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Ordinance No. 11,172ORDINANCE NO. 1 1 ,1 72 AN ORDINANCE OF THE CITE' OF BAYTOWN_ TEXAS. REVIEWING THE REQUESTED RATE INCREASE REQUEST OF CENTERPOI1- "T ENERGY ENTEX: SETTING AND ESTABLISI -IING RATES AND TARIFFS; ORDERENG THE REFUND OF BASE RATE INCREASES IMPLEMENTED ON AUGUST 1. 2009: ESTABLISHING AN EFFECTIVE DATE FOR 1-111S ORDINANCE AND THE IMPLEMENTATION OF NEW RATES: MAKING SUCH OTHER FINDINGS AND PROVISIONS RELATED HERETO: CONTAINING A SAVINGS CI-_AUSE, PP-ESCRI13UNCI A ry AXIMUM PENALTY OF FIVE HUNDRED AND NO /100 DOLLARS ($500.00): AND PROVIDING FOR THE PUBLICATION AND TEFL: EFFECTIVE DATE THEREOF_ WHEREAS_ on May 1, 2009_ CenterPoint Energy Entex ( "CenterPoint ") tiled a request to increase rates %within the Texas Coast Division by approximately S2 rlTrlllon; and WHEREAS- the Chair of the Texas Coast Utilities Coalition of' Cities (-TCUC-). Ignacio Ramirez. Sr._ City Attornev for the City of Baytown_ notified CenterPoint on July 13. 2009. that each of the TCUC Cities would suspend the effective date for 90 days as set forth in Attachment A. — which is appended hereto and incorporated herein by reference. and WHEREAS. the City as a member of TCUC suspended CenterPoint's requested iniplententation date of August 1- 2009_ for 90 days or until October 30, 2009, as provided in Attachment B_ which is appended hereto and incorporated herein by reference: and WI-FEREAS, Center-Point's filing purports to be in compliance with a -Cost of Service AdjustrTTerW- (-COSA-) tariff approved by the Railroad Commission of Texas; and WI- IEREAS, the COSA tariff approved by the Railroad Cormnission of Texas provides that "[tjhe provisions of this Cost of Service Adjustment are to be inTpfemented in harmony with the Gas Utility Regulatory Act (Texas Utilities Code, Chapters 101 -105). The Company's annual rate adjustment will be made in accordance with all applicable laws and �� I- IEREAS_ CenterPoint refused to respond to three sets of requests for inlorrnation_ thus, adding to the difficulty of TCUC's consultant. Diversified Utility Consultants_ Inc__ completing its report and recornntendation to the TCUC Cities; and W1 IEREAS. the suspensions of the effective date Were undertaken pursuant to Section 104.107 of the Texas Utilities Code_ and WHEREAS. in spite of the suspensions. on August I, 2009. CenterPoint increased its rates by approximately $1.7 million or 55 cents per nTonth fora typical residential customer. and `L.'UIEREAS, the TCUC Cities_ through its Chair, notified CenterPoint of the unlawfulness of its conduct as set forth on Attachment C_ which is appended hereto and incorporated herein by reference; and WHEREAS_ the report of Diversified Utility Consultants_ Inc-, indicates that the rates requested by CenterPoint were excessive as set forth in Attachment D. which is appended hereto and incorporated herein by reference; and WHEREAS. refunds are owed to ratepayers located within the TCUC Cities for higher base rates implemented on August 1. 2009: NOW THEREFORE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section l: That the facts contained in the preamble of this ordinance are determined to be true and correct and are hereby adopted as part of this ordinance. Section 2: That the base rate increase put into effect by CenterPoint on August 1, 2009, within the City is unlawful. Section 3: That CenterPoint shall refund any base rate increase put into effect between July 31, 2009, and October 29, 2009, with interest at the rate being carried on customer deposits no later than December 31. 2009. Section 4: That CenterPoint shall file a report on November 16. 2009, with the Chair of the TCUC Cities. Ignacio Ramirez. Sr.. City Attorney for the City of Baytown, Texas, detailing, on a customer -class basis. the amount refunded as ordered by this ordinance. and shall provide in its report the calsumption data upon .which refund is based. Section 5: The report by Diversified Utility Consultants. Inc., to the TCUC Cities calls for substantial reductions in the rate request, over and above the rates set by the Railroad Commission for the environs areas but assuming CenterPoint will refund the base rate increase of August 1. 