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Ordinance No. 7,263950323 -4 ORDINANCE NO. 7263 AN ORDINANCE RENEWING THE CONTRACT OF BROWNING FERRIS INDUSTRIES FOR THE ANNUAL SOLID WASTE COLLECTION AND DISPOSAL CONTRACT AND AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN OF THE SUM OF EIGHT HUNDRED TWENTY THOUSAND SEVEN HUNDRED FOUR AND 60/100 DOLLARS ($820,704.60); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. WHEREAS, Browning Ferris Industries was awarded the annual solid waste collection and disposal contract on February 14, 1991, pursuant to competitive bidding procedures, which contract included an option by the parties to renew for six (6) additional one (1) year periods; and WHEREAS, Browning Ferris Industries has indicated their willingness to renew the contract for an additional year under the same terms and conditions; and WHEREAS, the Administration has reviewed the market conditions and recommends renewal as being in the best interest of the City; NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section l: That the City Council of the City of Baytown hereby renews the contract of Browning Ferris Industries for the annual solid waste collection and disposal contract for the sum of EIGHT HUNDRED TWENTY THOUSAND SEVEN HUNDRED FOUR AND 60/100 DOLLARS ($820,704.60) and authorizes payment thereof. Section 2: That pursuant to the provisions of Texas Local Government Code Annotated § 252.048, the City Manager is hereby granted general authority to approve any change order involving a decrease or an increase in costs of FIFTEEN THOUSAND AND N01100 DOLLARS ($15,000.00) or less, provided that the original contract price may not be increased by more than twenty -five percent (250) or decreased by more than twenty -five percent (25a) without the consent of the contractor to such decrease. Section 3: 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 23rd day of March, 1995. PETE C. AL ARO, Mayor ATTEST: EILEEN P. HALL, City Clerk APPROVED AS TO FORM: ACIO RAMIREZ, SA_.,), City Attorney legal /councillmarch/3- 23- 95renewKbft • 950323 -4a • C� ARTICLE XX. Other Provisions ..... ............................... 39 APPENDIX A Municipalities with §42 Rate Ordinances that have been Appealed to the Commission APPENDIX B Municipalities with Pending or to be Initiated §42 Proceedings APPENDIX C Allocation of Base Rate Reduction APPENDIX D Tariff for Electric Service APPENDIX E Summary of Changes to Tariff for Electric Service APPENDIX F Pending Appeals APPENDIX G Allocation of Reduction Provided in Paragraph A of Article VII HOU0198O46 • DOCKET NO. 12065 COMPLAINT OF KENNETH D. § WILLIAMS AGAINST HOUSTON § PUBLIC UTILITY COMMISSION LIGHTING & POWER COMPANY § OF TEXAS STIPULATION AND AGREEMENT This Stipulation and Agreement is made and entered into by and among Houston Lighting & Power Company ( "HL&P ") and the other entities whose authorized representatives have signed it. Whereas, on May 25, 1993, Kenneth D. Williams filed with the Public Utility Commission of Texas ( "Commission" or "PUC ") a complaint pursuant to Sections 37, 39(b) and 42 of the Public Utility Regulatory Policy Act ( "PURA ") challenging the propriety of HL&P's rates; and Whereas, on February 23, 1994, the Presiding Officer in this Docket issued Order No. 22 ordering that the Complaint of Kenneth D. Williams proceed to hearing pursuant to PURA Section 42; and Whereas, notice of the Section 42 proceeding was provided consistent with all statutory and regulatory requirements; and Whereas, on June 16, 1994, the General Counsel of the Commission filed a petition of inquiry into the operation and management of the South Texas Nuclear Project which became Docket No. 13126; and 0 HOUO3 :98046 • Whereas, the municipalities listed on Appendix A have acted under PURA Section 42 to modify HL&P's rates within the geographic areas subject to their jurisdiction; and Whereas, HL&P has appealed to the Commission the orders of the municipalities listed on Appendix A; and Whereas, the municipalities listed on Appendix B presently have pending or will initiate Section 42 rate proceedings that are to be appealed to the Commission and consolidated with Docket No. 12065 pursuant to this Agreement; and Whereas, except as otherwise specified herein, the Signatories desire to resolve Docket No. 12065; HL&P's appeals of the municipal rate ordinances listed on Appendix A; the Section 42 proceedings listed on Appendix B; Docket No. 13126 as it relates to HL &P; and pending appeals of Commission orders in certain prior HL&P rate dockets; and Whereas, the public interest will be served by the adoption of an order consistent with this Agreement because it provides expeditious implementation of just and reasonable rates; promotes the adequate and efficient provision of service; and is in accordance with applicable law; and Whereas, resolution on a stipulated basis of all the matters set forth herein would conserve resources; avoid the uncertainties inherent in further litigation; and minimize rate case expenses both in this case and in the future. NOW, THEREFORE, Signatories, through their undersigned representatives, agree and stipulate as follows: HOUO3:9&X6 -2- i 11 ARTICLE I. Definitions A. Agreement -- The term "Agreement" refers to this Stipulation and Agreement, including all Appendices hereto. B. Base Rate Unit Charges -- The term "Base Rate Unit Charges" means the charges designated as "facilities charges ", "energy charges" and "demand charges" in the rate tariffs in the Tariff for Electric Service attached hereto as Appendix D, excluding IS -1, IS -10 and [3:31 C. Date of Execution -- The term "Date of Execution" means the last date on which the Agreement is signed by HL&P and all other Signatories but no later than February 21, 1995. D. HB -11 Factor -- The term "HB -11 Factor" means the rate adjustment for state franchise taxes pursuant to PUC Substantive Rule §23.21(d). E. Pending Appeals -- The term "Pending Appeals" means the appeals listed on Appendix F of this Agreement. F. PCRF — The term "PCRF" means HL&P's Purchased Power Cost Recovery Factor calculated pursuant to the PCRF Rate Schedule Rider. G. Rate Cap Period — The term "Rate Cap Period" means, for each regulatory authority with jurisdiction over HL&P's base rates, the three year period from January 1, 1995 through the earlier of December 31, 1997 or the date on which HL&P mattes a Section 43 base HOUO3:98046 -3- • rate increase filing in any applicable jurisdiction as permitted under paragraph A or paragraph D of Article VI. H. Section 42 Proceeding -- The term "Section 42 Proceeding" refers to any proceeding instituted by a regulatory authority to modify HL&P's rates pursuant to Section 42 of the Public Utility Regulatory Act. I. Signatories -- The term "Signatories" means those parties which execute this Agreement, including any parry that signs this Agreement as a non - opposing party. J. STP -- The term "STP" refers to the South Texas Project. K. 12065 Final Order -- The term "12065 Final Order" means an executed Commission order on the merits resolving Docket No. 12065 (including Docket No. 13126 insofar as that Docket relates to HL&P and appeals of municipal rate ordinances) and related issues dealt with in this Agreement in accordance with the terms of this Agreement. L. 12065 Final Order Date -- The term " 12065 Final Order Date" means the date on which the Commission issues a written 12065 Final Order under § §2001.141 of the Texas Government Code that is subject to motions for rehearing under § §2001.146 of the Texas Government Code. ARTICLE II. This Agreement is a compromise and settlement of Docket No. 12065 and appeals of municipal rate ordinances listed on Appendix A. The Signatories will request that the 12065 • Final Order be an order on the merits finally resolving Docket No. 12065 in the manner P rovided H0003 98046 -4- in this Agreement. HL &P agrees to implement the terms of this Agreement on a system -wide basis. ARTICLE I1I. A. Docket No. 13126 was created to permit consolidated hearing of issues regarding prudence of operation and management of the South Texas Project, which issues would otherwise have been resolved in separate rate proceedings for HL&P and Central Power & Light Company ( "CPL "). This Agreement is a compromise and settlement of Docket No. 13126 insofar as that docket applies to HL&P. Within ten (10) days after the Date of Execution, Signatories who are parties in Docket No. 13126 shall file a joint motion to dismiss HL&P from Docket No. 13126 and to provide that all HL&P related issues from Docket No. 13126 will be resolved in Docket No. 12065. It is recognized that to the extent Docket No. 13126 goes forward with respect to CPL there may be testimony, reports or other documents filed in Docket No. 13126 discussing alleged imprudence in connection with the operation and management of STP. In any future judicial or administrative proceeding involving the same or similar issues, neither HL&P nor any other party shall be bound by any findings that result from a trial or settlement of Docket No. 13126 issues as they relate to CPL, whether such resolution occurs in Docket No. 13126 or in any related CPL Docket. HL&P or other parties will be free to contest or otherwise respond to any allegations contained in Docket No. 13126 testimony, reports or other documents in any other proceeding in which an attempt is made to use such testimony, reports or other • documents against HL&P or other Signatories. H0003:98046 -5- 1-J, B. This Agreement is a compromise and settlement of Docket No. 13702 (Application of HL&P for approval of HB -11 Tax Adjustment Factors for 1995). Within ten (10) days after the Date of Execution, HL&P shall file a motion to suspend that docket pending Commission consideration of this Agreement and to dismiss that docket as of the Final Order Date. Signatories agree to support, or not oppose that motion. ARTICLE IV. A. HL&P shall reduce its base rates for service rendered on or after January 1, 1995. On an adjusted test year basis, the reduced rates would result in base rate revenues of $2,450,820,000 or an aggregate reduction of $232,918,000 (8.7 %a). The base rate reduction shall be allocated among existing rate classes in the amounts set out on Appendix C. The specific rates applicable to each class after giving effect to the agreed base rate reduction are set out in HL&P's Tariff for Electric Service, which is Appendix D to this Agreement. All changes to the Tariff for Electric Service are listed in the summary of tariff changes, which is Appendix E to this Agreement. Except as identified on that summary or otherwise addressed in this Agreement, none of the tariff modifications included in HL&P's Docket No. 12065 Rate Filing Package or proposed by any other party in Docket No. 12065 will be implemented under this Agreement. B. The rates and tariffs contained in Appendix D reflect the following specific agreements among the Signatories: 1. Except as otherwise provided herein or set forth in the Tariff for Electric Service, to the extent possible, the Base Rate decrease was applied to the HOUO3 -98046 -6- • rate design of each rate class on an equivalent basis to all listed charges in their respective tariffs. 