
or of equity.
3. The City has incurred expenses for the purpose of conducting
investigations, presenting evidence, advising and representing the governing body, and
assisting with litigation in connection with the request of the Company to change
its rates. The Company shall reimburse the City for the reasonable costs of such
services pursuant to Section 24(2) of the Public Utility Regulatory Act,
TEX.REV.CIV.STAT.ANN., art. 1446c (Vernon Supp. 1986). The Mayor shall forward
to the Company an invoice or invoices for such costs together with a request for
reimbursement. The Company shall reimburse the City for such costs incurred
within thirty days after having received each such request.
III. Conclusions
1. The City has original jurisdiction over this case pursuant to Section 43 of
the Public Utility Regulatory Act, TEX. REV. CIV. STAT. ANN., art. 1446c (Vernon
Supp. 1984).
2. The Company has the burden of establishing its revenue deficiency under
its present rates and of establishing the amount of such deficiency that will be
collected under its proposed rates pursuant to Section 40 of the Public Utility
Regulatory Act.
3. The rates prescribed herein will allow the Company to recover its
operating expenses together with a reasonable return on its invested capital,
pursuant to provisions of Section 39 of the Public Utility Regulatory Act.
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4. The rates prescribed herein will permit the Company a reasonable
opportunity to earn a reasonable return upon the invested capital used and useful in
rendering service to the public over and above its reasonably necessary operating
expenses as provided by Section 39 (a) of the Public Utility Regulatory Act.
5. The rates for electric service set forth herein provide just and reasonable
and not unreasonably preferential, prejudicial, or discriminatory rates, and are
sufficient, equitable, and consistent in application to each class of consumer, as
provided by Section 38 of the Public Utility Regulatory Act.
Section 3: The City Council hereby determines prescribes, establishes and
authorizes the increased rates for sale or supply of electric service by the Company
within the corporate limits of the City of Baytown as set out in this ordinance.
Such increased rates shall become effective as to each customer on or no later than
the thirtieth day after the date of final passage of this ordinance. The Company
shall be authorized to collect such rates until such time as they may be changed,
modified, amended or withdrawn in accordance with applicable statutes and
ordinances.
Section 4: The City Council hereby authorizes and directs the City Clerk to
serve the company with a certified copy of this ordinance which is the final
determination and order of the City.
Section 5: The Company shall, within ten days following the final passage
and approval of this ordinance and thereafter whenever required by applicable
statutes and ordinances and whenever requested by the City, file a complete
schedule of rates and tariffs with the City setting forth all of the Company's rates
and charges for utility service then in effect. The Mayor is authorized to review,
approve and require revisions to the tariff if he determines it not to be in
accordance with this ordinance.
Section 6: Nothing contained in this ordinance shall be construed now or
hereafter as limiting or modifying, in any manner, the right and power of the city
under the law to regulate the rates and charges of the Company.
Section 7: All ordinances or parts of ordinances in conflict herewith are
repealed to the extent of the conflict only.
Section 8: In the event that the Company appeals from this order setting
electric rates for the Company, the City hereby waives written notice of the
hearing before the Public Utility Commission of Texas ("PUC ") on such appeal.
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With respect to any such appeal, the City Council hereby authorizes the City
Attorney or his designees to represent the City and its citizens in any and all
matters in connection with such appeal and to take any and all actions necessary
and incidental thereto and to the resolution of the matters subject to such appeal,
all as may be in the best interests of the City.
Section 9: if any provision, section, exception, subsection, paragraph,
sentence, clause or phrase of this ordinance or the application of same to any
person or set of circumstances, shall for any reason be held unconstitutional, void or
invalid, the validity of the remaining portions of this ordinance or their application
to other persons or sets of circumstances shall not be affected thereby, it being the
intent of the City Council in adopting this ordinance that no portion hereof or
provision or regulation contained herein shall become inoperative or fail by reason
of any unconstitutionally, voidness or invalidity of any other portion hereof, and all
provisions of this ordinance are declared to be severable for that purpose.
Section 10: The City Council officially finds, determines, recites and
declares that a sufficient written notice of the date, hour, place and subject of this
meeting of the City Council was posted at a place convenient to the public at the
City Hall of the City for the time required by law preceding this meeting, as
required by the Open Meetings Law, TEX. REV. C1V. STAT. ANN., Article 6252 -17,
(Vernon Supp. 1986 ); and that this meeting has been open to the public as required
by law at all times during which this ordinance and the subject matter thereof has
been discussed, considered and formally acted upon. The City Council further
ratifies, approves and confirms such written notice and the contents and posting
thereof.
Section 11: This ordinance shall take effect immediately from and after its
passage by the City Council of the City of Baytown.
INTRODUCED, READ, and PASSED by the affirmative vote of the City
Council of the City of Baytown, this the 10th day of July, 1986.
ATTEST:
r1LEEN P. HALL, City Clerk
APPROVED:
/Attorney
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PETITION OF
HOUSTON LIGHTING & POWER COMPANY
FOR AUTHORITY TO CHANGE RATES
RECOMMENDATION OF THE DIRECTOR
OF REVENUE & REGULATORY AFFAIRS
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TABLE OF CONTENTS
Page
I. Executive Summary ............ ..............................1
II. Cost of Service ............ .......................••••••••
.3
A. Operations and Maintenance Expenses .............0.0...03
1. Salaries and Wages .. ..............................3
2. Employee Benefits ... ..............................3
3. Limestone Operating Expenses ......................4
4. Municipal Street Use Fee .......................... 4
5. Rate Case Expenses .. ..............................5
6. Edison Electric Institute Dues ....................5
7. Management Audit .... ..............................6
8. Leases and Rental ... ..............................6
9. Uncollectible Accounts ............................ 6
10. Advertising, Contributions & Donations ............ 7
11. Wheeling Expenses .............. 0.0...............
.7
12. Limestone Amortization ............................ 8
13. Other Operations & Maintenance Expenses ........... 8
B. Fuel Expenses ............................. ... ... ......11
C. Purchased Power Expense .. ............••••••••••••••••.11
D. Depreciation Expense ..... .............................11
E. Taxes other than Federal Income Taxes .................12
F. Federal Income Taxes ..... .............................12
G. Return on Investment ..... .............................12
III. Rate Base .................... .............................14
A. Electric Plant in Service ............................. 14
B. Construction Work in Progress .........................14
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Page
C.