2009, until the effective date of this Ordinance the City shall forego such additional adjustments to the rate request as detailed by Diversified in its report. Section 6: The City adopts the tariffs, which are appended hereto and incorporated herein as Attachment E by reference. so long as they do not go into effect prior to October 29, 2009. Section 7: The effective date for this ordinance is October 29. 2009. Section 8: The City adopts the attached tariffs with the understanding that such tariffs, or any other principle underlying such tariffs, shall not constitute precedent in any other proceeding. Section 9: If there is an appeal of this ordinance. then, the City reserves the right to assert additional adjustments to the revenue requirement. cost allocation and rate design which were not contained in the report by Diversified Utility Consultants. Inc., in addition to those in the report. Section 10: All conditions precedent to the adoption of each of the foregoing sections herein have been complied with under law. Section 11: CenterPoint shall reimburse the reasonable rate case expenses of the TCUC city coalition. Section 12: TCUC shall submit its rate case expenses to CenterPoint by September 1, 2009. Section 13: CenterPoint shall reimburse TCUC for its reasonable rate case expenses through the City of Baytown no later than November 3, 2009. Section 14: Any person violating or failing to comply with any provision or requirement of this ordinance may be tined up to FIVE HUNDRED AND NO /100 DOLLARS ($500.00) pursuant to the Local Government Code. Section 54.001. Notwithstanding the foregoing. any violation of any provision of this Ordinance that constitutes an immediate danger or threat to the health, safety and welfare of the public may be enjoined in a suit brought by the city for such purpose. Allegation and evidence of a culpable mental state are not required for the proof of an offense defined by this ordinance. Section 15: If any section or part of any section. paragraph. or clause of this ordinance is declared invalid or unconstitutional for any reason, such declaration shall not be held to invalidate or impair the validity. force, or effect of any other section or sections, part of section, paragraph. or clause of this ordinance Section 16: The Interim City Clerk is hereby directed to give notice hereof by causing the caption of this ordinance to be published in the official newspaper of the City of Baytown at least twice within ten (10) days after passage of this ordinance and to send a true and correct copy of this ordinance to Richard A. Zapalac, Vice President for Gas Operations- Texas. Centel-Point Energy, Suite 2120. 1 1 1 1 Louisiana Street, Houston. Texas 77002 and to Jim Boyle. Herrera & Boyle, PLLC. Suite 1250, 816 Congress. Austin, Texas 78701. INTRODUCED. READ and PASSED by the affirmative vote of the tty Council of the City of Baytown this the 27`h day of August, 2009. ST MEN 11. DONCARLOS, Mayor ATTEST: _ LETICfA GA A. IDgity Clerk 6, 0 ,YTO w;,� APPROVED AS TO FORM: =U' ACIO RAMIREZ, SR., City it ey RAKarenUiles \City Council \Ordinances\2009\August 27\Rate ordinance A final Baytown.doc ATTACHMENT A NOTICE OF SUSPENSION OF EFFECTIVE DATE r' :z City of Baytown July 13, 2009 Mr. Richard A. Zapalac Vice President for Gas Operations — Texas CenterPoint Energy Suite 2120 11 1 1 Louisiana Street Houston. Texas 77002 RE: CenterPoint Energy Entex, Texas Coast Division COSA 2008 Dear Mr.lapalac: I am writing on behalf of the Texas Coast Utilities Coalition ( "TCUC "), a coalition of cities. In connection with CenterPoint's tiling of May 1, 2009, the Company set an effective date of August 1, 2009. It does not appear that our consultants will have finished their review of the rate filing by that date. The 'TCUC Cities will be suspending the effective date so that the review can be finalized. We would like to meet with CenterPoint in mid- to late August in order to explore the possibilities of arriving at a settlement. Thank you for your attention to this matter. Sincerely yours, Ignacio Ramirez, Sr. City Attorney R Ii u1cxILcutr2CcntcrPoinlSuspcndingRatcs .dot 2401 Nlarkct Strcct P.O. Box 424 Raytown, Tcxas 77522.0424 (281)422.8281 Fax (281)420.6586 ba1'trtu•n6t,bayto%n.org ATTACHMENT B SUSPENSION RESOLUTION RESOLUTION NO. 2000 A RESOLUTION OF THE CITY OF BAYTOWN. TEXAS. AUTHORIZING THE SUSPENSION OF'THE EFFECTIVE DATE OF THE RATES. SCHEDULES AND TARIFFS OF CENTERPOINT ENERGY ENTEX FOR NINETY (90) DAYS WIT14 REGARD TO THE FILING BY CENTERPOINT GAS WITH THE CITY ON MAY 1, 2009: REQUIRING CENTERPOINT TO RE•IMBURSL REASONABLE RA *rE CASE EXPENSES: AUTHORIZING A CITY REPRESENTATIVE TO JOIN A COALITION OF CITIES TO DIRECT EXPERTS AND SPECIAL COUNSEL TO ACT ON THE CITY'S BEHALF: AUTHORIZING THE RETENTION OF SPECIAL COUNSEL AND RATE CONSULTANT FIRMS; MAKING SUCH OTHER FINDINGS AND PROVISIONS RL•'LATED TO THE SUBJECT: AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. WHEREAS, on or about May 1. 