2. The applicability provisions of the GHL rider to the MGS tariff was modified to include traffic signals operated by state, county, and municipal governments and the rider was renamed as the Governmental Lighting & Traffic Control ( "GLTC ") Rider. Within 90 days after the 12065 Final Order Date, HL&P will give notice of the availability of the GLTC Rider for service to traffic signals to Texas State Agencies and all municipalities and counties within its service territory. The notice to each governmental entity will include a listing of all of their accounts which, based on SIC codes, HL&P knows qualify for Rider GLTC. 3. The Tariff for Electric Service includes a wheeling tariff to enable QF's, other wholesale power suppliers, and wholesale power purchasers to purchase transmission wheeling for periods as short as one hour. 4. The minimum demand threshold in the LGS rate was lowered to 400 kVa. Within 90 days after the 12065 Final Order Date, HL&P will give individual written notices of this change in the minimum demand threshold to MGS customers taking at demand levels of 400 kVa or greater. 5. The tail block energy charge in the MGS rate was lowered to $0.00575/kwh with corresponding increases to the first two energy blocks. is H0003.9804b -7- • 6. The tail block in the LGS rate was lowered to $0.005 /kwh with corresponding increases to the demand charge and first block energy charge. 7. The Tariff for Electric Service was modified to state that HL&P will provide annually, in areas served by underground conductors, installation of a certain number of HL&P's High Pressure Sodium street lights mounted on ornamental standards at no installation cost. The number will be determined by the municipality but, the annual number will not exceed the greater of 50 or 6% of the previous year's street light count served by underground conductors for the municipality. A municipality may request that a portion of the residential street lights to be provided under this paragraph be installed instead in commercial areas; provided, however, that the municipality shall pay any additional costs. 8. The Tariff for Electric Service was revised to provide that HL&P will replace existing 3,300, 7,500 and 20,000 lumen Mercury Vapor street lights with 9,500, 16,000 and 25,500 lumen High Pressure Sodium street lights, respectively, in the municipalities it serves at no up front cost to those cities, as individual lamps burn out. 9. The Tariff for Electric Service was revised to provide that the time of operation of lights under Rate Schedule SPL will be 4000 hours. • HOUO3:98046 -8- • 10. The Base charge for Rates IS -10 and SBI in the Tariff book was set at 3.2 mills /kwh; and the Base charge for Rate IS -I was set at 1.5 mills /kwh. 11. The Tariff for Electric Service continues to include the EIS Tariff. Signatories agree that, in any future proceeding, Signatories will be free to make any argument regarding possible revenue imputation relating to the EIS Tariff. C. The changed rates and tariff language on Appendix D shall be effective retroactive to January 1, 1995 except the Fuel Cost Factor -Rider FC, which will be effective as provided in Article VIII. HL&P will refund to each rate class the amount by which the base rate revenues, adjusted by the PCRF and HB -11 Factor, billed to that class by HL&P, for service rendered during the Refund Period exceed the base rate revenues HL&P would have billed such class during the Refund Period at the rates set out on Appendix D. As used in this paragraph the term "Refund Period" means the period commencing on January 1, 1995 and ending at the beginning of the first billing cycle of the first calendar month after the 12065 Final Order Date but will not include the portions of that period during which HL&P billed pursuant to the deferred billing procedures in paragraph D of this Article IV. The refund amount for each transmission level customer and for each non - transmission rate class will be calculated for each month of the Refund Period by multiplying the actual billing determinants for each transmission customer and each non - transmission class by the amount, if any, by which the base rates (adjusted by the PCRF and HB -11 Factor) used for billing in such month exceed the base rates set out on Appendix D. If the deferred billing procedures in paragraph D are implemented as requested and are not HOUO3 98046 -9- n • terminated prior to the 12065 Final Order, the refunds for each class will bear interest at the rate provided in Section 23.45(g). If the deferred billing procedures in paragraph D are not implemented as requested or the deferred billing procedures are terminated prior to the 12065 Final Order, the refunds for each class will bear interest at the rate of six percent (6 %) compounded annually. The refunds will be made in a single month and will commence not later than the first billing cycle of the second calendar month after the 12065 Final Order Date ( "Refund Month "). The refunds to transmission level customers will be based on actual usage of each customer for the Refund Period. The Signatories agree that the refund method used to calculate and remit refunds due transmission level customers will be applied consistently to all transmission level customers. HL&P will provide workpapers illustrating these calculations to requesting parties. Refunds to customers other than transmission level customers will be made by application of a refund factor applied to actual usage during the Refund Month. The refund factor will be calculated by dividing the refund due non - transmission level customers in the class by the estimated kilowatt-hour sales to non - transmission level customers in the class for the Refund Month. Within 30 days after the Refund Month, HL&P will provide the Signatories with workpapers showing the calculations of the refund factors and the amount refunded and any over /under refund balance. Any balances that remain after refunds have been completed shall be credited or debited (as appropriate) as eligible fuel in HL&P's next fuel reconciliation proceeding. HOUO3:98046 -10- 11 D. HL&P agrees that commencing with the first billing cycle for the month following the date of the Commission order approving deferred billing, HL&P will temporarily defer billing a portion of the base rates that it is otherwise authorized to charge during such period. Specifically, HL &P's current effective Docket No. 9850 base rates adjusted for the PCRF and the HB - II Factor ( "Pre- Settlement Rates ") will remain the lawful, effective rates approved by the Commission. HL&P will be authorized, however, to bill each customer using the base rates contained in Appendix D ( "Appendix D Base Rates "). Each month, HL&P will maintain a monthly record of the difference between the revenues billed on the basis of the Appendix D Base Rates and the revenues that would have been billed at the Pre - Settlement Rates as if that difference were an under - recovery amount pursuant to PUC Substantive Rule 23.23(b)(3)(C). The deferred amounts shall accrue interest at the rate of six percent (6 %) compounded annually. Although deferred billing amounts will be treated as if they were an under - recovery amount pursuant to Substantive Rule 23.23(b)(3)(C), such amounts shall be maintained in accounts separate from fuel over and under collections. The deferred billings will be contingent upon issuance of a 12065 Final Order consistent in all material respects with the terms of this Agreement. If the 12065 Final Order is consistent in all material respects with the terms of this Agreement, the deferred balance accumulated during the period the deferred billings were in effect will be canceled. If, however, the Commission does not issue a final order consistent with the terms of this Agreement and, as a result, HL&P withdraws from this Agreement pursuant to Article XX, HL&P shall have the • right to stop deferred billings and to recover the deferred balance (including accumulated interest) HOUO3 :980x6 -11- • from its customers through surcharges over a number of months equal to the number of months that HL &P billed at the reduced levels. The surcharges will be allocated among classes and charged to customers using the procedures for refunds described in paragraph C of this Article 1V. The surcharges will commence with the first billing cycle of the month following the date on which HL&P withdraws from this Agreement. At the time HL&P commences surcharges, it will file workpapers showing calculation of the surcharge amounts. Signatories agree that HL&P will not be obligated to commence deferred billing as described in this paragraph D unless all of the following conditions are met: 1. This Agreement is not opposed by any party in Docket No. 12065 other than Michael Hershey; 2. The order approving deferred billing expressly approves deferred billing as described in the preceding paragraph and expressly authorizes HL&P to collect any applicable surcharges with interest as set forth in paragraph D of this Article 1V without further authorization from the Commission provided that such prior authorization shall not preclude any party from contending that HL&P's surcharges are not calculated in accordance with the authorized