Property Held for Future Use ..........................14
D.
Nuclear Fuel in Progress . .............................15
E.
Fuel Oil Inventory ....... .............................15
F.
Working Cash Allowance ... .............................16
G.
Prepayments .............. .............................16
H.
Deferred Limestone Expenses ...........................17
I.
Unrecovered Storm Losses . .............................17
J.
Deferred Taxes ........... .............................17
K.
Other Cost -Free Capital .. .............................18
IV.
Revenue
Requirement .......... .............................19
V.
Cost
Allocations ............. .............................19
VI.
Rate
Design .................. .............................20
VII.
Schedules
1.
Revenue Requirement
2.
Calculation of Rate Adjustments
3.
Operations and Maintenance Expense Adjustments
4.
Summary of Fuel and Purchased Power Costs
5.
Rate Base
6.
Summary of Cash Working Capital
7.
Cost of Capital
8.
Graph of Residential Rates
9.
Weighted Average Cost of Gas, 1969 - 1986
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I. EXECUTIVE SUMMARY
On March 18, 1986, Houston Lighting & Power Company ( "HL &P ")
filed a rate change application with the City of Houston, other
municipal regulatory authorities and the Public Utility Commis-
sion of Texas ( "PUC "). The application proposes to increase the
non -fuel component of rates by $345,289,000, or 18.7 %, and to
decrease the fuel component of rates by $520,461,000, or
32.4 %.1 The net effect of the request would be to reduce overall
revenues by $175,172,000, or 5.1 %, as compared to adjusted re-
venues for the test year ended December 31, 1985.
On April 15, 1986, City Council authorized execution of con-
tracts with three public utility consulting firms. These con-
sultants, together with the staff members of the Revenue & Regu-
latory Affairs Division, have conducted a thorough review of the
rate adjustment application and the books and records of the
utility.
Based upon this analysis, it is recommended that City Coun-
cil authorize an increase in the non -fuel component of rates in
the amount of $149,962,000, or 8.11 %, and a decrease in the fuel -
related component of rates by $562,519,000,2 or 34.07 %, on an
1 The proposed decrease in fuel revenues includes a fuel cost
overrecovery through December 1985 in the amount of
$180,897,000 for which customers received a bill credit in
May 1986. On a fully normalized basis, the amount of over -
recovery should not be included in the calculation of the
proposed rate change. Excluding this amount, HL &P's pro-
posal would result in a $340,757,000, or 21.2 %, reduction in
the fuel - related component of rates, and a $4,532,000, or
.13 %, increase in overall revenues.
2 This amount does not reflect fuel cost overcollections which
were refunded in May 1986, nor fuel cost overrecoveries
which have occurred since the end of the May refund per-
iod. The most recent overrecoveries will be refunded or
credited pursuant to the PUC's Substantive Rules upon
approval by the PUC.
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annual basis. The net effect of the recommended rate adjustments
would be an annual decrease in revenues in the amount of
$412,558,000, or 11.79 %, as compared to fully adjusted test
period revenues.
The primary reason for the recommended increase in base
rates is the addition of HL &P's new Limestone Unit 1 electric
generating station which began commercial operation in December
1985. The total cost of the lignite- fired, 720 mW unit was $893
million. With the completion of Limestone Unit 1, HL &P's fuel
mix is further diversified, reducing its dependence on natural
gas from 75% to 66% of the fuel mix3.
Lignite is projected to be less costly than the natural gas
burned in the gas fired units displaced by Limestone Unit 1. The
current cost of lignite is $1.12 per million btu's ("mmbtu "),
while HL &P's current cost of natural gas ranges between $1.425
and $2.26 per mmbtu. The reduction in fuel cost attributed to
the first year of operation of Limestone Unit 1 is projected at
$23,351,000. HL &P's weighted average cost of gas for the period
1969 through 1986 is shown on Schedule 9.
The specific adjustments made to HL &P's request are summa-
rized below and are explained more fully in the testimony of the
staff experts and consultants. Copies of the testimony are
available for review in the City Secretary's office and may be
obtained upon request from Jane Cater, 864 -5840.
3 Includes cogeneration purchases which are fueled by natural
gas.
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II. COST OF SERVICE
A. OPERATIONS AND MAINTENANCE EXPENSES
1 . Salaries and Wages ($4,618,000)
Salaries and wages have been adjusted to reflect
the annualization of HL &P's payroll for the period ended
April 30, 1986. Additional adjustments were made to re-
flect a 3.5% union wage increase effective May 22, 1986,
and to apply a 2% attrition factor to give effect the
HL &P hiring freeze currently in effect.
The number of employees as of April 30, 1986,
11,605, was determined to be representative of the aver-
age number generally employed by the utility.
Tests were made to determine the reasonableness of
the percentage of overtime paid during the test year and
the percentage of labor costs capitalized during the
test year as compared to previous years. HL &P's use of
these test year percentages was found to be reasonable.
2. Employee Benefits
($816,000)
The amount of Life Insurance cost requested by HL &P
included amounts related to affiliates of HL &P. These
were removed. In addition, the life insurance premium
was reduced to reflect interest which will be earned on
the balance HL &P has on deposit with its insurance com-
pany. A third adjustment to Life Insurance cost was
made to include $579,000 of test year expense inadver-
tently excluded in the Company's calculation of the ad-
justment.
