CC Resolution No. 2101 RESOLUTION NO. 2101
A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS, RESPONDING TO THE APPLICATION OF CENTERPOINT
ENERGY HOUSTON ELECTRIC, LLC, FOR AUTHORITY TO CHANGE
RATES AND ADOPT CERTAIN RATE RIDERS; DENYING
CENTERPOINT'S PROPOSED RATE INCREASE; FINDING THAT THE
EXISTING ELECTRIC DISTRIBUTION RATES OF CENTERPOINT ARE
UNREASONABLE AND SHOULD BE REDUCED; ORDERING
CENTERPOINT TO REDUCE ITS EXISTING RATES WITHIN THE CITY OF
BAYTOWN; ORDERING CENTERPOINT TO SUBMIT TARIFFS
CONSISTENT WITH THE RECOMMENDATION OF THE TEXAS COAST
UTILITIES COALITION OF CITIES' CONSULTANT WORKING IN
COORDINATION WITH OTHER CITIES IN PUBLIC UTILITY
COMMISSION DOCKET NO. 38339; ORDERING CENTERPOINT TO
REIMBURSE THE CITY FOR ITS REASONABLE COSTS INCURRED IN
THIS RATE CASE AND ANY RELATED RATEMAKING PROCEEDINGS
OR APPEALS OF SAID PROCEEDINGS; MAKING SUCH OTHER
FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND
PROVIDING FOR THE EFFECTIVE DATE THEREOF.
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WHEREAS, the City of Baytown, Texas ("City") is a regulatory authority under the
Public Utility Regulatory Act ("PURA") and pursuant to § 33.001, the City has exclusive
original jurisdiction over the electric rates, operations, and services provided within city limits;
and
WHEREAS, the City has the authority under PURA §§ 33.001 and 36.001, to determine
whether the existing rates of an electric utility are unreasonable or in any way a violation of any
provision of law; and
WHEREAS, on or about June 30, 2010, CenterPoint Energy Houston Electric, LLC
("CenterPoint") filed with the City Clerk an application for authority to change rates and to adopt
certain rate riders (the"application"); and
WHEREAS, on or about June 30, 2010, CenterPoint, pursuant to PURA §§ 33.001 and
36.001, filed with the City of Baytown a Statement of Intent to change delivery rates in all
municipalities exercising original jurisdiction within its service area effective August 6, 2010;
and
WHEREAS, the City previously authorized participation with the Texas Coast Utilities
Coalition ("'TCUC") in hiring experts and legal counsel to review CenterPoint's Statement of
Intent; and
WHEREAS, the City suspended the effective date of CenterPoint's requested rate
change; and
WHEREAS, TCUC representatives obtained additional information from CenterPoint
through written requests for information; and
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WHEREAS, the City's consultants and representatives through cooperative efforts under
the direction of TCUC have reviewed the rate filing package and responses to information and
have made a recommendation to the City regarding the rates to be charged by CenterPoint within
the City; and
WHEREAS, on October 22, 2010, this resolution was properly noticed and CenterPoint
and any interested citizen was given an opportunity to address the City Council regarding
CenterPoint's current rates and its Statement of Intent to increase rates; and
WHEREAS, PURA § 36.151(a)provides that if a regulatory authority, on its own motion
or on complaint by an affected person, after reasonable notice and hearing, finds that the existing
rates of an electric utility for a service are unreasonable or in violation of law, the regulatory
authority shall enter an order establishing the just and reasonable rates to be observed thereafter,
and serve a copy of the order on the electric utility; and
WHEREAS, PURA § 36.151(b) provides that the rates thus ordered by the regulatory
authority constitute the legal rates of the electric utility until changed as provided by PURA; and
WHEREAS, after affording reasonable notice and hearing to CenterPoint, it is the City's
opinion that CenterPoint's rates are not reasonable; and
WHEREAS, based upon City's Special Counsel and the consultants' findings, the City
has made a determination of the reasonableness of the existing rates of CenterPoint, and has
determined just and reasonable rates to be hereafter observed and enforced for all services of
CenterPoint within the City.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
BAYTOWN, TEXAS:
Section 1: That CenterPoint was given reasonable notice of the Council's meeting at
which CenterPoint's rate application was considered, and CenterPoint had a reasonable
opportunity to show the City that its rates were just and reasonable.