procedures; 3. The Commission order approving deferred billing expressly recognizes that (a) the deferred billing procedures were a part of the negotiated settlement in this docket, (b) that such procedures reflect compromises among the is Signatories and cannot be construed as an agreement or an admission of HOUO3:9WA6 -12- • any party regarding the propriety of these or analogous procedures, including the appropriate interest rates, in any other context or as an agreement or admission that a Commission order is required to implement these or analogous procedures; and (c) that the order shall not be construed to confirm or deny that any rates ordered or approved by the Commission on any basis, other than settlement, can be made effective retroactive to the date deferred billing was initiated or any other date. In addition, if after deferred billing is implemented the Agreement is opposed by a party in Docket No. 12065 other than Michael Hershey, HL&P may prospectively terminate deferred billings but may not impose surcharges to recover previously deferred amounts until and unless HL&P withdraws from this Agreement pursuant to Article XX. Within 7 days after the Date of Execution, HL&P will request a Commission order authorizing deferred billing as provided in this paragraph D. All Signatories will support that request and further request that deferred billing be approved in time to permit HL&P to commence deferred billing at the beginning of HL&P's April 1995 billing month. E. Signatories agree that the rates and tariff changes set out on Appendix D are just and reasonable. Signatories will recommend, support and defend in this Docket, approval of those rates and tariff changes. HOUO3 -98046 -13- • ARTICLE V. M. RRMINTIMMODIM. For purposes of computing the allowance for funds used during construction rate during the period from January 1, 1995 through the date HL&P's base rates are superseded by new systemwide base rates made effective under PURA Section 43 or 42, HUP shall use a return on equity of 11.55%. ARTICLE VI. A. HL&P shall not file to increase the base rates set out in Appendix D during the Rate Cap Period unless one or more of the following events occur: 1. New laws or regulations are adopted by legislative or regulatory bodies and as a result of those laws or regulations HL&P's actual revenues (determined on an accrual basis) will be reduced by more than $60 million on an annual basis. To the extent that such new laws or regulations would cause some revenues to decrease while other revenues increase, regardless of whether the increase in revenues is due to customers taking advantage of a service that was legal or in existence prior to the new laws or regulations taking effect, a rate increase filing would be permitted only if the net reduction exceeds $60 million; 2. New laws or regulations are adopted by legislative or regulatory bodies and • as a result of those laws or regulations HL&P's actual cost of service HOUO3:9&X6 -14- • (determined on an accrual basis) will be increased by more than $60 million on an annual basis. To the extent that such new laws or regulations would cause some expenses to increase while other expenses decrease, a rate increase filing would be permitted only if the net increase exceeds $60 million; or 3. Any combination of legislative or regulatory actions of the type identified in 1. or 2. above which will result in actual net cost of service increases and actual net revenue decreases which in combination exceed $60 million on an annual basis. 4. The $60 million thresholds referred to in sub - paragraphs 1, 2 and 3 above are in addition to any amounts HL&P may be entitled to recover through recovery factors. A change in methodology required by new laws or regulatory action shall not entitle HL&P to make a Section 43 filing under sub - paragraph 1, 2, or 3 unless the change in methodology increases the actual net cost of service or reduces actual net revenue by more than $60 million. 5. The provisions of this paragraph VLA establish triggers permitting HL&P to make a Section 43 filing but do not permit HL&P to increase rates based solely on the impacts of the legislative or regulatory action. Rather, any Section 43 base rate increase filing by HL&P pursuant to this paragraph A • must be based on HL&P's total costs of service and revenues. In no event HO0:03:99X6 -15- • shall rates be increased (including for example, increased rates under bond) as a result of a filing under this Article until HL &P actually begins experiencing the cost of service increase or revenue decrease the anticipation of which caused the triggering event to occur. B. HL&P may file to implement a voluntary reduction in base rates at any time during-the Rate Cap Period. In addition, at any time during the Rate Cap Period, HL&P, or other parties, may make filings to (1) modify tariffs, riders or terms and conditions while not increasing base rate revenues or Base Rate Unit Charges from any of the rate tariffs in the Tariff for Electric Service attached hereto as Appendix D and which do not increase the base charge for IS -I, SBI or IS -10 service; (2) add tariffs, riders, and terms and conditions to address changed conditions provided such additions do not result in an increase to base rate revenues or Base Rate Unit Charges as reflected in the Tariff for Electric Service attached hereto as Appendix D and do not increase the base charge for IS -I, SBI or IS -10 service; (3) increase or decrease the charges in, or otherwise modify any experimental tariffs provided such changes do not result in an increase to base rate revenues or an increase in Base Rate Unit Charges for non - experimental tariffs as reflected in the Tariff for Electric Service attached hereto as Appendix D and do not increase the base charge for IS -I, SBI or IS -10 service; (4) change fixed fuel factors or otherwise provide for the recovery of fuel costs and the disposition of fuel over - recoveries and under - recoveries; or (5) change the PCRF in accordance with the PCRF Rate Schedule. Except to the extent provided elsewhere in this Agreement, nothing herein will preclude any entity from contesting such matters as they choose in any proceeding initiated under this paragraph B. The Signatories further agree HOUO3.99046 -16- • that none of the five types of filings set out in this paragraph shall constitute force majeure events described in paragraph VI.A (unless such filings are required by new laws or regulations.) C. During the Rate Cap Period, HL&P shall not initiate any proceeding to increase, directly or indirectly, the 0 &M charge applicable to Rates IS -I, IS -10, SBI, and NEP, which charge shall remain at 1.204 mills /kwh. This provision shall not limit the right of any entity other than HL&P to seek to change the 0 &M charge in any proceeding during the Rate Cap Period nor shall it limit in any way the positions HL&P or any other entity may take in response to another entity's proposal to change the O &M charge for any one or more of Rates IS -I, IS -10, SBI and NEP. Thus, if in any proceeding during the Rate Cap Period, any entity proposes to change the O &M.charge applicable to one or more of the Rates IS -1, IS -10, SBI and NEP, HL&P and any other entity may take any position it chooses regarding the O &M charges for the same Rates as are covered by that entity's proposal or for any or all of the other Rates IS-I, IS -10, SBI and NEP. This paragraph shall not limit the right of any entity, including HL&P, to propose changes to the methodology for calculating the Period Avoided Cost under Rates IS -I, IS -10, SBI and NEP, as approved by the Final Order in Docket No, 7044. D. Each regulatory authority exercising jurisdiction over HL&P retains the right, on complaint or on its own motion, to initiate a Section 42 proceeding against HL&P. If, during the Rate Cap Period, any proceeding is initiated by the Commission or any other regulatory authority to reduce HL&P's rates below the levels set out in Appendix C, nothing in this Agreement shall restrict HL&P's right to defend against the proceeding in any manner it deems • appropriate including a right to file and make effective a Section 43 base rate increase in the HOL'03:9W96 -17- • ¢eographic area subject to the jurisdiction of that regulatory authority. Regardless of what measures HUP takes to defend itself in a Section 42 proceeding, HL&P may not file a Section 43 base rate increase in any jurisdiction that has not initiated a Section 42 proceeding except as provided in paragraph VI.A. E. Except as expressly set out in this Agreement, the settlement will not prejudice any position a party may take regarding any issue, including rate base treatment of any item, in any proceeding or earnings monitoring evaluation during or after the Rate Cap Period. F. During the Rate Cap Period, HL&P shall not defer costs which are normally expensed by public utilities. G. Nothing in this Agreement shall limit any customer's right to file a billing complaint against HL&P. ARTICLE VII. A. Effective August 1, 1994, HL&P shall reduce the total eligible fuel costs for the fuel reconciliation period ended July 31, 1994 by $70 million (the $70 million includes interest through July 31, 1994) and shall not seek to recover such $70 million from its ratepayers. All fuel revenues, other fuel costs, and related interest through July 31, 1994 shall be deemed reconciled in accordance with PUC Substantive Rule 23.23(b)(3) with the same effect as if the Commission had issued a final order in a fuel reconciliation proceeding for that period. B. As soon as practical after January data becomes available, HL&P will file • in Docket No. 12065 a request to refund the fuel over - collection balance through January 31, HOUO3M046 -18- • 1995 with such refund to begin the first billing cycle of the calendar month following approval of the refund. For purposes of the refund under this paragraph, the over - collection balance shall be calculated as if the $70 million reduction provided in paragraph VII.A had not been made. The refund shall include interest on the over - collection balance calculated pursuant to PUC Substantive Rules 23.23(b)(3)(C)(i) and 23.45(g). C. Commencing during the first billing cycle of the