Expenses associated with all other Employee Bene-
fits including Medical and Dental Insurance, Workers'
Compensation Insurance, and the Retirement and Savings
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Plans, were reviewed and found to be reasonable. These
expenses have therefore been included in the Cost of
Service.
3. Limestone Operating Expenses ($1,889,000)
HL &P's 720 mW Limestone Unit 1 began commercial
operation in December 1985. Operations and Maintenance
(0 &M) expenses associated with the power plant have been
estimated based on actual O &M expenses incurred during
the first three months of 1986. Certain adjustments
were made prior to annualizing the expenses incurred
during the first quarter of operation to: 1) give
effect to property insurance premiums which are paid
monthly but were not actually included in O &M expenses
until March 1986; 2) remove non - recurring moving expen-
ses incurred during the month of March 1986; and 3)
exclude vacation and holiday pay incurred in the first
quarter of 1986, because these amounts have been inclu-
ded in the recommended amount of Salaries & Wages
expense.
4. Municipal Street Use Fee
$(7,696,000)
In March 1985, the City of Houston and HL &P entered
into an Agreement to settle all issues of a lawsuit
brought against HL &P by the City concerning the method
of calculating and paying franchise fees for the years
1980 through 1985. The Settlement involved use of a
surcharge to HL &P customers for City Franchise Fees not
received for the period 1980 through 1985. Because this
Settlement is non - recurring in nature, the factor used
to compute Municipal Street Use Fees in the current rate
case has been adjusted to remove all effects of the
settlement.
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Municipal Street Use Fees were subtracted from the
Revenue Requirement prior to designing base rates be-
cause these fees are recovered through a line item on
the bills of customers residing within municipalities.
5. Rate Case Expenses
($1,059,000)
Rate Case Expenses associated with the current case
have been adjusted to reflect all known and measurable
changes to the test year amount.
Rate Case Expenses incurred in prior cases which
were associated with the South Texas Nuclear Project
have been amortized over a two year period.
Finally, an adjustment was made to include only 50%
of the adjusted balance of Rate Case Expenses in the
Cost of Service. The remaining fifty percent of all
costs associated with rate case activity will therefore
be borne by HL &P's shareholders. This adjustment recog-
nizes that shareholders receive benefits from the Com-
pany's rate cases. Such benefits include the opportun-
ity to increase profitability and to more closely align
costs and revenues.
6. Edison Blectric Institute Dues ($331,000)
HL &P has requested the inclusion of EEI support in
the amount of $331,000 in the Cost of Service.
Section 41(c)(3) of the Public Utility Regulatory
Act ( "PURA "), provides that "regulatory authorities
shall not consider for ratemaking purposes ... legis-
lative advocacy expenses." Because there is reason to
believe that EEI dues are used to support the lobbying
and advocacy functions of EEI, and because HL &P has not
proved that its EEI expenditures were not used for leg-
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islative advocacy, all EEI dues paid by HL &P during the
test year have been excluded from the Cost of Service.
7. Management Audit
In 1984, H
a new state law
of Texas ( "PUC"
fated utilities
Young & Company
audit of HL &P.
($652,000)
L &P was the first utility examined under
requiring the Public Utility Commission
to conduct management audits of regu-
at least once every ten years. Arthur
was selected to perform the management
In a recent case before the PUC, the Commission
ordered the amortization over a three year period of the
cost of a management audit of El Paso Electric Com-
pany. Because of this precedent, and because the HL &P
management audit conducted by Arthur Young & Company
should prove of benefit for a number of years, the
$978,000 cost of the audit has been amortized over a
three year period.
I
8. Leases and Rental
($3181000)
Several adjustments have been made to Lease and
Rental expenses to remove: 1) claimed operating cost
adjustments, not supported by HL &P, associated with two
leases; 2) a rounding adjustment of $39,572 made by HL &P
in the calculation of the cost of a Greenway Plaza
lease; and 3) the cost of three leases in Austin, Texas,
which are not necessary to the provision of electric
service in the Houston area.
9. Uncollectible Accounts
($947,000)
A factor was determined for use in projecting
uncollectible accounts expenses by dividing the test
OM
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year amount of uncollectible account write -offs by asso-
ciated revenues "lagged" 140 days. One- hundred forty
days was determined to be the average length of time
between revenue recognition and the write -off of an
uncollectible account. When compared to the uncollect-
ible account factor determined in the previous rate
case, the test year factor indicated improvement in the
percentage of accounts written -off by HL &P.
10. Advertising, Contributions & Donations ($13,000)
Section 23.21(b)(2) of the PUC's Substantive Rules
requires exclusion of certain types of donations from
the Cost of Service. All donations made by HL &P during
the test year were reviewed and several donations which
totaled $12,500, were excluded from the Cost of Service
in accordance with the Substantive Rule.
Section 23.21(b)(1)(E) of the Substantive Rules
provides that the total of all advertising, contribu-
tions and donations included in the Cost of Service
shall not exceed 3/10 of 1% (0.3 %) of the gross receipts
of the utility. A test was made of HL &P's compliance
with the "3 /10's of 1V rule, and it was found that the
utility was in compliance, spending 1/10 of 1% of gross
receipts on advertising, contributions and donations
during the test year.
11. Wheeling Expenses
($1971000)
HL &P purchases power from the City of Austin and
City Public Service Board of San Antonio pursuant to
contracts with both. The expenses associated with
"wheeling" power from Austin and San Antonio through the
service areas of other utilities have been adjusted to
reflect the projected cost of all wheeling contracts
currently in effect.