Section 2: That CenterPoint failed to show that its proposed or existing rates are just
and reasonable.
Section 3: That the adjustments to CenterPoint's Statement of Intent proposed by
Diversified Utilities Consulting, Inc., and Mr. Jacob Pous on behalf of TCUC and the overall
coordinated recommendation of the cities submitted in Public Utility Commission of Texas
("PUC") Docket No. 38339, and provided to CenterPoint on September 10, 2010, are reasonable
and that it is, therefore, reasonable to reduce CenterPoint's proposed increase of approximately
$110.8 million in its annual revenue, by $259.8 million, which represents a reduction to its
current revenue of about $149.1 million comprised of a reduction of approximately $114 million
for retail distribution rates, and approximately $35 million for wholesale transmission rates from
the level of CenterPoint's existing annual revenue.
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Section 4: That within ten days of the adoption of this Resolution, CenterPoint shall
file with the City rate tariffs consistent with the adjustments proposed by Mr. Pous and the other
cities' experts who coordinated with TCUC, and the costs allocation and rate design
recommendations proposed by the cities' experts in PUC Docket No. 38339, and provided to
CenterPoint on September 10, 2010, that will result in a reduction in current annual revenue of
$149 million. Included in this recommendation, but not limited by it, is the requirement that
franchise fees be recovered from all customers in base rates, denial of CenterPoint's Storm
Hardening Rider as an unauthorized automatic recovery mechanism, and denial of CenterPoint's
alternative customer charge.
Such tariffs shall constitute just and reasonable rates and establish CenterPoint's overall
revenues at an amount that will permit CenterPoint a reasonable opportunity to earn a reasonable
return on its invested capital used and useful in providing services to the public in excess of
CenterPoint's reasonable and necessary operating expenses, in compliance with PURA § 36.151.
Section 5: That CenterPoint shall upon the effective date of this Resolution begin
charging rates set forth in the Tariffs that are consistent with the recommendation of TCUC and
the witnesses it coordinated with in PUC Docket No. 38339.
Section 6: That the existing rates, service charges, and tariff language not
inconsistent with the recommendations of TCUC and the witnesses it coordinated with in PUC
Docket No. 38339 shall remain operative.
Section 7: That within thirty days of the adoption of this Resolution, CenterPoint
shall reimburse TCUC for all ratemaking costs associated with TCUC's activities related to the
rate proceeding and thereafter make prompt reimbursement on a monthly basis to cover costs of
appeals to the PUC or Courts, in accordance with PURA § 33.023.
Section 8. That a copy of this Resolution shall be sent to Stephen Bezecny, Director,
Regulatory Relations, CenterPoint Energy, Inc., I I I Louisiana St., Houston, Texas, 77002 and
Alfred R. Herrera, at Herrera and Boyle, PLLC, 816 Congress Avenue, Suite 1250, Austin,
Texas 78701.
Section 9. That the City is authorized to intervene in any appeal of the City's action
filed at the PUC and to otherwise participate in any litigation associated with CenterPoint's rate
charges in the City, in conjunction with TCUC.
Section 10: This resolution shall take effect immediately from and after its passage by
the City Council of the City of Baytown.
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INTRODUCED, READ and PASSED by the affirmative vote the City Council of the
City of Baytown this the 251h day of October, 2010.
5V X' ST HEN H. DONCARLOS, Mayor
AT T ST:
LETICIA A it er
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APPROVED AS TO FORM:
4RYNACIO RAMIREZ, SR., Ci t5worney
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