2009. CenterPoint Energy Entex ("CenterPoint Gas ") filed a request to increase gas rates for the Texas Coast Division by approximately $2 million through changes in rate schedules; and WHEREAS. the filing was entitled "Cost of Service Adjustment": and WHEREAS, the changed rate schedules were made with the City 1'0r in -city customers and at the Railroad Commission of Texas for customers located outside municipal boundaries; and WHEREAS, the City has participated as a member of the Texas Coast Utilities Coalition ( "TCUC "), a coalition of cities located in the service territory of the Texas Coast Division of CenterPoint Gas; and WHER.EAS, in order to efficiently, meaningfully and comprehensively review the changed rate schedules filed by CenterPoint Gas it is advantageous for the City to continue to participate as a member of the Texas Coast Utilities Coalition: and WHEREAS. given the knowledge and experience of the rate consultants and special couttse) employed by the Texas Coast Utilities Coalition cities in reviewing the books and records of CenterPoint Gas in the last general rate case, Docket No. 9791. it is advantageous for the City as a member of Texas Coast Utilities Coalition to continue to retain such firms: and WHEREAS, CenterPoint Gas designated August I. 2009, as the effective date for the rate increases reflected in its rate schedules: and WHEREAS, TCUC, through its consultants, has been examining the books and records of CenterPoint Gas. but at this point it appears that its review will not be completed by August 1.2009: and WHEREAS, under Texas law, the City has the right to suspend the effective date for up to ninety (90) days: NOW THEREFORE. BE IT RESOLVED BY THE CITY COUNCIL OF THE CI'T'Y OF BAYTOWN. TEXAS- Section 1: That the statements and findings set out in the preamble to this resolution are hereby in all things approved and adopted. Section 2: The effective date for the changes in rate schedules is suspended for ninety (90) days. The last day of the suspension period would be October 30. 2009, but the City may issue a decision in this matter prior to the expiration of the suspension period. Section 3: The City, as a member of the Texas Coast Utilities Coalition, continues its retention of Diversified Utilities Consultants; Inc.. and the law firm of Herrera & Boyle, PLLC, to act on its behalf with regard to matters related to the requested change in rate schedules by CenterPoint Gas. Section 4: The City will act as a member of the coalition of cities known as the Texas Coast Utilities Coalition in reviewing the appropriateness of the changos in rate schedules proposed by CenterPoint Gas. The City Manager and City Attorney or their designees will act as the City's representatives with regard to directing the activities ofthe Texas Coast Utilities Coalition, Section 5: The City orders CenterPoint Gas to reimburse the cost of its reasonable rate case expenses. The City will have no obligation for payment of any rate case expenses that are not reasonable. Section b: The City retains its right to withdraw from the coalition of cities at any time without any financial obligation to the remaining coalition members or to the experts or lawyers hired by the coalition or its members. Section 7: This resolution shall take effect immediately from and after its passage by the City Council of the City of Baytown. INTRODUCED, READ and PASSED by the affirmative vote of i City Council of the City of Baytown, this the 23rd day of July. 2009. S PHE . DONCARLOS, ayor ATTEST: Ca L l IA G . !n ri City Clerk APPROVED AS TO FORM: `� —��•! ,t ACIO RAMIREZ, SR.. Ci ttorney R:%KucPWiles%Ciry CouneillRcsoludons120Muly 2ATCUCSoWnsionResolution.doe ATTACHMENT C NOTIFICATION OF UNLAWFUL CONDUCT 1 City