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12. Limestone Amortization ($7,056,000)
HL &P has requested authorization to defer certain
expenses associated with Limestone Unit 1 during the
period December 1985 through September 1986, and to then
amortize these expenses through rates over a ten year
period. The request by the utility would effectively
result in selective ratemaking. For this reason,
expenses associated with Limestone Unit 1 during the
requested period (prior to a final rate order in the
current case) have not been deferred.
On a prospective basis, it is recommended that the
utility be authorized to defer operations and mainte-
nance expenses, depreciation expenses and property taxes
from the date of commercial operation of Limestone Unit
2 for a period of time not to exceed 18 months or until
such time as rates set in HL &P's next general rate pro-
ceeding become effective, whichever is sooner. An ad-
justment will be made to reduce the deferred amount to
reflect declining O &M expenses at power plants displaced
by Limestone Unit 2. A review for reasonableness of
expenses will be conducted at such time as HL &P proposes
to amortize the deferred amounts through rates.
13. Other Operations & Maintenance Expenses
a. Reduction in Gas O &M Expenses ($9,464,000)
An adjustment has been made to reflect declining
operating costs associated with certain gas gener-
ating units, the production from which has been
displaced by Limestone Unit 1 and cogeneration
purchases.
W-M
C.
M
e.
New Billing Procedures
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($255,000)
Effective April 1986, HL &P changed its billing
format. The cost savings associated with the new
format are projected at $255,000 annually.
Additional Legislative Advocacy
($17, 000)
Expenses associated with public image advertising
and inaugural ball tickets have been excluded from
the Cost of Service.
Unsupported & Excessive Officer Expense ($85,000)
Officers' expense vouchers were reviewed and all
unsupported expenses were removed from the Cost of
Service. Hotel charges in excess of $90 per day
were determined to be excessive and the increment
over $90 per day was removed from the Cost of Ser-
vice.
Lease and Rental Expenses
($51,000)
The cost of HL &P's Greenspoint Employment office
was reclassified from O &M to Lease Expenses and
included in the Cost of Service.
f. Fuel Refund Costs
($248,000)
In July 1985, HL &P issued checks to its customers
to refund an over - collection of fuel costs. All
costs associated with the refund have been amor-
tized over a two -year period as these costs are
non - recurring in nature.
am
M
h.
i.
Malakoff Expenses to CWIP
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($16,000
Expenses incurred in connection with Docket 5755,
before the PUC, Inquiry of the Public Utility into
whether the Certificate of Convenience and Neces-
sity granted Houston Lighting & Power Company for
its Malakoff Generating Station should be Cancel-
led, have been reclassified from Rate Case Expenses
to Malakoff - related Construction Work in Progress.
STP #2 Expense Reclassification
($1001000)
Expenses related to the study of the economic via-
bility of STP Unit 2 have been reclassified from
Other O &M Expense to Rate Case Expense.
Non - recurring Maintenance
($8, 550, 000)
Major stator and rotor repairs, and blade replace-
ments made during the test year at four generating
stations have been reclassified to CWIP or amor-
tized over a three year period, as appropriate.
j. Affiliate Charges
($538,000)
An adjustment was made to the amount of Houston
Industries, Inc. ( "HII ") charges allocated to HL &P
so that the Cost of Service includes 75% of HII
charges. The remaining 25% is allocated to the
other subsidiaries of HII.
k. Employee Store Expenses
($181,000)
All expenses incurred in the operation of a store
which is used to sell electric appliances to HL &P
-10-
60710 --1s
employees have been removed from the Cost of Ser-
vice.
B. FUEL EXPENSE
C.
Q
($136,181,000)
Fuel expenses have been projected by performing an econ-
omic dispatch of HL &P's system and factoring into the analy-
sis current fuel costs and contractual take -or -pay obliga-
tions. Substantial fuel cost savings are projected due to
the recent decline in natural gas prices and HL &P's renegoti-
ations of fuel supply contracts.
PURCHASED POWER EXPENSE ($40,961,000)
Purchased power expenses have been computed by applying
contractual rates for purchases from firm suppliers of cogen-
erated capacity and from the City of Austin and City Public
Service Board of San Antonio.
Pursuant to HL &P's non -firm cogeneration tariff, non -
firm cogeneration is purchased at the hourly marginal cost of
energy to HL &P. These purchases have been factored into the
Cost of Service analysis at the spot market price of natural
gas.
DEPRECIATION EXPENSE
($13,835,000)
Depreciation Expense has been adjusted to reflect the
useful lives and estimated salvage values of HL &P's property,
plant and equipment as determined by the consulting firm of
R.W. Beck and Company, which provided an analysis of HL &P's
Depreciation Study for the City in this case. The adjust-
ments are explained more fully in the testimony of Mr. Jack
Pous of R. W. Beck and Company.
_11-
60710 -1t
E. TAXES OTHER THAN FEDERAL INCOME TAXES ($5,013,000)
Social Security, Federal Unemployment and State Unem-
ployment Taxes were calculated based on current tax rates and
the recommended level of Salaries and Wage Expenses.
Ad valorem taxes were calculated based on an effective
rate applied to the recommended levels of Plant in Service
and Plant Held for Future Use.
No adjustments were made to the amount of State Fran-
chise Tax or the PUC Gross Receipts Payment factor requested
by HL &P. The amounts requested were determined to be reason-
able.
HL &P was audited by the State of Texas during the test
year and as a result of the audit, HL &P paid the State $3.7
million in Use tax, interest and penalties for the period
January 1, 1976, through June 30, 1983. The taxes paid
during the test year which were related to prior years have
been removed. Because HL &P does not recognize Use tax on a
current basis, no provision has been made for Use tax in the
Cost of Service.
