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R-05-07-28-11D1 - 7/28/2005 RESOLUTION NO. R-05-07-28-11D1 WHEREAS, TXU Electric Delivery ( "TXU" ) and a number of cities in its north Texas service area have reached a settlement agreement to resolve issues arising from Show Cause resolutions passed by the cities regarding TXU' s transmission and distribution rates, and WHEREAS, the settlement includes TXU' s agreement to file a rate case by July 1, 2006 with the Public Utility Commission that proposes and supports reduced municipal rates for street lighting and municipal pumping, and WHEREAS, TXU is extending the settlement offer to all cities in its service area in exchange for their agreement not to initiate Show Cause Actions concerning TXU' s rates prior to July 1, 2006, and WHEREAS, the City desires to enter into a Letter Agreement with TXU regarding the settlement, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City a Letter Agreement with TXU Electric Delivery, a copy of same being attached hereto as Exhibit "A" and incorporated herein for all purposes . The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. @PFDesktOp\::ODMA/WORLDOX/O:/WDOX/RESOLUTI/R50728D1.WPD/SC RESOLVED this 28th day of July, 2005 . olfW EL Mayor City of Round Rock, Texas AT T: CHRISTINE R. MARTINEZ, City Secret y 2 JUL-14-2005 11:45 CITY OF ROUND ROCK 5122137097 P.05i13 q'T TXU �' Electric Delivery TXU EleeWr.Delivery Rick Chapmap 350 Texas Ave District Manager Round Rock,TX 78664 Round Rode District / ss�� Tel: 512-244-5606 JUN �+ 2005 F=512-244-5665 J RChapman@bwed.c«n June 27, 2005 City of Round Rock Mr. Jim Nuse 221 East Main Street Round Rock, Texas 78664 Re: Settlement Between TXU Electric Delivery and the Steering Committee of Cities Served by TXLJ Electric Delivery Dear Mr. Nuse:: As you know, TXU Electric Delivery Company ("Electric Delivery") and the Steering Committee of Cities Served by TXU Electric Delivery ("Steering Committee") have concluded a settlement of all outstanding issues related to existing and potential Show Cause Actions and other pending regulatory issues. The purpose of this letter is to offer your city benefits comparable to those reflected in that settlement. A copy of that settlement is attached to this letter as Exhibit A. In consideration for your city's agreement not to initiate a Show Cause Action or similar proceeding concerning Electric Delivery's rates before July 1, 2006 and not to intervene in or participate in any manner in any Show Cause Action concerning Electric Delivery's rates initiated at the PUC or in any other jurisdiction prior to July 1, 2006, Electric Delivery will make a cash payment of $132,811.99 to your city. Starting March 31, 2006, and each March 31" thereafter, Electric Delivery will also make an annual cash payment of $126,487.81 to your city. Electric Delivery's obligation to make this payment ceases on (1) the date that your city initiates, intervenes in, or participates in a Show Cause Action or similar proceeding, (2) the date that Electric Delivery ceases to have any obligation to pay any amounts under paragraph 4 of Exhibit A, or (3) the date that the tariffs approved in Electric Delivery's next system-wide rate case at the PUC or in a city rate inquiry become effective on a temporary or permanent basis ("Termination Date"); provided, however, in the year the new tariffs become effective, the annual payment shall be prorated until the Termination Date. Your city's execution of this Letter Agreement signifies your city's agreement to the terms of this paragraph. EXHIBIT All JUL-14-2005 11:45 CITY OF ROUND ROCK r.Ub/1,5 June 27, 2005 -2 - Electric Delivery and the Steering Committee have also agreed to pursue discussions concerning various subjects. Any improved processes or revised tariffs that result from Exhibit A will be made available to and will be applicable to your city. Your city's acceptance of this Letter Agreement also signifies that your city agrees that the amounts paid under this Letter Agreement are paid solely in consideration for your city's forbearance from filing, pursuing, or intervening in any Show Cause Action or similar proceeding against Electric Delivery and are not a rate reduction, refund, rebate, discount,preference,or privilege of any kind for services provided by Electric Delivery. Upon receipt of an executed original of this Letter Agreement,Electric Delivery will send you a check in the first amount specified above. If your city agrees to the provisions of this Letter Agreement, please have a properly authorized representative of your city sign in the space provided below and return the executed original to the undersigned. The offer reflected in this letter expires on September 15,2005. Sin