of Baytown August 12, 2009 Sent via Certified Mail RRR 7004 1350 0002 8951 7446 Mr. Richard A. Zapalac Regional Vice President Gas Operations CenterPoint Energy Resources Corp. 1301 Travis, Suite 540 Houston, Texas 77002 Re: COSA 2008 rate application for the Texas Coast Division Dear Mr. Zapalac: I understand that CenterPoint has put new rates into effect for all the TCUC Cities on August 1, 2009. On behalf of the TCUC Cities, I believe this action is unlawful. All of the TCUC Cities suspended the effective date for the new rates for ninety days as provided by Section 104.107 of the Gas Utility Regulatory Act. Each city acted to suspend the effective date prior to August 1, 2009. The procedural requirements of the COSA tariff were made subject to the provisions of the Gas Utility Regulatory Act as set forth in the tariff, as follows: The provisions of this Cost of Service Adjustment are to be implemented in harmony with the Gas Utility Regulatory Act (Texas Utilities Code, Chapters 101 — 105). The Company's annual adjustment will be made in accordance with all applicable laws. Failure to comply with the suspensions of the effective date by TCUC Cities is totally at odds with the power vested in incorporated municipalities under Section 104,107(a)(1) to "stnpencl the operation of the schechcle fir not longer than 90 clubs iffier they chile the scheeltc/e iroukl otherwise he efreclive. " There is no way to argue that ignoring the power granted in Section 104.107 is in harmony with the provisions of the Gas Utility Regulatory Act or in accordance with all applicable laws. Ignoring the resolutions of the TCUC Cities is an act of defiance and contempt for the lawful functioning of incorporated municipalities acting as local regulatory authorities. 2401 Market Surrr P.O. But 424 Baytown, Tcxas 77522.042.1 (281)422.8281 Fax (281)420.6586 hayinwiViibayto n.org Letter to Mr. Zapalac August 12, 2009 Pa,c 2 Even if one were to argue that the tariff gave CenterPoint the right to implement rates within 90 days, the tariff cannot repeal the right that cities have to suspend the effective date as provided by Section 104.107 of the Gas Utility Regulatory Act. Further, as I indicated in my letter of July 13, 2009, the TCUC Cities were willing to work with CenterPoint to see if it was possible to arrive at an amicable settlement of this rate application. We had wanted to schedule negotiations for mid to late August after we received the recommendation of our consultants. Instead of working to this end, CenterPoint notified our Austin attorney on August 4, 2009, that it would not be answering one set of requests for information which were due a day later as well as refusing to respond to two more sets of requests which were due within a couple of days thereafter. This is not working in good faith to resolve this matter. We are still willing to work toward an amicable settlement if CenterPoint would answer the outstanding discovery and refund to customers any increase in base rates since August 1, 2009. With this understanding, please let us know by Monday, August 17, 2009, if CenterPoint is willing to work with us to resolve this rate case. Sincerely yours, Ignacio Ramirez City Attorney K Karen EnicvNamitev Ima to /s,Mbc 08 11 M ())doe ATTACHMENT D DIVERSIFIED REPORT AND RECOMMENDATION DIVERSIFIED UTILITY CONSULTANTS, INC. 1912 W. Anderson Ln, 202 o Austin, Texas 78757 a (512) 257 -2600 • Fax (512) 257 -2243 August 12, 2009 Texas Coast Utilities Coalition of Cities RE: CenterPoint Entex COSA Piling - Texas Coast Division Dear Mayors and City Council Members: This report contains Diversified Utility Consultants, Inc.'s ( "DUCI ") review, analysis and investigation of CenterPoint Entex's ( "CenterPoint" or "Company ") initial cost of service adjustment ( "COSA ") filing for the Texas Coast Division ( "TCD "). The letter provides a summary of recommendations, while the balance of the report discusses DUCI's analyses and each adjustment in greater detail. CenterPoint filed its initial COSA filing on May 1, 2009. The COSA filing seeks to take advantage of a process approved b the Railroad Commission of Texas ("Commission" or "RCT ") in GUD No. 9791 in 2008. While this report does not address the Cities' position regarding the legality of the COSA, it does recognize that the Company's