F. FEDERAL INCOME TAXES
($65,507,000)
Federal Income Taxes have been computed by applying
statutory tax rates to the recommended Revenue Requirement.
Tax savings resulting from the consolidation of affiliates'
returns have been deducted in the calculation of Federal
Income Taxes as required by Section 41(c)(2) of the Public
Utility Regulatory Act.
G. RETURN ON INVESTMENT
($66,209,000)
The Return that HL &P should be allowed to earn on its
investment has been calculated by multiplying its Weighted
-12-
60710 -1u
Average Cost of Capital by the value of its Rate Base.
The cost of debt and preferred stock used in the deter-
mination of the Weighted Average Cost of Capital reflect
actual costs associated with outstanding debt and preferred
stock issues.
The cost of equity capital was determined using the Dis-
counted Cash Flow and the Risk Premium methodologies. These
methodologies are used by financial analysts to determine in-
vestors' current expectations of a particular stock issue.
The analyses indicate that the cost of equity capital to
HL &P's parent company, Houston Industries, Inc., is currently
14.75 %. Because the financial performance of HII is domi-
nated by that of HL &P, no adjustment was made to HII's cost
of equity to project that of HL &P.
The utility's capital structure has been determined by
taking into consideration recent bond refundings and a requi-
sition of pollution control bond proceeds which had been held
in trust.
The calculation of the Weighted Average Cost of Capital,
in the amount of 11.58 %, is shown on Schedule 7.
The Weighted Capital Cost of Capital was multiplied by
the value of HL &P's Rate Base to determine the amount of
"return" to allow the Company.
-13-
60710 -1v
III. RATE BASE
A. ELECTRIC PLANT IN SERVICE ($5,496,000)
HL &P capitalized Employee Benefits and Use Tax asso-
ciated with Limestone Unit 2 as if they related to Limestone
Unit 1. These amounts have been reclassified from Plant in
Service to Construction Work in Progress because Unit 2 is
still under construction.
B. CONSTRUCTION WORK IN PROGRESS
$1,243,000
Adjustments were made to the balance of Construction
Work in Progress (CWIP) to reflect: 1) the reclassification
of Rate Case Expenses associated with the Malakoff decertifi-
cation proceedings from Rate Case Expenses to CWIP; 2) the
capitalization of major stator and rotor repairs made during
the test year to Robinson Unit 4, Parish Unit 5, and the
Greens Bayou generating stations; 3) the reclassification
from Plant in Service to CWIP of certain sales tax and Em-
ployee Benefits expenses associated with Limestone Unit 2
which HL &P had classified as related to Limestone Unit 1; and
4) the removal of the cost of a Direct Current Interconnect
line in Ft. Bend County, which, because of a change in plans,
the utility will not build.
None of the costs associated with the construction of
the South Texas Nuclear Project have been included in Rate
Base.
C. PROPERTY HELD FOR FUTURE USE
($518,000)
Due to changes in long range planning of the Electric
Reliability Council of Texas (ERCOT), the Crosby Street Sub-
station, which was formerly under construction by HL &P, will
not be completed. Because the utility has no definitive
plans for the substation, it is not "used and useful" as re-
-14-
60710 -1w
quired by §39(a) of the PURA for inclusion in Rate Base.
Expenditures related to the Crosby Street Substation, in the
amount of $517,859, have therefore been removed from the Rate
Base.
A. NUCLEAR FUEL IN PROGRESS
($60,370)
An adjustment was made to the balance of Nuclear Fuel in
Progress (NFIP) to reverse the compounded effect of an error
made by the Company in its calculation of Allowance for Funds
used During Construction (AFUDC) in the month of February
1985.
AFUDC is accrued monthly on the balance of CWIP and
Nuclear Fuel in Progress that is not included in Rate Base.
Conversely, "return" dollars are earned on CWIP and NFIP
included in the Rate Base.
The accrual of AFUDC is similar to the compounding of
interest during construction (IDC) on any major project, with
the primary difference between the accrual of AFUDC and IDC
being that AFUDC is accrued not only on construction costs
financed by debt proceeds, but also on construction costs
financed by equity funds.
E. FUEL OIL INVENTORY ($2,713,000)
The adjustment to the balance of Fuel Oil Inventory has
been derived by calculating each fuel oil- burning generating
station's maximum annual fuel oil burn over the period 1981
through 1985 and adding an "unuseable" component for each
plant to account for oil in tank bottoms and in the pipeline
system.
-15-
60710-ix
F. WORKING CASH ALLOWANCE ($$2,702,000)
The amount of Working Cash required in the day -to -day
operations of the utility was determined by using a Lead /Lag
Study. The Lead /Lag Study is used to evaluate the timing of
all sources and uses of cash by the utility.
An example of a "Lead" item in this analysis is the
Franchise Fee paid to the City of Houston by HL &P for the use
of City streets and public rights -of -way. In accordance with
the terms of HL &P's Franchise ordinance, the Company collects
Franchise Fees from ratepayers each month of a calendar year,
and then remits the fees to the City on February 15th of the
next year. In the Lead /Lag Study, Franchise Fee Revenues are
assumed to be collected mid -way through the calendar year
(approximately June 30), and remitted to the City 228.5 days
later (on February 15), resulting in a 228.54 "Lead" on Fran-
chise Fee Revenues. Conversely, were the City to perform a
Lead /Lag Study of its own, the receipt of Franchise Fees from
HL &P would be assigned a 228.5 day "Lag ".
G. PREPAYMENTS
($308,000)
Unlike Municipal Franchise Fees, State Franchise Taxes
and the PUC Gross Receipts Assessment are prepaid in accor-
dance with State law. Adjustments have been made to accu-
rately reflect the average monthly balance of these prepaid
taxes for each month of the test year.
4 The 228.5 day "Lead" is calculated as follows: (065 days +
2) + (31 days in January) + (15 days in February)].
