Ordinance No. 11,660ORDINANCE NO.11,660
AN ORDINANCE OF THE 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;REQUIRING THE
REIMBURSEMENT OF RATE CASE EXPENSES;ESTABLISHING AN
EFFECTIVE DATE FOR THIS ORDINANCE;MAKING SUCH OTHER
FINDINGS AND PROVISIONS RELATED HERETO;CONTAINING A
SAVINGS CLAUSE;AND PROVIDING FOR THE EFFECTIVE DATE
THEREOF.
************************************************
WHEREAS,onoraboutApril 28,2011,CenterPoint EnergyEntex ("CenterPoint")filed
arequesttoincreaseratesbyanannualamount of approximately EIGHTY-TWO THOUSAND
AND NO/100 DOLLARS ($82,000.00)withinthe Texas Coast Division under the "Cost of
Service Adjustment-3"("COSA-3")tariff approvedbytheRailroad Commission of Texas;and
WHEREAS,CenterPoint's filingpurportstobein compliance witha "Cost of Service
Adjustment-3"("COSA-3")tariff approvedbytheRailroad Commission of Texas;and
WHEREAS,the COSA-3 tariff approved bythe Railroad Commission of Texas provides
that"[t]heprovisions of thisCost of ServiceAdjustmentaretobeimplementedinharmonywith
theGasUtility Regulatory Act(TexasUtilitiesCode,Chapters 101-105)"andthatthe
"Company's annualrate adjustment willbemadeinaccordancewithall applicable laws";and
WHEREAS,absenttheavailability of theCOSA-3 tariff approved bytheRailroad
Commission of Texas,itishighlyunlikelythatCenterPointwouldhaveinitiatedaratecaseto
recoverachangeinitscost of service of EIGHTY-TWOTHOUSANDANDNO/100
DOLLARS ($82,000.00),whichrepresentsapproximately0.15 percent (0.15%)of itsoverall
cost of service;and
WHEREAS,absent the availability of the COSA-3 tariff approved bythe Railroad
Commission of Texas,theCitywouldnotbe expending resources to address an application to
increase ratesbythe de minimis amount of EIGHTY-TWO THOUSAND AND NO/100
DOLLARS ($82,000.00);and
WHEREAS,the Railroad Commission of Texas inGas Utility Docket No.9910
concluded thata municipality maynotsuspendtheeffectivedatethat CenterPoint proposesinits
requestto change rates under a COSA application,a conclusion with which theCity disagrees
andwhichissueis pending beforetheTravisCountyDistrictCourt;and
WHEREAS,CenterPoint proposed an effective date of August 1,2010,whichin
conjunction withthe Railroad Commission of Texas'conclusion thattheCitymaynot suspend
CenterPoint's proposed effective date,precludestheCityfrom conducting a meaningful review
of CenterPoint's request to raise rates,thereby denying the City's counsel and consultants the
abilitytoprovideafullreviewand recommendation tothe Texas CoastUtilitiesCoalition of
Cities ("TCUC Cities");and
WHEREAS,CenterPoint failedtocarryitsburden of proof andmeetthe requirements of
theGas Utility Regulatory Actas necessary to warrant a change inrates,byfailingtomeetthe
requirements of theGasUtilityRegulatoryActinseveralareas of itsraterequest,including,but
not limited tothe following areas:
a.CenterPoint's expenses relatedtoits Affiliate Transactions;
b.CenterPoint's proposedcost of capital,includingitsReturnonEquity,itsCost of
Debt,itsCapitalStructure,anditsoverallRate of Return;
c.CenterPoint's proposed RateDesign;
d.CenterPoint's proposed treatment of Accumulated Deferred Income Tax;
e.CenterPoint's proposed calculation of its Cash Working Capital;and
f.CenterPoint's proposed calculation of its Pension Expense;and
WHEREAS,the 345lh Judicial District Court of Travis County,Texas in Cause No.D-l-
GN-09-000982,TexasCoastUtilitiesCoalitionvs.The RailroadCommission of Texas,Judge
StephenYelenoskypresiding,issuedaJudgment concluding thattheRailroad Commission of
Texasdidnothavethe authority toimposetheCOSA-3 tariff ontheCityanddidnothavethe
authoritytoapproveaCOSA-3 tariff inthoseareaswheretheRailroad Commission of Texas
hadoriginal jurisdiction;NOW THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1:Thatthefactscontainedinthepreamble of this ordinance are determined
tobetrueand correct andare hereby adopted aspart of this ordinance.
Section2:Thatthebaserateincreaseproposedby CenterPoint isdenied.
Section 3:That tothe extent CenterPoint implements any change in rates in
contradiction of this ordinance,CenterPoint shallrefundtotheCityanybaserate increase infull,
plusinterest calculated attheratebeingearnedon customer deposits,andshallalsoremitany
andall amounts pursuant to penalties thatmayapply.
Section 4:That the effective dateforthis ordinance isthedate of its adoption.
Section 5:If there isan appeal of this ordinance,the City reserves all rights to
advocate adjustments tothe revenue requirement,cost allocation and rate design proposed by
CenterPoint andtofully participate in such appeal,including the reimbursement of its reasonable
rate case expenses.
Section 6:TheCityisa participant ina coalition of cities known asthe Texas Coast
Utilities Coalition of Cities and authorizes intervention in proceedings related to CenterPoint's
rate application beforetheRailroad Commission of Texasandrelated proceedings incourts of
law,and subject tothe right to terminate employment atany time,the City authorizes the law
firm of Herrera &Boyle,PLLC toactas special counsel with regard torate proceedings
involving CenterPoint before the City,the Railroad Commission of Texas,or any court of law.
Section7:All conditions precedenttothe adoption of each of the foregoing sections
herein have been complied with under law.
Section 8:CenterPoint shall reimburse the reasonable rate case expenses of the
TCUC Cities upon presentment of invoices receivedbytheCity.
Section 9:That if any section orpart of any section,paragraph,or clause of this
Ordinance is declared invalid or unconstitutional forany reason,such declaration shall notbe
heldto invalidate orimpairthe validity,force,oreffect of any other section or sections,part of
section,paragraph,or clause of thisOrdinance.
Section10:ThattheCityClerkisherebydirectedtosendatrueandcorrectcopy of
this ordinance toScottE.Doyle,RegionalVice President Gas Operations,CenterPoint Energy,
1111 Louisiana Street,Houston,Texas 77002 andto Alfred R.Herrera,Herrera &Boyle,PLLC,
Suite 1250,816 Congress,Austin,Texas 78701.
Section 11:This ordinance shalltakeeffect immediately fromand after its passage by
theCity Council of theCity of Baytown.
INTRODUCED,READ,andPASSEDbvthe affirmative vote of theCityCouncil of the
.thCityofBaytownthisthe9dayofJune.2011.
LETICIA B'R^SgjK
APPROVED AS TO FORM:
^TtfNACIO RAMIREZ.SR..jCiWy Attorney
R:\karen\Files\Cily Council\Ordinances\20l I-June 9.TCUC COSA•2011 Rale Ordinance.doc