filing falls short of being a reasonable or adequate rate filing package. The Company's failure to comply with standard or typical informational presentations in its filing undermines any presumption that its request only seeks reasonable and necessary revenue requirements. Further, compounding the problems of the Company's limited rate filing presentation is the Company's position that the Cities must take action with 90 days of the filing. It appears the Company is attempting to take unfair advantage of Cities and customers by limiting both the amount of information and the corresponding time period to obtain, review and analyze information in order to set a rate in compliance with the law. The Company's COSA request seeks an annual increase of $2,050,632. The Company's proposed increase is excessive. The proposed increase incorporates various inappropriate costs or expenses that do not comply with various rate setting standards, including items previously denied by the Commission. The following table sets forth the Company's monthly proposed base rate increase and DUCI's recommended increases, by customer class. 1 Final Order GUD No. 9791 signed October 20, 2008 and the Order on Rehearing dated December 16, 2008. COSA Proposed Monthly Customer Charge Increase Customer Class CenterPoint Base Rate% Increase DUCI Residential $0.67 4.60% $0.33 Small Commercial $0.63 3.00% $0.47 Lar a Volume $0.63 1 0.02% $0.63 Based on a review of the Company's filing, DUCT recommends a total COSA adjustment of $1,014,867 or a reduction of $1,035,765 to the Company's proposed COSA increase. This recommendation results in a monthly COSA adjustment of $0.33 for the Residential class and $0.47 for Small Commercial class. The Large Volume customer class COSA proposed increase by both the Company and DUCI of $0.63 is set at the maximum allowed level of 5 %, a Iimitation or cap set forth in the COSA tariff. As discussed at the end of the attached report, DUCI may have recommended additional adjustments had the Company provided responses to the outstanding information requests. However, the Company refused to provide responses to DUCI's last three sets of interrogatories as noted in the attached email from CenterPoint. The RCT analyzed the same COSA filing as it related to environs customers, those not in a municipality. The Commission did not suspend the effective date of the Company's request and as such had less time and information associated with its review efforts. Given that DUCI had both additional time and information, even though not all the information requested, we were able to identify more issues and thus a greater overall level of adjustments compared to the Commission. The following table summarizes the RCT's and DUCI's adjustments. RCT and DUCI Adjustments DESCRIPTION RCT's Adjustments DUCI's Adjustments Cash Working Capital $216,764 $394,022 Uncollectible $0 $401,525 Interest on Customer Deposits (— $0 $58,310 Incentive Compensation $58,137 $58,137 Long Term Incentive Compensation $0 $41,715 Investor Relations I $44,344 $44,344 Employee Meals and Entertainment ! 34,467 $24 467 Total Adjustments j $351,5441 $1.05-m We invite the Mayors, City Council Members, City Managers and City Staff to review the Company's request and DUCI's adjustments to the Company's proposed COSA filing. We appreciate the opportunity to provide this service to the Cities, and are prepared to answer any questions that may arise from your review of this request. Sincerely, Diversified Utility Consultants, Inc. ATTACHMENT E TARIFFS CENTERPOINT ENERGY RESOURCES CORP. DB /A CENTERPOINT ENERGY ENTEX AND CENTERPOINT ENERGY TEXAS GAS TEXAS COAST DIVISION RATE SHEET RESIDENTIAL SERVICE RATE SCHEDULE NO. R -2074 APPLICATION OF SCHEDULE This schedule is applicable to any customer to whom service is supplied in a single private dwelling unit and its appurtenances, the major use of which is for household appliances, and for the personal comfort and convenience of those residing therein. Natural gas supplied hereunder is for the individual use of the customer at one point of delivery and shall not be resold or shared with others. MONTHLY RATE For bills rendered on and after the effective date of this rate schedule, the monthly rate for each customer receiving service under this rate schedule shall be the