calendar month following the 12065 Final Order Date, HL&P will refund the $70 million provided in paragraph A of this Article VII, with interest on the $70 million calculated pursuant to the PUC Substantive Rules 23.23(b)(3)(C)(i) and 23.45(g). The refund will be allocated among customer classes as set out on Appendix G. Refunds to transmission level customers will be based on those customers' respective usage during the period February 1993 through May 1994. Refunds to customers other than transmission level customers will be made by application of a refund factor applied to actual usage during the month in which the refund is made. The refund factor will be calculated as provided in PUC Substantive Rule 23.23(b)(3)(C)(iv). The allocation on Appendix G is the result of compromises and should not be treated as precedential. D. HL&P's eligible fuel costs for the period beginning August 1, 1994 shall be subject to reconciliation in a future fuel reconciliation proceeding. The reconcilable costs and revenues for the fuel reconciliation period starting on August 1, 1994 shall be governed by Substantive Rule 23.23(b). The parties specifically agree that (i) the revenues from the steam sales to DuPont; spent nuclear fuel disposal costs; wheeling charges paid by HL&P in connection • with power purchases; Department of Energy decontamination and decommissioning fees; IS -1, H0003:99046 -19- • IS -10 and SBI Revenues; and ETSI IitiQation credits will be classified as eligible fuel costs; and (ii) wheeling revenues and expenses associated with HL&P providing wheeling services to others will be considered in the determination of base rates. To the extent any of the above classifications of costs as eligible or non - eligible could be construed as inconsistent with the PUC Substantive Rule 23.23(b)(2)(B), the Signatories request Commission approval of the classifications delineated above. ARTICLE VIII. A. Within 10 days after the Date of Execution of this Agreement, HL&P shall file in Docket No. 12065 a request for an interim order reducing its fuel factors by approximately 17% effective as of the first billing cycle of the calendar month following the date of approval of that request, whether or not this Agreement is approved. The Signatories agree to support, or not oppose, such a request. B. HL&P's PCRF shall be set at zero effective retroactive to January 1, 1995. For purposes of computing adjustments under the PCRF for periods after January 1, 1995, the purchased power costs used to fix the base rates contained in Appendix D shall be deemed to be $31,784,178. C. HL&P's HB -11 Factor shall be reduced to zero effective retroactive to January 1, 1995. HO UO3:98046 -20- • ARTICLE IX. Trinity Mine Investments and Malakoff Electric Generating Station Investments A. The costs incurred by HL&P in connection with its previously planned, but now cancelled, Malakoff Electric Generating Station and the related Trinity lignite reserves shall be amortized as follows: (1) Malakoff costs for which amortization was authorized in Docket No. 8425 shall continue to be amortized on the schedule approved in that docket. (2) Malakoff costs for which amortization was first requested in Docket No. 12065 shall be amortized over a period not exceeding seven (7) years commencing January 1, 1993. (3) Trinity lignite related costs shall be amortized over a period not exceeding seven (7) years commencing on a date to be determined by HL&P but not later than January 1, 1996. Under this amortization schedule, HL&P's entire investment in Malakoff and Trinity shall be written off HL&P's books not later than December 31, 2002. HL&P shall not accrue, for amortization, any additional Trinity or Malakoff amounts (including amounts incurred under fuel contracts) after the Date of Execution, nor shall it accrue carrying costs on the unamortized balances. B. Until the earlier of (i) HL&P's next Section 43 base rate increase filing, or • (ii) completion of amortization of the costs as set out above, the amortization amounts provided HOUO3:98046 -21- • in paragraph IX.A shall be included as part of HL &P's cost of service as "operating expenses" for purposes of each earnings monitoring evaluation and any Section 42 proceeding initiated to modify HL &P's rates. Except for correction of mathematical errors, the Signatories agree that no portion of such amortization amounts may be removed from HL&P's cost of service during that time - frame. In any future Section 43 rate increase proceeding (including but not limited to a Section 43 filing in response to a Section 42 proceeding), all Signatories shall be free to propose or contest inclusion of such amortization amounts in HL&P's cost of service or inclusion of unamortized amounts in rate base. Any treatment or assumed treatment of the Malakoff and Trinity amortization amounts or of the unamortized Malakoff and Trinity costs under this Agreement shall not have any precedential value for purposes of determining how such amounts should be treated in such future Section 43 proceedings. ARTICLE X. A. In Docket No. 8425, the Commission authorized HL&P to defer certain STP Unit 1 costs under a phase -in plan (Qualified Deferrals) and in Docket Nos. 8230, 8425, and 9010 authorized HL&P to use deferred accounting for certain other STP Unit 1 and 2 costs incurred between the dates those units went into commercial operation and the date the costs of the units were reflected in rate base (Accounting Deferrals) (the Qualified Deferrals and Accounting Deferrals are referred to jointly as "STP Deferrals "). In any future earnings monitoring evaluation or Section 42 proceeding, whether during or after the Rate Cap Period, and in any future Section 43 base rate increase proceeding, HOUO3:99046 -22- • any Signatory may raise any of the following reserved issues relating to the calculation of the STP Deferrals: AFUDC (Carrying Cost) Rate Differences Depreciation Rate Differences Balance Subject to Carrying Costs Reduced Monthly by Accumulated Depreciation Balance Subject to Carrying Costs Reduced Monthly by ADFIT Balance Subject to Carrying Costs Reduced Monthly by Bonded Rates Effect of STP -1 Accounting Deferral Differences on STP -1 Qualified Deferrals Combined Effects of the Calculation Differences In earnings monitoring evaluations or Section 42 proceedings, the parties are not limited as to the methodology they may use when calculating the reserved issues. In exchange for the mutual consideration that is being exchanged through this Agreement, except for the right to propose adjustments associated with the reserved issues (which adjustments to STP Deferrals balances may not exceed $88 million), no Signatory may contest inclusion of the STP Deferrals in rate base or contest amortization of STP Deferrals as an operating expense in cost of service in any Section 42 proceeding or earnings monitoring evaluation during the Rate Cap Period. Except as provided in paragraphs B and C of this Article X, the position on the • STP Deferrals that parties are obligated to take as a result of this Agreement is without prejudice HOUO3:98046 -23- • to any position that any Signatory may take in any Section 43 proceeding during the Rate Cap Period and in any proceeding after the Rate Cap Period. No Signatory may refer to the position that a party is obligated to take on the STP Deferrals under this Agreement during the Rate Cap Period in any Section 43 proceeding, any proceeding after the Rate Cap Period, or in any appeal at any tune. B. Except as set out in paragraph X.A, all issues relating to calculation of the STP Deferrals as of December 31, 1993 are resolved and HL&P's balances as of such date (except to the extent that they may be modified as a result of the reserved issues) are determined to have been correctly calculated. The STP Deferrals shall continue to be amortized under the schedules established in Docket No. 9850. C. In Docket No. 12065, certain "financial integrity" issues were raised relating to inclusion of the STP Deferrals in rate base and inclusion of amortization of such deferrals in the cost of service. If, in order to recover the STP Deferrals, HL&P is required to prove a financial integrity need only once, then HL&P has made that financial integrity showing. However, if HL&P is required to prove a financial integrity need in each rate case in which HL&P seeks to reflect the STP Deferrals and amortization in its cost of service, then nothing in this Agreement prejudices any claim a party may make on the issue of financial integrity and the recovery of the accounting deferrals in any future rate cases. The provisions in this paragraph about the financial integrity finding regarding the accounting deferrals is limited solely to the issue of the STP Deferrals and is not a general statement about HL&P's financial integrity and is not • a finding that is applicable to any other issue. HOUO3:9804b -24' D. It is recognized that two of the Pending Appeals relate to deferred accounting, and those appeals will not be dismissed under this Agreement. If as a result of those appeals it is finally determined that HL&P's STP Deferrals balance as of December 31, 1993 should be reduced, then notwithstanding the provisions of paragraphs A and B of this Article X, such reduction shall be applied prospectively in future proceedings, but will not be applied retroactively to modify HL&P's rates as approved in this or prior proceedings. ARTICLE XI. During the 135 day period commencing on the Date of Execution of this Agreement, HL&P and the other Signatories shall negotiate in good faith to develop performance standards to be applied prospectively to HL&P's interest in STP. Other interested parties, including the parties to Docket No. 12065 and Docket No. 13126, will be allowed to attend but not to participate in negotiations. However, to the extent any non - Signatory interested parry is allowed to participate in the negotiations, all non - Signatory interested parties will be allowed to participate to the same extent. The first meeting will occur within fourteen (14) days after the Date of Execution. During these negotiations, the parties will consider standards that reflect fuel costs, operation and maintenance expenses and capital