erely, AGREED TO AND ACCEPTED: City of Round Rock By: Its: Date: JUL-14-2005 1145 C1 TY OF ROUND RUCK 51� 1i rty r r. rl Exhimblot Settlement Agreement between TXU Electric Delivery Company and the Steering Committee of Cities Served by TXU Electric Delivery dated February 22, 2005 JUL-14-2005 11:45 CITY OF ROUND ROCK SE'l=MF,NT AGREEMENT This Settlement Agreement ("Agreemenel is made and entered into between "ITXU Electric Delivery Company("Electric Delivery') and the Steering Committee of Cities Served by TXU Electric Delivery Company on behalf of all cities listed on Exhibit A to this Agreernent (`Cities`),hereinafter referred to jointly herein as"Signatories." WHEREAS, the city councils of 23 cities who are members of Cities passed resolutions in 2004 requiring Electric Delivery to file with those cities information that demonstrates good cause for showing that Electric Delivery's transmission and distribution rates should not be reduced(hereinafter referred to as"Show Cause Actions"); WHEREAS, other cities who are members of Cities are contemplating initiating similar Show Cause Actions against Electric Delivery; WHEREAS, Cities and Electric Delivery desire to resolve all outstanding issues related to the existing and potential Show Cause Actions and other regulatory issues;and WHEREAS, after extensive negotiations, Cities and Electric Delivery have reached a compromise and settlement to resolve those issues. NOW, THEREFORE, the Signatories, through their undersigned representatives, hereby agree to the following: 1, Electric Delivery agrees to propose and support in its next system-wide rate case or city rate inquiry one or more municipal rates,each without a demand ratchet, that together will cover all municipal accounts, including a street lighting rate and municipal pumping rate that will be lower than they otherwise'would be. Cities agree to provide to Electric Delivery any information needed to design the rates described in this paragraph. 2. Electric Delivery agrees to file a system-wide rate case at the Public Utility Commission of Texas ("PUC") no later than July 1, 2006, based on a test year ending December 31, 2005 unless Cities and Electric Delivery mutually agree that such a filing is unnecessary. For those cities that do not have a City Council meeting in July, 2006, Electric Delivery will extend its effective date to accomplish suspension by August 31,2006. However,if Electric Delivery files a system-wide rate case at the PUC on or before June 1, 2006, then Electric Delivery will not extend its effective date. 3. Cities agree that Electric Delivery is not required to respond to any pending Show Cause Action initiated by any city listed on Exhibit A to this Agreement prior to July 1, 2006. Cities further agree to abate or dismiss all pending Show Cause Actions,not to pursue any abated Show Cause Actions, and not to initiate similar actions before July 1, 2006, provided the provisions of this Settlement Agreement are honored. Cities agree not to intervene in, or participate in any maturer in, any show cause action initiated at the PUC or in any other jurisdiction prior to the proceeding described in paragraph 2, or in any appeals of such show cause actions, except as necessary to protect the tariff or tariff-eff'oru associated with paragraph 1 or to protect the city or I JUL-14-2005 11:46 CITY OF ROUND ROCK 512218`r[�y r N.by�1 i its residents from being prejudiced in any show cause action pending on appeal at the PUC. If Cities intervene in a show cause action pending on appeal at the PUC, then Cities agree not to take any position in that proceeding that is inconsistent with its obligations under this Settlement Agreement. 4. In consideration for Cities' obligations under this Agreement, Electric Delivery agrees to make a cash payment of S8,5 million to Cities by the later of March 31, 2005 or two weeks after receiving notice from Cities that (1) all cities listed on Exhibit B to this Settlement Agreement have abated or dismissed show cause actions pending against Electric Delivery,and(2)each city on Exhibit C to this Settlement Agreement has passed a resolution ratifiying this Settlement Agreement or provided to Cities a letter in substantially the same form as Exhibit D to this Settlement Agreement that has been signed by an authorized representative of the city. Starting March 31, 2006, and each March 31' thereafter, Electric Delivery will make an annual cash payment of S8 million to Cities. Electric Delivery's obligation to make this payment ceases on the date upon which Cities fail to comply with their obligations under this Agreement or the date upon which the tariffs approved in Electric Delivery's next system-wide rate case at the PUC or in a