-16-
60710 -1y
H. DEFERRED LIMESTONE EXPENSES ($64,625,000)
As previously stated, Limestone Unit 1 became opera-
tional on December 1, 1985. HL &P has requested that costs
incurred during the month of December 1985, and projected
operation and maintenance expenses, depreciation, ad valorem
taxes and AFUDC for the period January 1, 1986, to October 1,
1986, be included in the rate base.
Were the City to honor HL &P's request, the utility would
be granted selective ratemaking treatment. The utility would
defer expenses which were not included in the determination
of rates now in effect. This is not recommended, in parti-
cular because HL &P reported earnings during the test period
in excess of that authorized in its last rate case. For this
reason, deferred costs associated with Limestone Unit 1 have
not been included in Rate Base.
I. UNRECOVERED STORM LOSSES
($8,880,000)
In Docket No. 5779, HL &P was authorized to recover all
costs associated with Hurricane Alicia in excess of the
amount available in the property insurance reserve through
amortization over a seven year period. Consistent with the
PVC's Final Order in that Docket, the unamortized balance of
costs associated with Hurricane Alicia are not included in
the Rate Base.
J. DEFERRED TAXES
($29,878,000)
The accumulated balance of Deferred Taxes has been esta-
blished to recognize the difference in the amount of taxes
included in the Cost of Service and the amount actually paid
the Federal government. In the early years of the life of an
asset, "per book" taxes generally exceed taxes actually paid,
-17-
60%10 -1z
and the difference between the two is flowed through to rate-
payers over the life of the asset. The balance of Deferred
Taxes yet to be amortized is credited to the Rate Base to
prevent ratepayers from paying a return on cost -free funds
provided by the Federal government.
K. OTHER COST -FREE CAPITAL ($5,280,000)
Cost -free Capital has been increased to reflect un-
claimed fuel refund checks and unpaid incentive and deferred
compensation costs as of the end of the test year. These
expenses were included in the determination of rates in pre-
vious years but as of yet have not been paid by the util-
ity. Accordingly, the funds represent Cost -free Capital and
have been deducted from the Rate Base.
m
60710 -laa
IV. REVENUE REQUIREMENT
Based upon a Rate Base of $4,764,986,000, a Rate of Return
of 11.58 %, and the Cost of Service adjustments discussed in Sec-
tion II above, the Revenue Requirement for HL &P has been deter-
mined to be $3,087,698,000. When compared to fully adjusted test
year revenues in the amount of $3,500,255,000, a revenue reduc-
tion in the amount of $412,557,000, or 11.79% is recommended.
(See Schedule 2.)
V. COST ALLOCATIONS
Cost Allocation is the process by which the total revenue
requirement is allocated to the customer classes served by HL &P.
Capacity charges have been allocated using the Probability
Peak Methodology proposed by HL &P. The Probility Peak method
weights each hour of the year by the probability of being unable
to supply the demand on the system in any given hour.
The Cost of Service for each of HL &P's customer classes was
determined, and Relative Rates of Return were computed. Proposed
revenues for each class were established such that each class
would move toward a Relative Rate of Return of 1.00. A Relative
Rate of Return of 1.00 indicates a class is providing revenues
equal to the cost of serving the class.
-19-
60710 -1bb
VI. RATE DESIGN
As recommended, the residential class as a whole will re-
ceive a 8.6% reduction in rates. Under the recommended rate
structure, the average cost per kilowatt -hour increases with con-
sumption during the on -peak summer season, thereby encouraging
conservation by providing a rate incentive to conserve. On the
other hand, the rate recommended for winter heating consumption
in excess of 1,000 kilowatt- -hours per month, is low, recognizing
the base load usage characteristics of such consumption.
The present and proposed residential rate structures follow:
Present Monthly Rate Structure_
Summer: Customer Charge of $9.00 per month, which includes 250 kwh
all kwh over 251 kwh at 5.292U per kwh
plus: fuel charge of 2.53130 per kwh for all kwh
plus: PCRF charge of 0.309U per kwh for all kwh
Winter: Customer Charge of $9.00 per month, which includes 250 kwh
251 -1,000 kwh at 5.2923 per kwh
over 1,000 kwh at 2.4297 per kwh
plus: fuel charge of 2.5313 per kwh for all kwh
plus: PCRF charge of 0.3093 per kwh for all kwh
Houston Lighting & Power Company Proposed Rate Structure
Summer: Customer Charge of $10.60 per month, which includes 250 kwh*
all kwh over 251 kwh at 6.6780 per kwh
plus: fuel charge of 2.5098 per kwh for all kwh
Winter: Customer Charge of $10.60 per month, which includes 250 kwh*
251 -1,000 kwh at 6.6780 per kwh
over 1,000 kwh at 3.4500G per kwh
plus: fuel charge of 2.50984 per kwh for all kwh
Revenue & Regulatory Affairs Division Recommended Rate Structure
Summer: Customer Charge of $9.00 per month, which includes 250 kwh*
all kwh over 251 kwh at 6.24604 per kwh
plus: fuel charge of 2.08544 per kwh for all kwh
Winter: Customer Charge of $9.00 per month, which includes 250 kwh*
251 -1,000 kwh at 6.24604 per kwh
over 1,000 kwh at 2.96554 per kwh
plus: fuel charge of 2.08544 per kwh for all kwh
-20-
60710 -1cc
Under the recommended rates, the typical residential custo-
mer averaging 1,700 kwh usage in the summer months and 800 kwh
usage in the winter months, would realize a monthly average re-
duction in electric bills of $8.10.