additions. Failure of the parties to agree on appropriate performance standards for STP will not affect any of the other terms of this Agreement. Notwithstanding any other provision of this Agreement, if an agreement concerning performance standards is not reached within that 135 day period, then the parties are free to pursue any available remedy. If some or all parties are able to reach an agreement on HOUO3.98046 -25- • performance standards, those parties will support a docketed proceeding requesting PUC approval of those standards. Any party with a justiciable interest may seek to intervene in the docket to adopt performance standards. ARTICLE XII. VIUMMI 15"1 HL&P shall have the right to write -down a portion of its investment in STP, but may not write -up any other assets to offset such a write -down. For purposes of earnings monitoring and any Section 42 proceeding during the five year period commencing January 1, 1995, the Signatories agree that any write -down, up to $50 million in any one calendar year, will be treated as a reasonable and necessary expense. For purposes of each earnings monitoring report and any Section 42 proceeding, whether during or after that five year period, and each future Section 43 proceeding, the portion of HL&P's rate base attributable to its investment in STP shall be reduced by the amount of the write - downs, if any, actually taken by HL&P. HL&P will not use a write -down to justify a Section 43 rate increase filing. Should HL&P file a Section 43 proceeding requesting cost of service treatment of any write -down, the parties will be free to take any position as to whether such write -down was a reasonable and necessary expense. ARTICLE XIII. A. For the period from January 1, 1995 through the effective date of HL &P's next base rate change pursuant to PURA Sections 43 or 42, HL&P will continue to use the i depreciation. rates approved in Docket No. 9850. HOUO3:98046 -26- E B. The Signatories agree that HL&P shall maintain its accumulated nuclear production plant depreciation accounts on a "per unit" basis, instead of a "plant" basis. This is similar to the manner in which HL&P maintains its Plant in Service (Schedule D -4) C. The Signatories agree that HL&P shall accrue decommissioning expenses for its interest in STP at the rate of $14,828,815 per year. Such decommissioning expenses shall be recognized as a reasonable and necessary expense in any Section 42 proceeding or earnings monitoring evaluation initiated during the Rate Cap Period, and during such period, no Signatory shall contest inclusion of such amounts in HL&P's cost of service. D. For purposes of calculating AFUDC on nuclear fuel in process, the Signatories agree that test year end balance for account 120.1 of $4,982,654 is assumed to be included in rate base in this docket. Such inclusion shall not prejudice any claims a parry may make regarding such balance in future proceedings. E. HL&P's cost of service includes $21,967,612 of Post - retirement Benefits Other than Pension (FASB 106) expense on a full accrual basis in accordance with Generally Accepted Accounting Principles (GAAP) and PUC Substantive Rule 23.21(b)(1)(H). HL&P's cost of service includes Post Employment Benefits (FASB 112) expense on a full accrual basis in accordance with GAA.P. HL&P will comply with funding requirements of the Commission's Substantive Rules, and will notify Signatories when funding commences. F. All rate case expenses associated with Docket No. 12065, Docket No. 13126 and municipal rate proceedings will be deferred and fully amortized over the three year period beginning January 1, 1995. H0003 .98046 -27- G. HL&P agrees that it will change the accounting method for gas inventory from LIFO to average cost by December 31, 1995. H. HL &P's cost of service includes the restoration of the deficiency in unprotected deferred taxes over a 10 year period, which deficiency is $9,909,946 as of January 1, 1995. I. HL&P agrees it will compare its coal and lignite inventory determination methodology with an appropriate software package prior to its next Section 43 base rate increase filing. ARTICLE XIV. MT MWITIFIGIM row GMT, 17-41 A. HL&P currently sponsors a program ( "SHARE ") of customer and shareholder contributions to certain disadvantaged customers. HL&P agrees that it will continue to contribute not less than $1.5 million to SHARE during each year of the Rate Cap Period. The Signatories agree that the SHARE expense will be excluded from cost of service for all purposes during the Rate Cap Period. The Signatories also agree that they are free to advocate any ratemaking treatment of the SHARE expenses after the Rate Cap Period is over. B. HL&P will fund a total of up to $62,000 for design experts specializing in low income program design. 1. HL&P will fund up to $37,000 (from the $62,000 total) for design experts to assist in the design of cost effective low income DSM programs ( "DSM Consultant "). The • DSM Consultant must be mutually agreeable to HL&P and Low Income Intervenors. HL&P will HOUO3:9&46 "28- 0 work cooperatively with the DSM Consultant and provide necessary assistance to the DSM Consultant such as data gathering, program design and benefit cost evaluation. The DSM Consultant will be selected within 60 days of the 12065 Final Order Date. The low income DSM programs developed by the DSM Consultant will be filed at the PUC within 180 days after selection of the DSM Consultant. A public meeting will be scheduled in HL&P's service area to present the findings of the DSM Consultant, to receive input and to respond to questions. HL&P will in good faith consider the programs developed from this effort for possible implementation. 2. HL&P will fund up to $44,000 (from the $62,000 total) during the Rate Cap Period, with up to $22,000 being funded during the first year, for a low- income rate design expert to be selected by Low income Intervenors ( "Rate Design Expert "). The Rate Design Expert will be selected by the Low Income Intervenors within 30 days after the 12065 Final Order Date and will assist in monitoring the Balanced Billing Pilot Program and assist in designing and monitoring the Shadow Program described below. a. HL&P will implement and monitor a Balanced Billing Pilot Program for a targeted group of between 1,500 - 3,000 customers identified as low income unless a lower number is otherwise agreed upon between the Rate Design Expert and HL&P. The program will follow the design and schedule of HL&P's existing Balanced Billing Program with some modifications to the guidelines and qualifying criteria agreed upon by HL&P and the Rate Design Expert. A control group agreed upon between HL&P and the Rate Design Expert will be established and monitored to assess the effectiveness of the program. HOLIU98046 -29- b. The Balanced Billing Pilot Program will be mirrored with a Shadow Program designed by the Rate Design Expert and HL&P. The Shadow Program will collect information for a targeted group of between 1,500 - 3,000 customers, unless a lower number is otherwise agreed upon between the Rate Design Expert and HL&P. The Shadow Program will compare the payments of electric bills of participants to the amounts that would have been received by HL&P under a Direct Payment Section 8 Utility Allowance Program. HL&P agrees to work with the Rate Design Expert and provide nonconfidential information from the program to the Rate Design Expert. HL&P will perform appropriate and reasonable data gathering and cost effectiveness screening of the program. C. The Balanced Billing Pilot and Shadow Programs will be developed within 60 days after the 12065 Final Order Date. The program will be implemented within 90 days after the 12065 Final Order Date. HL&P will file the results of the programs with the Commission at the end of the three year pilot period. C. HL&P will establish an Earned Income Tax Credit Utility Outreach program for the Rate Cap Period, in partnership with the Internal Revenue Service and the Volunteer Income Tax Assistance Program (IRS /VITA). Under this program, HL&P will provide information in several languages on the earned income tax credit to customers through various outlets targeting low income customers, including customer mailings (bill inserts) to all residential customers at least twice a year during December and January (or those months determined most • appropriate by IRS/VITA). HOUO3.98046 -30- • activities: ARTICLE XV. RNI=41104 MW HL &P agrees to undertake the following Demand Side Management ( "DSM ") 1. HL&P will publicly announce the DSM Solicitation Short List of bidders within 60 days after the 12065 Final Order Date, or as soon as the Short List is available. 2. HL&P will meet with the PUC Staff and other interested parties within 60 days after the 12065 Final Order Date to review HL&P's current DSM evaluation plan and activities. HL&P will take input from the parties and file a revised plan, if necessary, at a date agreed upon by the parties. HL&P will share information with the parties regarding its future DSM evaluation Request for Proposals. 3. HL&P will modify its Cool Storage Program beginning in 1996 to require new participants to obtain an energy audit of their facility. The participants may choose who will conduct the audit. 4. HL &P will continue to modify its Good Cents New Home program to reduce incentives for structural improvements. Within 180 days after the 12065 Final Order Date, HL&P will propose a plan to move the program toward a home rating system and will share its findings with the PUC Staff 0 HOUO3:98046 -31- • 0 and other interested parties and obtain input from the PUC Staff and those parties. 5. HL&P will modify its residential walk - through audit program beginning in 1996 to provide water heater wraps and low flow showerheads or showerhead flow restrictors to interested participants who have electric water heating 6. HL &P will provide to the PUC Staff and other interested parties the information it has available (such as demographic and awareness data) on the Energy - Efficiency- Environment program including the Our House TV series. 7. HL&P recognizes the potential for DSM in the commercial and industrial market sector and intends to pursue cost - effective energy and demand reductions in these sectors through its current solicitation, future solicitations and, possibly, other appropriate mechanisms. 