HomeMy WebLinkAboutOrd 295 Approving retail base rate reductions for Texas Utilities Electric CompanyORDINANCE NO.
AN ORDINANCE APPROVING RETAIL BASE RATE REDUCTIONS FOR
TEXAS UTILITIES ELECTRIC COMPANY; PROVIDING AN EFFECTIVE
DATE THEREFOR; REJECTING DEPRECIATION SHIFTING; APPROVING A
MOST FAVORED NATION PROVISION; PROVIDING A SEVERABH.ITY
CLAUSE; AND FINDING AND DETERMINING THAT THE MEETING AT
WHICH THIS ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS
REQUIRED BY LAW.
WHEREAS, on December 22, 1997, Texas Utilities Electric Company ("TUEC")
filed with the governing body of this municipality a Petition and Statement of Intent to
implement base rate reductions for its retail electric service customers within this
municipality, which base rate reductions are components of a settlement reached among
various parties set forth in the Stipulation and Joint Application for Approval Thereof
("Stipulation") filed with the Public Utility Commission of Texas ("PUC") on December
17, 1997; and
WHEREAS, TUEC's rates should be reduced now and in the future consistent
with load growth, cost reductions, debt refinancings, synergistic savings attributable to
the merger with Enserch, declining rate base and declining cost of capital, all of which
have occurred since rates were last reviewed for reasonableness in the context of PUC
Docket No. 11735; and
WHEREAS, TUEC's agreement to lower its base rates by $263 million over the
period from January 1, 1998 through December 31, 1999 provides less rate relief than
would be afforded by traditional cost of service regulatory reviews during the same
period; and
WHEREAS, the rate relief afforded by the Stipulation is significantly less than
that justified by the overearnings analysis performed recently by the Staff of the PUC;
and
WHEREAS, the Stipulation contains depreciation shifting and other components
of a legislative package advanced by TUEC and the PUC Commissioners during the last
legislative session but rejected by the Legislature, and
WHEREAS, depreciation shifting is inequitable, anti-competitive and otherwise
inconsistent with sound regulatory and public policy; and
WHEREAS, the approval of the Stipulation could be an abdication of statutory
responsibility to set just and reasonable rates and is contrary to public policy because of
provisions that not only freeze rates irrrespective of what overearnings may occur
through TUEC's changed circumstances, but also because it unconscionably endorses
TUEC's recovery of $836 million in previously written -off assets and application of an
unrealistically high rate of return on equity should any party, in good faith, attempt to
review the reasonableness of TUEC's rates or challenge TUEC's overeamings; and
VVTMREAS, the Town of Westlake should intervene in the PVC's proceeding to
review the Stipulation, PUC Docket No. 18490, for the purpose of advocating greater rate
relief and opposing provisions that are contrary to sound public policy and adverse to
ratepayers; and
WHEREAS, the appropriate response of the PUC ought to be to set temporary
base rate reductions consistent with the Stipulation while proceeding with a thorough
review of TUEC's rates including a comprehensive review of the Texas Utilities/Enserch
merger savings and TUEC's affiliate transactions with further and final rate relief
reconcilable to January 1, 1998; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE TOWN OF WESTLAKE,
TEXAS THAT:
SECTION 1: The Town of Westlake intervene in PUC Docket No. 18490 and
coordinate its efforts in that regard with other cities through the Steering Committee of
Cities Served by TUEC.
SECTION 2: The PUC be encouraged to proceed with its mandate to regulate
TUEC in the public interest rather than rely upon the Stipulation.
SECTION 3: The Legislature be encouraged to reject the TUEC and PUC
lobbying efforts that w411 be associated with the Stipulation and to specifically reject
depreciation shifting as a means of funneling uneconomic investment in generation plant
to stranded transmission and distribution customers.
SECTION 4: The retail base rate reduction tariffs filed by TUEC (Rider RRD-
Residential Rate Reduction, Rider GSRD — General Service Secondary Rate Reduction,
and RD — Rate Reduction) are approved on an interim basis effective January 1, 1998.
With the expectation that appropriate regulatory authorities will afford further rate
reductions upon review of the Stipulation and review of TUEC's cost of service, any
further reductions associated with a final PUC order are to be retroactive to January 1,
1998. Otherwise, the referenced schedules shall remain in effect until such time as they
may be changed, modified, or amended by the approval of the Board of Aldermen. The
filing of the rate schedules shall constitute notice to the consumers of electricity, within
this municipality, of the availability and application of such rate schedules.
SECTION S: The shifting of $335 million in transmission and distributed
depreciation to nuclear production plant as called for in the Stipulation is rejected.
SECTION 6: Nothing contained in this Ordinance shall be construed now or
hereafter as limiting or modifying in any manner the right and power of the governing
body of this municipality under the law to regulate rates, operations, and services of
Texas Utilities Electric Company.
SECTION 7. Notwithstanding any other provision of this Ordinance, the rates
authorized for electric service in the Town of Westlake shall not exceed the lowest rates
available to residents of any other municipality served by TUEC.
SECTION 8: That if a court of competent jurisdiction declares any part,
provision, section or phrase of this Ordinance invalid or unconstitutional, the remaining
sections, phrases, parts, and provisions shall be valid and remain operable to the fullest
extent permitted by law.
SECTION 9: It is hereby officially found and determined that the meeting at
which this ordinance is passed is open to the public as required by law and that public
notice of the time, place and purpose of said meeting was given as required.
SECTION 10: A copy of this Ordinance is to be provided promptly by the Town
Secretary to the local TUEC representative and to Jay Doegey, City Attorney of the City
of Arlington, as Chairman of the Cities Steering Committee.
PASSED AND APPROVED BY THE BOARD OF ALDERMEN OF THE TOWN OF
WESTLAKE, TEXAS, ON THIS 19TH DAY OF JANUARY, 1998.
itI
ATTEST:
4 Y
Clinger C,rosswy, Town Seo e ry
APPROVED AS TO FORM:
Paul C. Isham, Town Attorney