Ordinance No. 11,394ORDINANCE NO. 11.394
AN ORDINANCE OF TI IE CITY COUNCIL OF THE CITY OF BAYTOWN. TEXAS.
REVIEWING THE RATE INCREASE REQUEST OF CENTERPOINT ENERGY
ENTEX: DENYING THE REQUESTED INCREASE IN RATES, ORDERING THAT
NO CHANGE IN RATES OCCUR: MAKING SUCH OTHER FINDINGS AND
PROVISIONS RELATED HERETO: CONTAINING A SAVINGS CLAUSE: AND
PROVIDING FOR THE EFFECTIVE DATE THEREOF.
WHEREAS, on April 30, 2010. CenterPoint Energy Entex ( "CenterPoint ") filed a request to
increase rates within the Texas Coast Division by approximately S3.6 million: and
WHEREAS. CenterPoint's filing purports to be in compliance with a "Cost of Service
Adjustment" (`COSA ") tariff approved by the Railroad Commission of Texas: and
WHEREAS. the COSA tariff approved by the Railroad Commission of Texas provides that "[tjlle
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)" and that the "Company's annual rate
adjustment will be made in accordance with all applicable laws," and
WHEREAS, the Railroad Commission of Texas in Gas Utility Docket No. 9910. concluded that a
municipality may not suspend the effective date that CenterPoint proposes in its request to change rates
under a COSA application, a conclusion with which the City disagrees: and
WHEREAS. CenterPoint proposed an effective date of August 1, 2010, which in conjunction
with the Railroad Commission of Texas conclusion that the City may not suspend CenterPoint's
proposed effective date. precludes the City from conducting a meaningful review of CenterPoint's request
to raise rates. thereby denying the City's counsel and consultants the ability to provide a full review and
recommendation to the TCUC Cities: and
WHEREAS, CenterPoint failed to carry its burden of proof and meet the requirements of the Gas
Utility Regulatory Act to warrant a change in rates. in several areas of its rate request, including, but not
limited to the following areas:
a. CenterPoint's expenses related to its Affiliate Transactions:
CenterPoint's proposed cost of capital. including its Return on Equity, its Cost of Debt,
its Capital Structure, and its overall Rate of Return:
C. CenterPoint's proposed Rate Design:
d. CenterPoint's proposed treatment of Accumulated Deferred Income Tax:
CenterPoint's proposed calculation of its Cash Working Capital:
CenterPoint's proposed calculation of its Pension Expense: and
WHEREAS, the 345`h Judicial District Court of Travis County, Texas, in Cause No. D- 1- GN -09-
000982, Texas Coast Utilities Coalition v. The Railroad Conmâ–ºission of Texas. Judge Stephen Yelenosky
presiding, issued a Judgment concluding that the Railroad Commission did not have the authority to
impose the COSA tariff on the City and did not have the authority to approve a COSA tariff in those areas
where the Railroad Commission had original jurisdiction: NOW THEREFORE.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS:
Section 1: 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 proposed by CenterPoint is denied.
Section 3: That to the extent CenterPoint implements any change in rates in contradiction of
this Ordinance. in addition to any penalties that may apply. CenterPoint shall refund any base rate
increase with interest at the rate being earned on customer deposits.
Section 4: If there is an appeal of this ordinance, then, the City reserves all rights to assert
adjustments to the revenue requirement, cost allocation and rate design proposed by CenterPoint and to
fully participate in such appeal. including reimbursement of its reasonable rate case expenses.
Section 5: All conditions precedent to the adoption of each of the foregoing sections herein
have been complied with under law.
Section 6: CenterPoint shall reimburse the reasonable rate case expenses of the TCUC city
coalition upon presentment of invoices received by the City.
Section 7: 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 8: The City Clerk is hereby directed to send a true and correct copy of this
Ordinance to Scott E. Doyle. Regional Vice President Gas Operations. CenterPoint Energy. 1111
Louisiana Street, Houston. Texas 77002 and to Alfred R. Herrera. Herrera & Boyle. PLLC, Suite 1250.
816 Congress, Austin. Texas 78701.
Section 9: This ordinance shall take effect on July 31, 2010.
INTRODUCED. READ and PASSED by the affirmative vote of T ity Council of the City of
Baytown this the 22 "d day of July. 2010.
APPROVED AS TO FORM:
DONCARLOS.
I NACIO RAMIkEZ. SR.. Ci ttorney
llcobsrvIVega MarenTiles Wity CouncihOrdinances,2010Vuly 22iCOSA -2010 -Rate ordinance - FINAL. -TCUC Cities.doc