8. HL&P will meet on an informal basis with the PUC Staff and other interested parties twice a year (or as otherwise agreed to by the parties) to provide a review and consider input on DSM activities and issues. The first meeting will occur within 60 days after the 12065 Final Order Date. HOUO3 98N6 -32- • ARTICLE XVI. Additional Tariff Matters and Studies A. HL&P will file the following experimental real time pricing tariffs: 1. Within 180 days after the 12065 Final Order Date, HL&P shall file an experimental Real Time Pricing tariff for the LOS rate classes with all regulatory authorities having rate jurisdiction. 2. Within 180 days after the 12065 Final Order Date, HL&P shall file an experimental Real Time Pricing tariff for the commercial rate classes (LGS and MGS) with all regulatory authorities having rate jurisdiction. 3. Within 30 days after the 12065 Final Order Date, HL&P shall file an experimental Real Time Pricing tariff for the residential rate class with all regulatory authorities having rate jurisdiction. As part of HL&P's experimental real time pricing proposals, HL&P will not increase base rate revenues or increase Base Rate Unit Charges for non - experimental tariffs as reflected in the Tariff for Electric Service attached hereto as Appendix D. Nothing herein shall be construed to require any Signatory to support any of the experimental real time pricing tariff filings or to prejudice any argument a parry may wish to make in favor of, or opposition to, such filings. Moreover, nothing herein will restrict any Signatory's rights to make any claims or arguments regarding the • m experimental real time pricing tariffs (for example the rateaking treatment of any revenue shifts HOUO3:98W -33- 0 or revenue shortfalls due to the experimental real -time pricing tariff) at the time of HL&P's next Section 42 or Section 43 rate proceeding. B. HL&P agrees to provide interruptible customers who have multiple facilities taking interruptible service with appropriate operational flexibility for complying with requested curtailments. Within 60 days after the Date of Execution of this Agreement, HL&P will negotiate in good faith with interested interruptible customers to develop specific procedures for achieving such flexibility. These procedures will be developed within the guidelines of HL&P's current interruptible tariffs. C. HL&P is currently studying potential control area services. HL&P will complete the study by December 31, 1995 and, upon such completion, provide copies of that study to all intervenors. ARTICLE XVII. A. Within seven (7) days after the later of (i) the Date of Execution or (ii) receipt of an invoice detailing all rate case expenses incurred to such Date of Execution, HL&P will pay to each signatory coalition an amount equal to all rate case expenses incurred to the Date of Execution including expenses incurred in Docket No. 12065, Docket No. 13126 and in any municipal rate proceedings. HL&P will also reimburse all reasonable rate case expenses related exclusively to any pending or to be initiated municipal rate proceeding listed on Appendix B through the date that such municipalities take fugal action in those proceedings. To the extent that any cost incurred to the applicable cut -off date is not known at the time a municipality submits HOUO3:98O46 -34- 0 • its initial invoice, the municipality may submit an additional invoice to recover such costs. HL&P, without prior Commission approval, will also reimburse up to $10,000 of additional rate case expenses actually incurred in Docket No. 12065 and Docket No. 13126. If the expenses incurred by a signatory coalition in Docket No. 12065 and Docket No. 13126 after the Date of Execution exceed $10,000, HL&P will reimburse such expenses after a finding by the Commission that the expenses were reasonable. HL&P shall not oppose any request of a signatory coalition for reimbursement of such excess post - execution expenses. B. For the purpose of participating in the negotiation of STP Performance Standards pursuant to Article XI during the 135 days after the Date of Execution of this Agreement, the Gulf Coast Coalition of Cities and the Coalition of Cities will form a joint coalition. The leadership team for this joint coalition will be composed of the City of Houston, GDS Associates Inc. and Wickliff and Hall on behalf of the Coalition of Cities, and the City of Friendswood and the Law Offices of Robert A. Rima on behalf of the Gulf Coast Coalition of Cities. HL &P, without prior Commission approval, will reimburse up to $50,000 of additional expenses that are related to the joint coalition's participation in the negotiations for development of STP performance standards and are actually incurred during the 135 day period provided in Article XI for those negotiations. These expenses will be deemed rate case expenses. HOUO3:98046 -35- • ARTICLE XVIII. It is recognized that HL&P and various other parties have filed the Pending Appeals all of which relate to Commission orders in other HL&P dockets. As described in this Article XVIII, this Agreement resolves certain issues that have been raised by the Signatories in the following Pending Appeals: Docket No. 6668 appeals initially filed by HL&P, the Office of Public Utility Counsel (OPC) and the City of Houston and Coalition of Cities [but not the appeal of that same order filed by the Cities for Fair Utility Rates ( "CFUR ")]; Docket No. 8230 and 9010 appeals originally filed by OPC (but not appeals of those same orders filed by the State of Texas); Docket No. 9850 appeal originally filed by OPC; and Docket No. 10092 appeal originally filed by HL&P (such appeals are referred to jointly as "Resolved Appeals "). Within 10 days after the date of execution of this Agreement, all Signatories who are parties to any of the Resolved Appeals shall jointly notify the court in which the appeal is now pending that, subject to Commission action on this Agreement, the issues raised in the Resolved Appeals have been resolved in favor of upholding the Commission's order. Such notice shall request that further action on the appeal be delayed pending Commission consideration of the Agreement, and confirm the Signatories' intention to file appropriate motions with the court, following Commission approval, seeking affirmance of the Commission's order as to all issues raised by the Signatories. Subject to qualifications set out below, within 10 days after the 12065 Final Order Date, the Signatory Parties who are parties to the Resolved Appeals shall file appropriate motions • with each appellate court to affirm the applicable Commission order as to issues raised by the HOliO3.98046 -36- • Signatories (other than the State of Texas, if it is a Signatory), and to dismiss with prejudice each of the pending appeals brought by any one of the Signatories (other than the State of Texas, if it is a Signatory). The precise form of the motions shall be tailored to each case, but will be substantially as described below with respect to each Signatory and proceeding: 1. In Docket No. 9850, now pending in the Austin Court of Appeals on remand from the Texas Supreme Court, OPC agrees to dismiss and withdraw any points attacking the Commission's order, and to request that the judgment of the District Court affirming the Commission's order be affirmed in all respects; 2. In Docket No. 823019010, now pending on remand in the Austin Court of Appeals, OPC agrees to withdraw and dismiss such of its arguments, if any, as remain pending questioning the validity of the Commission's order, and request that as to the issues originally raised by OPC [but not issues raised by the State of Texas] the judgment of the District Court affirming the Commission's order be affirmed in all respects; 3. In Docket No. 6668, OPC, HL&P and the City of Houston each agree to dismiss their respective appeals pending in the District Court with prejudice, and request that the order of the Commission be affirmed; 4. HL&P agrees to dismiss with prejudice its appeal from the Commission's order in Docket No. 10092 and request that the Commission's order be is affirmed . H0003:98046 -37- u It is recognized that the Resolved Appeals do not include appeals filed by CFUR in Docket Nos. 6668 and 8425 and by the State of Texas in Docket Nos. 8230/9010 and 8425. Signatories with appeals (other than the State of Texas, if it is a Signatory) shall make good faith efforts to cause CFUR and the State of Texas to similarly file to dismiss with prejudice their Pending Appeals of Commission orders in prior HL&P dockets and seek affirmance of the Commission's order. If CFUR does not agree to dismiss its appeal in Docket No. 6668, HL&P shall have the right to maintain its appeal of the Commission's order in Docket No. 6668. However, if HL&P elects to maintain that appeal, then prior to the deadline for filing to dismiss, HL &P shall provide each Signatory with Resolved Appeals notice that HL&P will maintain its Docket No. 6668 Appeal. If HL&P elects to maintain the Docket No. 6668 Appeal, all Signatories will have the right, but not the obligation, to maintain any, or all, of its Resolved Appeals. However, if HL&P subsequently dismisses the Docket No. 6668 Appeal, each Signatory that maintained a Resolved Appeal shall simultaneously dismiss each of its appeals. ARTICLE XIX. Signatories represent that they have reached no agreements or understandings concerning this rate case other than as set forth in this Agreement or disclosed to the parties in Docket No. 12065 prior to the Date of Execution either with HL&P or with any other entity. If prior to the 12065 Final Order, any Signatory enters into any other agreements for the purpose of settling and compromising Docket No. 12065, Docket No. 13126 or any municipal rate • proceedings related thereto, other than as set forth in this Agreement, then each component of the HOUO3 :98046 -38- • consideration granted by any Signatory shall be made known immediately to all Signatories; and any Signatory may in that Signatory's discretion freely withdraw from this Agreement and request reopening of hearings on the merits