sum of the following: (a) The Base Rate consisting of: (1) Customer Charge — $14.05 (2) Commodity Charge — All Ccf $0.03055 per Ccf (b) Tax Adjustment — The Tax Adjustment will be calculated and adjusted periodically as defined in the Company's Tax Adjustment Rate Schedule and Franchise Fee Adjustment Rate Schedule. (c) Gas Cost Adjustment — The applicable Purchased Gas Adjustment (PGA) Rate — as calculated on a per Ccf basis and adjusted periodically under the applicable Purchased Gas Adjustment (PGA) Rate Schedule — for all gas used. RULES AND REGULATIONS Service under this schedule shall be furnished in accordance with the Company's General Rules and Regulations, as such rules may be amended from time to time. A copy of the Company's General Rules and Regulations may be obtained from Company's office located at 1 I 1 I Louisiana Street, Houston, Texas. CENTERPOINT ENERGY RESOURCES CORP. D /B /A CENTERPOINT ENERGY ENTEX AND CENTERPOINT ENERGY TEXAS GAS TEXAS COAST DIVISION RATE SHEET GENERAL SERVICE -SMALL RATE SCHEDULE NO. GSS -2074 APPLICATION OF SCHEDULE This schedule is applicable to natural gas service to any customer engaging in any business, professional or institutional activity, for all uses of gas, including cooking, heating, refrigeration, water heating, air conditioning, and power. This schedule is applicable to any general service customer for commercial uses and industrial uses, except standby service, whose average monthly usage for the prior calendar year is 150,000 cubic feet or less. Natural gas supplied hereunder is for the individual use of the customer at one point of delivery and shall not be resold or shared with others. MONTHLY RATE For bills rendered on and after the effective date of this rate schedule, the monthly rate for each customer receiving service under this rate schedule shall be the sum of the following: (a) The Base Rate consisting of: (1) Customer Charge — $13.13' (2) Commodity Charge — First 150 Ccf $0.06655 per Ccf Over 150 Ccf $0.03258 per Ccf (b) Tax Adjustment — The Tax Adjustment will be calculated and adjusted periodically as defined in the Company's Tax Adjustment Rate Schedule and Franchise Fee Adjustment Rate Schedule. (c) Gas Cost Adjustment — The applicable Purchased Gas Adjustment (PGA) Rate — as calculated on a per Ccf basis and adjusted periodically under the applicable Purchased Gas Adjustment (PGA) Rate Schedule — for all gas used. RULES AND REGULATIONS Service under this schedule shall be furnished in accordance with the Company's General Rules and Regulations, as such rules may be amended from time to time. A copy of the Company's General Rules and Regulations may be obtained from Company's office located at 1 I I t Louisiana Street, Houston, Texas. CENTERPOINT ENERGY RESOURCES CORP. DB /A CENTERPOINT ENERGY ENTEX AND CENTERPOINT ENERGY TEXAS GAS TEXAS COAST DIVISION RATE SHEET GENERAL SERVICE -LARGE VOLUME RATE SCHEDULE NO. GSLV -605 AVAILABILITY This schedule is available at points on existing facilities of adequate capacity and suitable pressure in the area designated in the Rate Book of CENTERPOINT ENERGY RESOURCES CORP., DB /A CENTERPOINT ENERGY ENTEX AND CENTERPOINT ENERGY TEXAS GAS (hereinafter called "Company"). LICATION OF SCHEDULE This schedule is applicable to any general service customer for commercial uses and industrial uses whose average monthly usage for the prior calendar year is more than 150,000 cubic feet. Gas supplied hereunder is for the individual use of the Consumer at one point of delivery and shall not be resold or shared with others. If the Consumer has a written contract with Company, the terms and provision of such contract shall be controlling. MONTHLY RATE For bills rendered on and after the effective date of this rate schedule, the monthly rate for each customer receiving service under this rate schedule shall be the sum of the following: (a) The Base Rate consisting of. (1) Customer Charge — $13.13 (2) Commodity Charge — First 1,500 Ccf $0.09036 per Ccf 1,500 — 10,000 Ccf 50.05880 per Ccf Over 10,000.Ccf 50.04980 per Ccf (b) Tax Adjustment — The Tax Adjustment will be calculated and adjusted periodically as defined in the Company's Tax Adjustment Rate Schedule and Franchise Fee Adjustment Rate Schedule. (c) Gas Cost Adjustment — The applicable Purchased Gas Adjustment (PGA) Rate — as calculated on a per Mcf basis and adjusted periodically under the applicable Purchased Gas Adjustment (PGA) Rate Schedule — for all gas used. WRITTEN CONTRACT In order to receive a delivery from Company of more than 25 Mcf during any one day, the Consumer must execute a written contract with Company on Company's form of contract covering the sale of gas by Company to it. In the case of existing Consumers, the maximum gas usage during any one day shall be obtained from the records of the CENTERPOINT ENERGY RESOURCES CORP. DBIA CENTERPOINT ENERGY ENTEX AND CENTERPOINT ENERGY TEXAS GAS TEXAS COAST DIVISION RATE SHEET GENERAL SERVICE -LARGE VOLUME RATE SCHEDULE NO. GSLV -605 Company, except in cases where the existing Consumer will be purchasing increased volumes of gas from Company because of expansions or for any other reasons, in which event the Company may estimate usage by such Consumer. Also in the case of new Consumers, the Company may estimate usage by the Consumer. Any such estimates made by Company shall be binding on Consumer in determining whether or not a contract is required. Such written contract shall be executed by Consumer upon request of Company and Company shall not be obligated to serve any such Consumer more than 25 Mcf during any one day until such written contract is executed and delivered by Consumer. MEASUREMENT The term "cubic foot of gas" for the purpose of measurement of the gas delivered and for all other purposes is the amount of gas necessary to fill a cubic foot of space when the gas is at an absolute pressure of 14.65 pounds per square inch and at a base temperature of sixty (60) degrees Fahrenheit. The term "Mcf' shall mean 1,000 cubic feet of gas. The Sales Unit shall be one Mcf. Assumed Atmospheric Pressure - The average atmospheric pressure shall be assumed to be fourteen and seven - tenths (14.7) pounds per square inch, irrespective of actual elevation or location of the point of delivery above sea level or variation in such atmospheric pressure from time to time. Orifice Meters - When orifice meters are used for the measurement of gas, such orifice meters shall be constructed and installed, and the computations of volume made, in accordance with the provisions of Gas Measurement Committee Report No. 3 of the American Gas Association as revised September, 1969 ( "A.G.A. Report No. 3), with any subsequent amendments or revisions which may be mutually acceptable. The temperature of the gas shall be determined by a recording thermometer so installed that it may record the temperature of the gas flowing through the meter or meters. The average of the record to the nearest one (1) degree Fahrenheit, obtained while gas is being delivered, shall be the applicable flowing gas temperature for the period under consideration. The specific gravity of the gas shall be determined by a recording gravitometer owned and operated by the pipeline company from whom Company purchases its gas, so installed that it may record the specific gravity of the gas flowing through the meter or meters; provided, however, that the results of spot tests made by the pipeline company with a standard type specific gravity instrument shall be used at locations where the pipeline company does not have a recording gravitometer in service. if the recording gravitometer is used, the average of the record to the nearest one - thousandth (0.00 1), obtained while gas is being delivered, shall be the applicable specific gravity of the gas for the period under consideration. If the spot test method is used, the specific gravity of the gas delivered hereunder shall be determined once monthly, the result obtained, to the nearest one - thousandth (0.00 1), to be applicable during the succeeding billing month. Adjustment for the effect of supercompressibility shall be made according to the provisions of A_G.A. Report No. 3, hereinabove identified, for the average conditions of pressure, flowing temperature and specific gravity at which the gas was measured during the period under consideration, and with the proportionate value of each carbon dioxide CENTERPOINT ENERGY RESOURCES CORP. DB /A CENTERPOINT ENERGY ENTEX AND CENTERPOINT ENERGY TEXAS GAS TEXAS COAST DIVISION RATE SHEET GENERAL SERVICE -LARGE VOLUME RATE SCHEDULE NO. GSLV -605 and nitrogen in the gas