city rate inquiry become cfFective on A temporary or permanent basis ("Termination Date"); provided, however, in the year the new tariffs become effective, the annual payment shall be prorated until the Termination Date. 5. Electric Delivery agrees to work with Cities to improve the timeliness of streetlight maintenance and to develop a process so that every city-owned and Electric Delivery-owned street light is assigned an identifiable geographic location. Signatories agree to establish a task force of senior employees that will develop, by June 30, 2005, the process and planned rollout for the street light assignment project. Electric Delivery also agrees to provide to Cities a specific contact person (or persons) within Electric Delivery who will be responsible for handling all unresolved.Cities' requests with respect to streetlights, including, but not limited to, billing, maintenance,installation,removal,and account initiation and closure. Signatories agree to diligently pursue resolution of the issues discussed in this paragraph;however, failure to reach an agreement with respect to these issues will not constitute a breach of this Settlement Agreement by either Cities or Electric Delivery. 6. Electric Delivery agrees to work with Cities to establish improved communication, coordination, and timing of construction concerning relocations of Electric Delivery's facilities in public right of way. Signatories agree to establish a task force of senior employees that will develop,by June 30, 2005, the process and planned rollout of an improved relocation process. Signatories agree to diligently pursue resolution of the issues discussed in this paragraph; however, failure to reach an agreement with respect to these issues will not constitute a breach of this Settlement Agreement by either Cities or Electric Delivery. 7. Electric Delivery agrees to discuss with Cities the payment of franchise fees on a quarterly basis regardless of whether the basis for a quarterly payment is historic or prospective and the standardization of a franchise renewal process that permits transition from a prospective basis to a historic basis where the franchise is up for renewal. Signatories agree to diligently pursue discussion of the issues discussed in this paragraph;however, failure to reach a resolution 2 7UL-14-2005 11:46 CITY OF ROUND ROCK 5122187097 P.10113 of these issues will not constitute a breach of this Settlement Agreement by either Cities or Electric Delivery. 8, Electric Delivery agrees to negotiate with Cities,and Cities agree to approve, a tariff that permits Cities to request undergrounding of new or existing distribution facilities. The tariff shall ensure full cost recovery by Electric Delivery through a surcharge in the requesting city in the event that no third party is required by Electric Delivery's tariff,or applicable city ordinance, to pay for undergrounding costs. That tariff will also allow Cities to request undergrounding of transmission lines to the extent Electric Delivery determines that (a) such undergrounding is feasible, (b) such undergrounding is consistent with the PVC's Substantive Rules and ERCOT's requirements, and (c) Electric Delivery can recover the costs of such undergrounding through a surcharge in the requesting city. Electric Delivery will not be obligated to file the tariff for city approval until after the expiration of the Price to Beat or the modification of the Price to Beat in a manner that allows pass through of tariff charges to the ultimate consumer. 9. Electric Delivery agrees to provide quarterly updates to representatives designated by Cities and their consultants concerning Electric Delivery's capital expenditure projects and affiliate transactions, the creation and regulatory treatment of a Pension and Health Benefits Reserve for Electric Delivery, possible workable parameters for performance based rates for Electric Delivery, and other topics as agreed upon by the Signatories. Electric Delivery will work with Cities to provide information requested by Cities concerning those topics. 10. Electric Delivery shall pay up to $10,000 per month in regulatory expenses directly to Cities' consultants, after receipt of appropriate documentation and invoices, provided said expenses may be deferred for recovery. Cities agree to support recovery of such costs in Electric Delivery's next rate case. Should recovery be denied by the PUC, then the payments will immediately cease. 