of the settlement. The terms of this article will also be applicable to Pending Appeals of past Commission proceedings involving HL&P, including appeals related to Commission Docket Nos. 8230/9010, 6668, 8425, 9850 and 10092. The above provisions notwithstanding, if HL&P voluntarily or by order of the Commission reimburses a municipality for reasonable expenses incurred in participating in either Docket Nos. 12065 or 13126 or any appeals of Commission rate proceedings, then such reimbursement shall be made known to all Signatories but shall not permit any Signatory to withdraw from this Agreement. This Article was agreed to by the Signatories as part of the overall consideration for other provisions of this Agreement. It is based upon the unique conditions underlying this Agreement. Its inclusion in this Agreement shall not be cited by any entity as a recognition that the provisions of this paragraph would be appropriate or that these provisions are more appropriate than other types of disclosure or preferential treatment provisions in any other proceeding involving the same or different parties. ARTICLE XX. • 1. A. The Signatories after extensive negotiations have reached a compromise and settlement to resolve Docket No. 12065, Docket No. 13126 as it relates to HL&P and Section 42 proceedings initiated by municipalities with regulatory jurisdiction over HL&P's rates and other • matters discussed herein. Signatories state that this Agreement is in the public interest and shall H0003:98W -39- • urge the Commission to approve and accept the provisions of this Agreement and to adopt a 12065 Final Order consistent with all the terms hereof. If the Commission does not adopt a 12065 Final Order consistent with all the terms of this Agreement, neither oral and written statements made during the course of the settlement negotiations nor the terms of this Agreement may be used as an admission or concession of any sort or as evidence in Docket No. 12065 or any other proceeding. B. This Agreement reflects a compromise, settlement and accommodation among Signatories, and all Signatories agree that the terms and conditions herein are interdependent.. If the Commission does not accept this Agreement as presented and enters an order inconsistent with any material terms of this Agreement, the Signatories agree that any Signatory has the right to withdraw from this Agreement, proceed to hearings on all issues and present evidence. It is specifically recognized that the Signatories, except for HL&P, will not submit pre -filed testimony regarding the merits of the Agreement and will forego cross- examination of the testimony that is submitted in support of the Agreement; provided, however, that any Signatory may submit rebuttal testimony in support of the cost allocation and rate design under this Agreement if the cost allocation and rate design is contested by a non - Signatory. If this Agreement is not accepted, the Signatories agree to acknowledge each other's right, and to further confirm by oral or written statement to the Presiding Officer or Commission, the agreement of the Signatories to allow each other to proceed with a full hearing, to present evidence, and to • cross - examine witnesses. HOUO3:98046 -40- E C. This Agreement is binding on each of the Signatories only for the purpose of settling the issues herein and for no other purpose. Specifically, by entering this Agreement, no party admits to any wrongdoing, or the absence of wrongdoing, imprudence or prudence, unreasonableness or reasonableness of any expenses, capital expenditures or rate design or otherwise admits any liability; and no Signatory agrees to the propriety of any ratemaking theory or principle that may be said to underlie any of the issues resolved by this Agreement. The matters resolved herein are resolved on the basis of a compromise and settlement. Except to the extent that this Agreement expressly governs Signatories' rights and obligations for future periods, this Agreement shall not be binding or precedential upon such Signatories outside of this case. It is acknowledged that a Signatory's support of the matters contained in this Agreement may differ from its position or testimony in other dockets. To the extent that there is a difference, the Signatories are not waiving their position in other dockets. Because this is a stipulated agreement, the Signatories are under no obligation to take the same positions as set out in this Agreement in other dockets whether those dockets present the same or a different set of circumstances. D. Signatories recognize that a 12055 Final Order consistent with this Agreement must determine that the Appendix D rates and other provisions of this Agreement are supported by record evidence satisfying the requirements of the Public Utility Regulatory Act. To support the foregoing, HL&P shall prepare, file and defend appropriate testimony and supporting schedules. HL&P and any Signatory submitting rebuttal testimony under paragraph B of this Article XX will consult with other Signatories before making its filing. Signatories shall • support such testimony solely as a compromise and not as acquiescence in any ratemaking HOUO3:98046 1 • 0 principle, valuation methodology, method of cost -of- service determination, method of revenue calculation, or cost allocation or rate design principle underlying such testimony or underlying the provisions and agreements contained in this Agreement or the attachments hereto. Any and all exhibits and testimony to be submitted in support of this Agreement will be offered for the limited purpose of supporting this Agreement. In the event any exhibits or testimony are admitted in this proceeding or in any other proceeding for any other purpose, then Signatories reserve their Ml rights to challenge such exhibits and testimony, including objections to admission, rights to file rebuttal testimony and the right of cross - examination. E. The titles assigned to each Article are for convenience only, are not part of this Agreement and shall not be considered in the resolution of any dispute or question arising with respect to this Agreement. F. Execution of this Agreement by representatives of a municipality constitutes a commitment to seek approval of the Agreement by the governing body of the municipality but shall not bind the municipality until it has been approved by that governing body. G. Each person executing this Agreement represents that (s)he is authorized to sign this Agreement on behalf of the parry represented. Facsimile copies of signatures are valid for purposes of evidencing an Agreement. H. References to Sections of PURA are to those sections in effect at the Date of Execution of this Agreement. HO003.9996 I. This Agreement may be executed in multiple counterparts. -t2- s 0 S/- Signed this �1 day of February, 1995 Signed thisZ4day of February, 1995 Signed this g)iray of February, 1995 H0003:98046 David M. McClanahan Group Vice - President -- Finance and Regulatory Relations HOUSTON LIGHTING & POWER COMPANY 1. Thomas Brocato Assistant General Counsel PUBLIC UTILITY COMMISSION OF TEXAS TEXAS OF The Office of Public Utility Counsel is signing to indicate that it does not oppose entry of an order consistent with the Agreement because, taken as a whole the document resolves the issues in a manner that is consistent with the public interest. -43- • Signed this,21!�day of February, 1995 Alton Hall Wickliff & Hall Attorney for CITY OF HOUSTON and COALITION OF CITIES (consisting of Baytown, Bellaire, Brookshire, Brookside Village, Clute, Deer Park, El Lago, Fulshear, Galveston, Houston, LaPorte, Meadows, Pasadena, Santa Fe, Seabrook, Surfside Beach, Thompson, Webster, West University Place) Signed this& day of v February, 1995 ~' Robert A. Rima Law Offices of Robert A. Rima Attorney for GULF COAST COALITION OF CITIES (consisting of Alvin, Bunker Hill Village, Dickinson, Friendswood, Jersey Village, La Marque, Missouri City, Oak Ridge North, Sealy, Simonton, Spring Valley, Stafford) Signed thisr�4-tray of February, 1995 Jo than Day r, Day, Caldwell & Keeton Attorney for TEXAS INDUSTRIAL ENERGY CONSUMERS Signed this _ day of February, 1995 Richard Noland Sutherland, Asbill & Brennan Attorney for OCCIDENTAL CHEMICAL CORPORATION HO ti 03.98046 -44- • • 02/21'95 19 :13 $5124693351 S•a&B .AUSTIN Signed this _ day of February, 1995 Signed this _ day of February,-1995 Signed this _____ day of February, 1995 Signed this day of February. 1,995 2.0 . d 2002 Alma Hall Wickuff & Hell Attorney for CITY OF HOUSTON and COALMON OF CTTISS (consisring of Baytown, Bellaire, Brookshire. Brookside Village, Clum, Deer Paris, El Ingo, fulshcar, Galveston, Houston, La Porre, Meadows, Pasadena, Santa Fc, Scabrook, Slx&ide Beach, Thom sons. Webster, West University Flare) - RoberF A. Rima Law Offi= of Robert A. R na Atrorney for GULF COAST COAIJTION OF CTM (consisting of Alvin, Bunker IFill Village, Dickiu=, Friendswood, Jersey Village, La Marque, Nf sotu City,. Oak Ridge North, Sealy. Simonton, Spring Valley, Stafford) Jotrathan Day Mayor. Day, Caldwell & K=on Attorney for TEXAS iNDUSTREAL ENERGY CONSULS Atromey for OCCIDENTAL caBuCAL CORPORATION EV ;91 S66T —TZ —F7:;4 • C� Signed this _ day of February, 1995 James E. Miller DESTEC ENERGY, INC. Signed this _ day of February, 1995 Marianne Carroll Akin, Gump, Strauss, Hauer & Feld Attorney for CLEAR LAKE COGENERATION LIMITED PARTNERSHIP Signed this _ day of February, 1995 Paul W. Phillips DEPARTMENT OF ENERGY Signed this &kfday of n • February, 1995 �tJ Tony D. Voliams TEXAS COTTON GINNERS' ASSOCIATION Signed this 2/ day of February, 1995 Michael G. Shirley Jenkens & Gilchrist, P.C. Attorney for TEXAS -NEW MEXICO POWER COMPANY HO UO3.98046 -45- • 0 Signed this _ day of February, 1995 Signed this _ day of February, 1995 Signed this _ day of February, 1995 Signed this _ day of February, 1995 Signed this _ day of February, 1995 HOUO3.98046 Richard M. McElvaney, Jr. Gulf Coast Legal Foundation Attorney for LOW INCOME INTERVENORS �homas S. Hunter �- Foster & Hunter, L.L.P. Attorney for RETAIL MERCHANTS ASSOCIATION OF HOUSTON, INC. Greg Lucero I.B.E.W. LOCAL NO. 66 Richard A. Muscat STATE OF TEXAS Public Agency Representation Section Don E. Walden TEXAS