The rate structure for all classes, with the exception of
the residential class which is discussed above, shall be the same
structure as that proposed by HL &P in Volume VII of its Rate
Filing Package. In accordance with Section S of the Rate Ordi-
nance submitted for City Council's approval, HL &P shall design
rates and submit the tariff for approval within ten days of
approval of the Rate Ordinance.
B- 6118 -47
-21-
LINE
N0.
DESCRIPTION
1
OPERATION AND MAINTENANCE
2
FUEL
3
PURCHASED POWER
4
DEPRECIATION
5
OTHER TAXES
6
INTER ON CUSTOMER DEPOSITS
7
FEDERAL INCOME TAXES
8
RETURN
9
REVENUE REQUIREMENT
60710 -ldd
CITY OF HOUSTON
HOUSTON LIGHTING C POWER COMPANY
REVENUE REQUIREMENT
TEST YEAR ENDED DECEMBER 31, 1985
(OOO's)
SCHEDULE 1
HLCP
CITY
CITY
PER BOOKS
ADJUSTMENT
REQUEST
ADJUSTMENT
RATE ORDER
$594,576
$11,114
$605,690
($45,097)
$560,593
1,420,262
(432,108)
988,154
(136,181)
851,973
442,802
96,454
539,256
(40,961)
498,295
177,099
33,488
210,587
(13,835)
196,752
140,185
16,507
156,692
(51013)
151,679
0
0
2,302
(0)
2,302
262,557
77,439
339,996
(65,507)
274,489
495,883
121,940
617,823
(66,209)
551,614
----- - - - - --
$3,533,364
-------- --
($75,166)
----- - - - - --
$3,460,500
---- - - - - --
($372,802)
----- - - - - --
$3,087,698
CITY OF HOUSTON
HOUSTON LIGHTING C POWER COMPANY
CALCULATION OF INCREASE
TEST YEAR ENDED DECEMBER 31, 1985
(000's)
LI NE
NO. DESCRIPTION
i REVENUE REQUIREMENT
2 LESS: FUEL REVENUES
3 MUNICIPAL STREET USE REVENUES
4 OTHER REVENUES
5 BASE RATE REVENUE REQUIREMENT
5 INCREASE IN BASE RATE REVENUES
60710 -lee
HLEP
CITY
CITY
REQUEST
ADJUSTMENT
RATE ORDER
--- - - - - --
$3,460,500
----- - - - - --
($372,802)
----- - - - - --
$3,087,698
(11265,810)
177.158
(1,088,652)
(80,117)
9,069
(71,048)
(25,090)
(1,141)
(26,331)
--- - - - - --
$2,089,483
----- - - - - --
($187,816)
_- -- - - ----
$1,901,657
SCHEDULE 2
TEST YEAR
AS ADJUSTED
$3,500,255
(1,651,171)
(84,587)
(22,589)
$1,741,908
$159,759
60710 -1ff
SCHEDULE 3
CITY OF HOUSTON
HOUSTON LIGHTING E POWER
COMPANY
OPERATIONS
E MAINTENANCE EXPENSE
ADJUSTMENTS
TEST YEAR ENDED
DECEMBER
31, 1985
(000'5)
LINE
HLEP
CITY
CITY
NO.
DESCRIPTION
PER BOOKS
ADJUSTMENT
REQUEST
ADJUSTMENT
RATE ORDER
1
SALARIES C WAGES
$226,920
$14,104
$241,024
($4,618)
$236,406
2
EMPLOYEE BENEFITS
29,511
(488)
29,023
(815)
28,207
3
LIMESTONE OPERATING EXPENSES
152
12,330
12,482
(1,889)
10,593
4
STORM DAMAGES
2,076
(702)
1,374
0
1,374
5
STORM DAMAGES -5779
238
996
1,234
0
1,234
6
MUNCIPAL STREET USE FEES
98,711
(19,967)
78,744
(7,696)
71,048
7
RATE CASE EXPENSES
498
757
1,255
(1,059)
196
8
EEI DUES
414
(83)
331
(331)
0
9
R E 0
11,721
11058
12,779
0
12,779
10
AMORT. OF OTHER DEF. CHARGES
204
0
204
0
204
11
MANAGEMENT AUDIT
0
978
978
(652)
326
12
LEASE AND RENTAL
5,408
278
5,686
(318)
5,368
13
UNCOLLECTIBLE ACCOUNTS
14,419
902
15,321
(947)
14,374
14
ADVERT., CONTR. & DON.
2,803
784
3,587
(13)
3,574
15
LEGISLATIVE ADVOCACY
9
(9)
0
0
0
16
SOCIAL DUES
25
(25)
0
0
0
17
POWER WHEELING
8,FR7
(61855)
1,822
(197)
1,625
18
AMORT. OF LIMESTONE DEF. CHRGS
0
7,056
7,056
(7,056)
0
19
OTHER O&M EXPENSES
192,790
0
192,790
0
192,790
20
REDUCTION IN GAS O&M EXP.
(9,464)
(9,464)
21
NEW BILLING PROCEDURES
(255)
(255)
22
ADD'L. LEGISLATIVE ADVOCACY
(17)
(17)
23
UNSUPPORTED 6 EXCESSIVE OFFICER
EXP.
(85)
(85)
24
LEASE E RENTAL EXPENSES
(51)
(51)
25
FUEL REFUND COSTS
(248)
(248)
26
MALAKOFF EXP. TO CWIP
(16)
(16)
27
STP #2 EXP. RECLASS. TO RATE CASE EXP.
(100)
(IGO)
28
NON - RECURRING MAINTENANCE
(8,550)
(8,550)
29
AFFILATE CHARGES
(538)
(538)
30
EMPLOYEE STORE EXPENSES
(181)
(181)
TOTAL EXPENSES
$594,576
.......
$11,114
.......
$605,690
-------
($45,097)
.......
$560,593
.......