11_ Electric Delivery agrees to work with Cities to establish better communications between the Cities and Electric Delivery with respect to access to city meters for monthly reading. Each city shall provide in writing,by March 31,2005,a contact person for inaccessible meters for city accounts, and shall promptly notify Electric Delivery of any change in the contact person. in months where a meter reader is unable to gain access to the premises to read the meter on regular meter reading trips, or in months when meters are not read, Electric Delivery agrees to provide the customer with a postcard and request the customer to read the meter and return the card to Electric Delivery. If the postcard is not received by Electric Delivery in time for billing, Electric Delivery may estimate the meter reading And issue a bill. Electric Delivery agrees that all municipal meters will be read at least once every three months by it or by the respective city. The failure of a city to designate a contact person for inaccessible meters affects only that city and does not adversely impact any other city or mitigate responsibilities and benefits otherwise inherent to this Agreement. 12. Electric Delivery agrees to reimburse Cities for the expenses incurred related to the Show Cause Actions in an amount not to exceed $100,000 after receipt of appropriate documentation and invoices, and Cities agree that those costs can be deferred for recovery in its next rate case and agree to support deferral and recovery in that case. Notwithstanding any provisions in 3 JUL-14-2005 11:47 CITY OF ROUND ROCK 512�s�r�yr r.11�is existing applicable franchise agreements to the contrary, Electric Delivery agrees to reimburse Cities for reasonable and necessary expenses incurred in Electric Delivery's next rate case in an amount not to exceed$2,000,000. The rate case expense reimbursements will be made monthly, beginning with the first month after the consultants are hired. Cities further agree not to contest the recovery of Cities' rate case expenses and Electric Delivery's reasonable and necessary rate case expenses in Electric Delivery's next rate case. Electric Delivery further agrees to pay, and Cities agrees to accept, $150,000 in settlement of all previously disputed regulatory expenses. Electric Delivery will not seek reimbursement of that $150,000 amount in Electric Delivery's rates. 13. Electric Delivery agrees that, in fianehise negotiations, it will not seek to extend the prohibition on reimbursement of municipal rate case expenses beyond June 2008- 14. Electric Delivery agrees that if the 2005 Texas Legislature considers the implementation of a nodal pricing system in ERGOT, then Electric Delivery will provide information to the Legislature concerning the importance of a vibrant electric transmission system and the benefits of the expansion of transmission facilities in helping to reduce congestion costs. 15. Signatories acknowledge that Electric Delivery intends to offer certain terms of this Settlement Agreement to cities served by Electric Delivery that are not listed on Exhibit A ("Negotiations'). Electric Delivery agrees that all cities listed on Exhibit A are entitled to Most Favored Nations protection during those Negotiations and that any benefits that Electric Delivery agrees to provide to any city during those Negotiations that are not already included in this Settlement Agreement will be offered to all cities listed on Exhibit A. Cities acknowledge and agree that to receive any additional benefits from Electric Delivery, additional consideration from Cities to Electric Delivery may be required. 16. The Signatories agree that the amounts paid by Electric Delivery to Cities pursuant to paragraphs 4, 10, and 12 of this Agreement are paid solely in consideration for Cities' abatement or dismissal of, and forbearance from filing or pursuing, Show Cause Actions against Electric Delivery and Cities' agreement to abide by the terms of this Agreement,and to reimburse Cities' expenses associated with the Show Cause Actions and other regulatory proceedings. To the extent that the amounts paid may be in excess of Cities' expenses, the excess is paid solely in order to settle the matters that are the subject of this Agreement. Signatories recognize and agree that the payments specified in this Agreement are not a rate reduction, refund, rebate, discount, preference or privilege of any kind for services provided by Electric Delivery or any of its affiliates or predecessors in interest under any tariff, whether in the past, now, or in the future. As such, the provision of electric delivery service to Cities by Electric Delivery or any affiliate or predecessor has been and will continue to be governed solely by the rates, terms, and conditions of the applicable tariffs. 17. Cities agree that for a ten-day period following the date this Settlement Agreement is executed, neither Cities nor the cities listed on Exhibit A will make any public statements or take any public action concerning the existence of a settlement or the terms of the Settlement Agreement. 