RATEPAYERS' ORGANIZATION TO SAVE ENERGY ( "TEXAS ROSE ") -46- • I • `a ay '95 14 ;44'GLL^ COAST LEGAL FAN F ::)/2'. Lc Signed tbLV day of February, 1995 Richard M. McElvaney, Jr. Gulf Coast Legal Foundation Atwrney for LOW INCOME INTERVENORS Signed this -___ day of February, 1995 Signed this _ day of Fcbruary, 1995 Signed this , day of February, 1995 Signed this day of February, 1995 HOLM:92W Thomas S. Hunter Foster & Hunter, L.L.P. Attorney for RETA3L MERCHANTS ASSOCIATION OF HOUSTON, INC. Greg Luccro I.B.E.W. LOCAL NO. 66 Richard A. Muscat STATE OF TEXAS Public Agency Representation Section Don E. Waldcn TEXAS RATUAYERS' ORGANIZATION TO SAVE ENERGY ( "TEXAS ROSE ") -46- TOTPL P.02 :7 Signed this day of February, 1995 Signed this day of February, 1995 Signed this day of February, 1995 Signed this day of February, 1995 Signed this day of February, 1945 Richard M. McElvaney, Jr. Gulf Coast Legal Foundation Attorney for LOW INCOME INTERVENORS Thomas S. Hunter Foster & Hunter, L.LP. Attorney for RFTAIL MERCHANTS ASSOCIATION OF HOUSTON, INC f �1 • • • .. Richard A. Muscat STATE OF TEXAS Public Agency Representation Section Don E. Walden TEXAS RATEPAYERS' ORGANIZATION TO SAYE ENERGY ("TEXAS ROSE ") HOM.98DW13 .4& 0 Signed this _ day of February, 1995 Signed this _ day of February, 1995 Signed this _ day of February, 1995 Signed this _ day of February, 1995 HOL'03:98046 Adan Martinez ENVIRONMENTAL DEFENSE FUND Rodney Doerscher Representing MICHAEL HERSHEY Kenneth D. Williams Charles Pace Representing ASSOCIATION OF LAID -OFF EMPLOYEES -47- • 0 APPENDIX A Municipalities Whose Rate Ordinances Have Been Appealed Alvin Bunker Hill Village Dickinson Friendswood Jersey Village Lake Jackson La Marque Missouri City Oak Ridge North Spring Valley Stafford H0003 :98046 • • Pru Municipalities With Pending or To Be Initiated Section 42 Proceedings That Are To Be Appealed To The Commission and Consolidated With Docket No. 12065 Pursuant To This Agreement Baytown Bellaire Brookshire Brookside Village Clute Deer Park El Lago Fulshear Galveston Houston LaPorte Meadows Pasadena Santa Fe Seabrook Simonton Surfside Beach Thompsons Webster West University Place HO UO3 MO45 • APPENDIX C Purchased Non - purchased Power -Base Power -Base Rate Reduction $ Rate Reduction $ Total $ (000) (000) (000) Residential 75,164 24,900 100,064 MGS 42,655 23,700 66,355 LGS 32,653 410 33,063 LOS -A 12,168 1,620 13,788 LOS -13 9,308 1,141 10,449 IS-1 0 1 1 IS -10 0 1 1 IS -30 0 121 121 IS -S 0 129 129 TNP 587 1,300 1,887 SPL 277 6,000 6,277' Wheeling 0 200 200 Standby 0 337 337 Contract Lighting _ 106 140 246 172,918 60,000 232,918 ' HL &P has agreed to reduce the SPL class by an additional $2.2 million. That $2.2 million, which is not reflected on this sheet, is reflected in Appendix D and will not impact any other classes. HOUO3:98046 • TARIFF FOR - ELECTRIC SERVICE HOUSTON LIGHTING & POWER COMPANY P.O. BOX 1700 HOUSTON. TEXAS 77251 Copy of tariff, marked received on March 13, 1995, for electric service is on file with the City Clerk of the City of Baytown and is incorporated by reference herein for all intents and purposes. is • APPENDIX E HOUSTON LIGHTING & POWER COMPANY Summary of Tariff Language Changes 0 Sheet Rate Language Change DI RS CIarify that the MGS rate is not available to a single family dwelling. D4 LGS Minimum Kva for LGS reduced from 600 Kva to 400 Kva. Language added to "Application" section to limit "rate- hopping" to avoid ratchets. D7 ERS Tariff deleted. D7.5 EIS Minimum Kva for EIS reduced from 600 Kva to 400 Kva. Minimum combined LGS and EIS demands reduced from 850 Kva to 650 Kva. Changed some charges for distribution level customers to keep a positive discount compared to LGS. D9 TNP Tariff deleted. D9.5 TNP Supplemental Kva language removed. D10 SPL Delete application and agreement form and incorporate necessary language into tariff. Conversion of MV lamps to HPS with no cost to customer as individual lamps burn out. Recalculated the monthly kwh for each lamp based upon 4,000 hours of operation. Cancellation charges deleted. D I 1 MLS Delete application and agreement form and incorporate necessary language into tariff. Change name from Contract Lighting Service to Miscellaneous Lighting Service. Cancellation charges deleted. Dig IS -30 Additional language added to "Non - Compliance" section to clarify that any power taken during times of interruption shall be billed under one of the Company's firm rate schedules. Language added to refer to the Administrative Procedures Sheet E27.5. D13 IS -10 Additional language added to "Non- Compliance" section to clarify that any power taken during times of interruption shall be billed under one of the Company's firm rate schedules. Language added to refer to the Administrative Procedures Sheet E27.5. D14 IS -1 Additional language added to "Non - Compliance" section to clarify that any power taken during times of interruption shall be billed under one of the Company's firm rate schedules. D18 TWS Rewrite of TWS rate schedule to improve clarity and make as consistent as possible with rate schedules PCW and ACW. Page 1 of 3 • APPENDIX E HOUSTON LIGHTING & POWER COMPANY Summary of Tariff Language Changes • Sheet Rate Language Change D19 PCW Language refinements to clarify tariff. D20 ACW Language refinements to clarify tariff. D20.5 HWS New experimental tariff for hourly wheeling transactions. D21 SES Change notification period to 48 hours or 4 p.m. of next business day following the taking of standby service. D24 FC Lower fuel charges. D24.5 GLTC Expanded applicability to include continuously operating traffic signal lights. D25 PCRF Modified calculation to adjust for changes in customer mix since last general rate case and to minimize over /under recovery of PCRF expenses. D25.5 HB 11 Tariff deleted. D32 SBI Additional language added to "Non- Compliance" section to clarify that any power taken during times of interruption shall be billed under one of the Company's firm rate schedules. D33 CSB Minimum Kva for LGS CSB reduced from 600 Kva to 400 Kva. Modified indemnity language to conform to language in Terms and Conditions. El Terms & Conditions Added language to ensure the Company's right to lock meter cans and maintain meter connections. Modified indemnity language. E4 Terms & Conditions for Modified to include TWS. TWS, PCW, ACW Modified indemnity language. E4.5 Terms & Conditions for New Terms & Conditions for the experimental Hourly Wheeling Service. HWS (Experimental) E5 Terms & Conditions for Modified to incorporate the deletion of the contract for SPL and MLS. Lighting Service Modified indemnity language. E7 Application & Agreement Clarify minimum bill is applied to substituted agreements. for MGS & LGS E8 Application & Agreement Clarify minimum bill is applied to substituted agreements. for LOS E9 Application & Agreement Deleted. for ER.S Page 2 of 3 0 • APPENDIX E HOUSTON LIGHTING & POWER COMPANY Summary of Tariff Language Changes Sheet Rate Language Change E10 Application & Agreement Clarify minimum bill is applied to substituted agreements. for IS -30 E14 Application & Agreement Modification of form for clarification and consistency. for TWS, PCW, & ACW Modified to include TWS. E14.5 Application & Agreement New Application and Agreement form for experimental hourly wheeling for HWS (Experimental) transactions. E16 Application & Agreement Deleted. for SPL -OH E17 Application & Agreement Deleted. for SPL -UG E18 Application & Agreement Deleted. for CLS E20 Service Extension Policy Changed the SPL policy for municipal residential lighting additions served by underground conductors to the greater of 50 lamps or 6% of previous year's street lighting count. Specified that a portion of the municipal residential lighting additions car be used for commercial lighting if customer pays the additional cost. Eliminated the language which combined certain lamps into one group for purposes of the previous year's lamp count. Incorporated former contract language into service extension SPL policy. Added language which specifies the cost for removing street lights when requested by the customer. Changed CLS reference to MLS. E24 Billing Policy Revised to reflect a change in the law. Added language to specify that if the past due date falls on a weekend or holiday, the due date will be the next work day. E27.5 Administrative Procedures Added to clarify HL&P's policy for IS administration. for IS -30 and IS -10 Page 3 of 3 • • APPENDIX_ F PENDING HL &P APPELLATE PROCEEDINGS RELATED TO COMMISSION ORDERS 1. Commission Docket No. 6668: Houston Lighting & Power Co. v. Public Util. Comm'n, In the 250th Judicial District of Travis County; No. 492 -003, on remand from The Supreme Court of Texas; No. D -3661 2. Commission Docket No. 8230/9010: Public Util. Comm'n and Central Power and Light Co. v. State of Texas and Office of Public Util. Counsel, In the Third Court of Appeals at Austin; No. 03- 90- 00259 -CV, on remand from The Supreme Court of Texas; No. D -3154; consolidated with Public Util. Comm'n and Houston Lighting & Power Co. v. State of Texas and Office of Public Util. Counsel, In the Third Court of Appeals at Austin; No. 03-90 - 00260-CV, on remand from The Supreme Court of Texas; No. D -3155. 3. Commission Docket No. 8425: Houston Lighting & Power Co. v. Cities for Fair Util. Rates and The State of Texas, In the Supreme Court of Texas; No. 94 -1237, Application for Writ of Error from The Third Court of Appeals at Austin; No. 03- 93- 71 -CV. 4. Commission Docket No. 9850: Office of Public Util. Counsel v. Public Util. Comm'n of Texas and Houston Lighting & Power Co., In the Third Court of Appeals at Austin; No. 03- 92- 000518 -CV, on remand from The Supreme Court of Texas. 5. Commission Docket No. 10092: Houston Lighting & Power Co. v. Public Utility Comm'n . of Texas, In the 200th Judicial District of Travis County; No. 92 -05566. HODU98046 • HOUO3:48046 Allocation of Reduction Provided in Paragraph A of Article VII REDUCTION $ RS $21,481,984.46 MGS -D $17,689,844.91 MGS -T $26,214.87 LGS -D $13,311,067.58 LGS -T $164,409.03 LOS -A LOS -B TNP SPL CLS ERS -D ERS -T IS -30 SES -D SES -T TOTAL $7,306,898.87 $5,746,969.75 $97,196.25 $188,975.92 $61,527.13 $159,119.43 $2,711,201.64 $754,865.38 $21,786.34 $277,938.43