delivered included in the computation of the applicable supercompressibility factors. Company shall obtain appropriate carbon dioxide and nitrogen fraction values as may be required from time to time. Positive Displacement Meters and Turbine Meters - When positive displacement meters and/or turbine meters are used for the measurement of gas, the flowing temperature of the gas metered shall be assumed to be sixty (60) degrees Fahrenheit, and no correction shall be made for any variation therefrom; provided however, that company shall have the option of installing a recording thermometer, and if company exercises such option, corrections shall be made for each degree variation in the applicable flowing temperature for the period under consideration. The volumes of gas determined shall be adjusted for the effect of supercompressibility as follows: (A) When the flowing temperature of gas is assumed to be sixty (60) degrees Fahrenheit, the supercompressibility factor shall be the square of the factor, Fpv, computed in accordance with the principles of the A.G. A. Report No. 3, hereinabove identified, for a pure hydrocarbon gas of six - tenths (0.6) specific gravity and for the average pressure at which the gas was measured. (B) When the flowing gas temperature is recorded and applied according to the option above, the supercompressibility factor shall be the square of the factor, Fpv, computed in accordance with the principles of the American Gas Association Gas Measurement Committee Report No. 3, hereinabove identified, for a pure hydrocarbon gas of six - tenths (0.6) specific gravity and for the average conditions of pressure and flowing temperature at which the gas was measured. SUPPLY INTERRUPTIONS Total or partial interruption of gas deliveries due to acts of God, the elements, requirements for residential and other uses declared superior to Consumers by law, or to other causes or contingencies beyond the control of Company or not proximately caused by Company's negligence, shall not be the basis for claims- delivery and receipt of gas to be resumed whenever any such cause or contingency shall end. CHARGES FOR UNAUTHORIZED OVER -RUN GAS Any gas taken during any day by Consumer which exceeds the maximum daily quantity specified in Consumer's contract with Company shall be considered to be unauthorized over -run gas. Any gas taken by Consumer after the effective hour of an order calling for a complete curtailment of all gas deliveries, and prior to the authorized resumption of natural gas service, hereunder shall be considered to be unauthorized over -run gas. Any gas taken by Consumer after the effective hour of an order calling for a partial curtailment, and prior to the authorized resumption of natural gas service, which exceeds the stated amount of gas deliveries Consumer may take during such partial curtailment, shall be considered to be unauthorized over -run gas. Company shall bill, and Consumer shall pay for unauthorized over -run gas at the rate of S 10.00 per Mcf, in addition to the Monthly Rate specified herein for such gas. The payment of such additional charge for unauthorized over -run gas shall not, under any circumstances, be considered as giving the Consumer the right to take unauthorized over -run gas, nor shall such payment be considered to exclude or limit any other remedies available to Company against the Consumer for exceeding the maximum daily quantity specified in Consumer's contract with Company, or for failure to comply with curtailment orders issued by Company hereunder. CENTERPOINT ENERGY RESOURCES CORP. DB /A CENTERPOINT ENERGY ENTEX AND CENTERPOINT ENERGY TEXAS GAS TEXAS COAST DIVISION RATESHEET GENERAL SERVICE -LARGE VOLUME RATE SCHEDULE NO. GSLV -605 The additional amount specified above charged for unauthorized over -run gas shall be adjusted, either plus or minus, to conform to the change made by-Company's supplier in its rate schedule under which Company purchases its gas supply for resale under this schedule. RULES AND REGULATIONS Service under this schedule shall be furnished in accordance with the Company's General Rules and Regulations, as such rules may be amended from time to time. A copy of the Company's General Rules and Regulations may be obtained from Company's office located at l I I I Louisiana Street, Houston, Texas.