4 JUL-14-2005 11.47 CITY OF ROUND ROCK 18. This Agreement shall become effective only upon the execution of this Agreement and the entry of resolutions or orders abating or dismissing the Show Cause Actions. 19. Each person executing this Agreement represents that he or she is authorized to sign this Agreement on behalf of the party represented. 20. The Signatories expressly acknowledge and agree that oral and written statements made by any party or its representative during the course of the settlement negotiations that led to this Agreement cannot be used or portrayed as an admissions or concession of any sort and shall not be admissible as evidence in any proceeding in any forum. Executed on this the 22:.day of February,2005,by the Signatories hereto,by and through their undersigned duly authorized representatives. TXU Electric Delivery Company Steering Committee of Cities Served by TXU Electric Delivery Company on behalf of All cities fisted on Exhibit A to this Agreement 5 JUL-14-2005 11:47 CITY OF ROUND ROCK 51��1t r0y r r.i s�i s Exhibit A City of Addison City of Highland Park City of The Colony City of Allcu City of Honey Grove City of Tyler City of Alvarado City of Howe City of University Park City of Andrews City of Hurst City of Vtmus City of Archer City City of Hutto City of Waco City of Arlington City of Irving City of Watauga City of Belton City of Jolly City of White Settlement City of Benbrook City ofJosephine City of Wichita Falls City of Big Spring City of Justin City of Woodway City of Breckenridge City of Kaufman City of Bridgeport City of Krllcr City of Brownwood City of Kerens City of Buffalo City of Lakeside City of Burkbumcn City of Larnesa City of Burleson City of Lindale City of Caddo Mills City of Little River Academy City of Cameron City of Ludla City of Canton City of Malakoff City of Carrollton City of Mansfield City of Celina City of McKinney City of Centerville City of Midland City of Cleburne City of Milford City of Colleyville City of Murphy City of Collinsville City of Murchison City of Comanche City of New Chapcl Hill City of Corinth City of North Richland Hills City of Crowley City of O'Donnell City of Dallas City of Oak Leaf City of Dalworthington City of Oak Point Gardens City of Odessa City of DeLeon City of Ovilla City of Denison City of Palestine City of Early City of Pantego City of Eastland City of Paris City of Edgecliff Village City of Plano City of Euless City of Ranger City of Farmers Branch City of Rhome City of Flower Mound City of Richardson City of Forest Hill City of Richland Hills City of Fort Worth City of Roanoke City of Frisco City of Robinson City of Frost City of Rockwall City of Glenn Heights City of Rosser City of Grand Prairie City of Rowlett City of Granger City of Sherman City of Grapevine City of Snyder City of Gunter City of Southlake City of Harker Heights City of Sulphur Springs City of Heath City of Sunnyvale City of Henrietta City of Sweetwater City of Hewitt City of Temple TOTAL P.13 DATE: July 22, 2005 SUBJECT: City Council Meeting - July 28, 2005 ITEM: 11.D.1. Consider a resolution authorizing the Mayor to execute a Letter Agreement with TXU Electric Delivery whereby the City agrees to not intervene in any Show Cause Action concerning TXU Electric Delivery rates prior to July 1, 2006. Department: Administration/Legal Staff Person: David Kautz, Assistant City Manager/Chief Financial Officer Steve Sheets, City Attorney Justification: Upon approval of the agreement, the company will make a cash payment of $132,811.99 immediately to Round Rock. Starting March 31, 2006 and each March 31 thereafter, the company will also make an annual cash payment of $126,487.81 to Round Rock. The company will cease the payments when new tariffs approved in the system-wide rate case become effective. Funding• Cost: N/A Source of funds: N/A Outside Resources: TXU Electric Delivery Background Information: TXU Electric Delivery and a number of cities in their north Texas service area have reached a settlement agreement to resolve issues arising from "show cause" resolutions passed by the cities. The resolutions would have required the company to file information with those cities to show why the company's transmission and distribution rates should not be reduced. The settlement requires the company to agree to a rate case filing in June 2006 that proposes and supports reduced municipal rates for street lighting and municipal pumping. Additionally, the company will provide monetary consideration and improved street lighting data records for the cities. The company is extending the settlement offer to all cities in its service area. Public Comment: N/A