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CC Resolution No. 1924 - Denying Gas Rate Increase RESOLUTION NO.1924 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN,TEXAS, DENYING THE RATE INCREASE PROPOSED BY CENTERPOINT ENERGY RESOURCES CORP.,DBA CENTERPOINT ENERGY ENTER AND CENTERPOINT ENERGY TEXAS GAS,TEXAS COAST DIVISION("CENTERPOINT"),MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT;AND PROVIDING FOR THE EFFECTIVE DATE HEREOF. WHEREAS.CenterPoint Energy Resources Corp.,d/b/a CenterPoint Energy Entex and CenterPoint Energy Texas Gas,Texas Coast Division("CenterPoint")filed a Statement of Intent with the City of Baytown.Texas("City")on or within a few days after March 6.2008 to increase its division- wide,annual revenue requirement,by approximately S7.36 million;and WHEREAS.the City is a regulatory authority under the Gas Utility Regulatory Act("GURA") and under§103.001 of GURA has exclusive original jurisdiction over CenterPoint's rates,operations, and services of a gas utility within the municipality:and WHEREAS,CenterPoint has not filed a general rate case in over thirty years.Over that time period there has not been a thorough review of the reasonableness of the expenditures of the gas utility or the prudence of its capital additions:and WHEREAS,CenterPoint is seeking to significantly increase rates for residential customers by substantially raising the customer charge in this proceeding and continuing or expanding a rate mechanism which will cause all rate increases in the future to solely impact the customer charge:and WHEREAS,in order to maximize the efficient use of resources and expertise in reviewing, analyzing and investigating CenterPoint's rate request and its changes in tariffs,the City Council through Resolution No.1922 suspended the effective date of the requested rate and tariff changes of CenterPoint and authorized the City to join the the Texas Coast Utilities Coalition("TCUC")in order to work together in helping its members to carry out their fiduciary responsibilities as regulatory authorities;and WHEREAS,on April 10,2007,the City Council held a public hearing pursuant to Section 104.105 of the Texas Utilities Code,the City Council held a hearing since CenterPoints proposed increase constitute a major change as defined in Section 101.104 of the Texas Utilities Code:and WHEREAS.after reviewing CenterPoint's statement of intent to increase rates and after holding the requisite hearing and considering the testimony therein,the City Council of the City of Baytown. Texas,now desires to deny CenterPoint's rate request and tariff changes;NOW THEREFORE.. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN.TEXAS: Section 1:That the statements and findings set out in the preamble to this ordinance are hereby in all things approved and adopted. Section 2:The City hereby denies CenterPoint's request to increase rates and in support thereof finds,in part,that: a)The Statement of Intent fails to provide sufficient information to justify the requested increase in rates or to justify the changes set forth in the attached tariffs; b)The requested increase in rates puts more of the cost for the base rate increase on low-use residential customers who often are in the worst position to absorb such cost increases; and c)The request asks that a rate mechanism to be continued or expanded which provides a disincentive to reducing costs and becoming more productive or efficient and does not provide for meaningful review of annual rate requests. Section 3:The City hereby authorizes that Herrem&Boyle,PLLC,the attorneys for the TCUC,take such actions as are appropriate,whether in court or before any regulatory authority,to prohibit CenterPoint from charging for expenses which are not reasonable and necessary,or capital expenditures which have not been prudently incurred,or rates which are not just and reasonable. Section 4:The City Clerk is hereby directed to notify CenterPoint of this resolution by sending a copy of same to Denise Hardcastle,Director of Regulatory Activities,CenterPoint Energy,P.O. Box 2628,Houston,Texas 77252. Section 5: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 the Council of the City of Baytown this the 10'"day of April,2008.i rr STEP E�NCARLOS, ATTEST:A� al, m� KAY fE DARN City le APPROVED AS TO FORM: �ACIO RAMIREZ,SR.,City Orny a:VCaren\Fil City Council\RIIItuiII N"pnl IOVtesoluliondnenialollWes.doc 2