60710 -1gg
SCHEDULE 4
CITY OF HOUSTON
HOUSTON LIGHTING E POWER COMPANY
SUMMARY OF FUEL COSTS
TEST YEAR ENDED DECEMBER 31, 1985
LINE
HLEP
CITY
CITY
NO.
DESCRIPTION
REQUEST
ADJUSTMENT
RATE ORDER
FUEL EXPENSE
1
RECOVERABLE COSTS
$875,322
(=121,279)
$754,043
2
BASE RATE FUEL
112,832
(14,902)
97,930
3
TOTAL FUEL
988,154
(136,18I)
851,973
PURCHASED POWER
4
RECOVERABLE COSTS
390,488
(55,879)
334,609
5
BASE RATE PURCHASED POWER
148,768
14,918
163,686
6
TOTAL PURCHASED POWER
539,256
(40,961)
498,295
7
TOTAL FUEL AND PURCHASED POWER
$1,527,410
($177,142)
$1,350,268
8
BASE RATE FUEL
ia. i :i iii
X261,600
anYti iii a.
X16
.i. i... ii
X261,616
9
FUEL REVENUE
X1,265,810
rasa :ii..
($I77,158}
.........
siiiii..i
X1,088,652
.........
60710 -lhh
SCHEDULE 5
CITY
OF HOUSTON
HOUSTON LIGHTING
E POWER COMPANY
INVESTED CAPITAL
AND RETURN
TEST YEAR ENDED DECEMBER 31,
1985
(000,S)
LINE
HLEP
CITY
CITY
NO.
DESCRIPTION
REQUEST
ADJUSTMENT
RATE ORDER
- - --
1
----------------- - - - - --
PLANT IM SERVICE
--- - - - - --
$5,915,823
----- - - - - --
($5,496)
---- - - - - --
$5,910,327
2
ACCUMULATED DEPRECIATION
1,201,576
0
1,201,576
3
NET PLANT
4,714,247
(5,496)
4,708,751
4
CONSTRUCTION IN PROGRESS
676,830
1,243
678,073
5
PROPERTY HELD FOR FUTURE USE
3,613
(518)
3,095
6
NUCLEAR FUEL
118,181
(60,370)
57,811
7
FUEL OIL INVENTORY
17,478
(2,713)
14,765
8
WORKING CASH ALLOWANCE
44,454
(82,702)
(38,248)
9
MATERIALS AND SUPPLIES
56,662
0
56,662
10
PREPAYMENTS
15,058
(308)
14,750
11
DEFERRED LIMESTONE CHARGES
64,625
(64,625)
0
12
UNRECOVERED STORM LOSSES
8,880
(81880)
0
13
DEFERRED TAXES
(601,625)
(29,878)
(631,503)
14
PRE -I971 INVESTMENT TAX CREDIT
(6,302)
0
(6,302)
I5
CUSTOMERS DEPOSITS
(32,538)
0
(32,538)
16
CUSTOMER ADVANCES FOR CONSTR.
(15,891)
0
(15,891)
17
RESERVE FOR INJURIES
(5,597)
0
(5,597)
18
OTHER COST FREE CAPITAL
(33,562)
(5,280)
(38,842)
19
INVESTED CAPITAL
$5,024,513
($259,527)
$4,764,986
20
RATE OF RETURN
:�asama..ax
12.30%
axxsx...... R.yar..
-0.72%
:..x
11.58%
21
RETURN
$617,823
—mm .... nwa
($66,209)
ms=xxxaxa.. .
$551,614
=......W..
60710 —iii
SCHEDULE 6
CITY OF HOUSTON
HOUSTON LIGHTING 6 POWER COMPANY
DOCKET 6765
SUMMARY OF CASH WORKING CAPITAL
MULTIPLIER CASH WORKING
RECOMMENDED LEAD) /LAG (LEAD) /LAG DAYS CAPITAL
WORKING CAPITAL USES AMOUNT DAYS /365 DAYS REQUIREMENT
-------------------- -----------------------------------------------------------
Revenue Requirement $3,087,698 36.25 0.0993 $306,655
WORKING CAPITAL SOURCES
Fuel
$851,973
(29.47)
(0.0807)
($68,784)
Purchased Power
498,295
(37.50)
(0.1027)
(51,195)
Other O&M
560,593
(17.54)
(0.0481)
(26,946)
Federal Income Taxes
160,139
(99.91)
(0.2737)
(43,834)
Other Taxes
99,407
(180.54)
(0.4946)
(49,169)
Interest
247,571
(86.13)
(0.2360)
(58,418)
Preferred Dividends
29,391
(46.13)
(0.1264)
(3,715)
ESTIMATED CAPITAL TO FINANCE THE
NET LEAD IN RECOVER OF COST OF
SERVICE
4,594
Cash Componant
1,636
Municipal Franchise Fees
71,048
(228.50)
(0.6260)
---------------
(44,478)
CASH WORKING CAPITAL REQUIREMENT
as :axsx........
($38,248)
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THE STATE OF TEXAS §
COUNTY OF HARRIS §
BEFORE ME, the undersigned authority, on this day personally
appeared Jane Wilton Cater, who, having been placed under oath by
me, did depose as follows:
"My name is Jane Wilton Cater. I am of legal age and a
resident of the State of Texas. The foregoing Recommendation and
Schedules, offered by me on behalf of the City of Houston, were
prepared by me or under my direction and supervision, and are
true and correct, and the opinions stated therein are, to the
best of my knowledge and belief, accurate, true, and correct."
/kAz w) -
Jane Wilton Cater
SUBSCRIBED nd SWORN TO BEFORE ME by the said Jane Wilton
Cater, this % day of June, 1986.
Notary Public in and for
Harris County, Texas
Anita Slavkoff
My Commission expires 03/06/88