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R-11-02-10-11B7 - 2/10/2011RESOLUTION NO. R -11-02-10-11B7 A RESOLUTION OF THE CITY OF ROUND ROCK, TEXAS ("CITY") SUSPENDING THE EFFECTIVE DATE FOR NINETY DAYS IN CONNECTION WITH THE RATE INCREASE FILING OF ONCOR ELECTRIC DELIVERY COMPANY LLC ON JANUARY 7, 2011; FINDING THAT THE MEETING COMPLIES WITH THE OPEN MEETINGS ACT; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE WHEREAS, Oncor Electric Delivery Company LLC ("Oncor" or "Company") filed a Statement of Intent with the City on or about January 7, 2011 to increase its system -wide annual revenue requirement by approximately $353 million, to increase its system -wide residential base rates by approximately 15%, and to increase its Lighting services rates by approximately 26%, and seeks a vegetation management surcharge to recover revenues in the amount of approximately $34.6 million above actual expense; and WHEREAS, the City is a regulatory authority under the Public Utility Regulatory Act ("PURA"), and under Chapter 33, §33.001 et seq. of PURA has exclusive original jurisdiction over Oncor's rates, operations, and services within the municipality; and WHEREAS, in order to maximize the efficient use of resources and expertise in reviewing, analyzing and investigating Oncor's rate request and its changes in tariffs, it is prudent to coordinate the City's efforts with a coalition of similarly -situated municipalities; and WHEREAS, the City, in matters regarding applications by Oncor to change rates, has in the past joined with other local regulatory authorities to form the Alliance of Oncor Cities ("AOC"), formerly known as the "Alliance of TXU/Oncor Cities" ("ATOC"), and hereby continues its participation in AOC; and WHEREAS, Oncor's rate request consists of a voluminous amount of information including Oncor's rate -filing package, pre -filed direct testimony, exhibits, schedules, and workpapers; and O:\wdox\SCCInts\0112\ 1104 \MUNICIPAL\ 00213207.DOC WHEREAS, Oncor proposed February 14, 2011 as the effective date for its requested increase in rates; and WHEREAS, it is not possible for the City to complete its review of Oncor' filing by February 14, 2011; and WHEREAS, the City will need an adequate amount of time to review and evaluate Oncor's rate application to enable the City to adopt a final decision as a local regulatory authority with regard to Oncor's requested rate increase; and WHEREAS, the City will require the assistance of specialized legal counsel and rate experts to review the merits of Oncor's application to increase rates; and WHEREAS, the decision of the Public Utility Commission of Texas will have a direct impact on the City and its citizens who are customers of Oncor and, in order for the City's participation to be meaningful, it is important that the City promptly intervene at Docket No. 38929 pending at the Public Utility Commission of Texas; Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS THAT: Section 1. The findings set out in the preamble are in all things approved and incorporated herein as if fully set forth. Section 2. Oncor's proposed effective date for its proposed increase in rates is hereby SUSPENDED for ninety days beyond February 14, 2011. Section 3. The statutory suspension period may be further extended if Oncor does not provide timely, meaningful, and proper public notice of its request to increase rates, or if its rate -filing package is materially deficient. Section 4. The City shall participate in a coalition of cities known as the Alliance of Oncor Cities and authorizes intervention in proceedings related to Oncor's Statement of PAGE 2 of 4 Intent before the Public Utility Commission of Texas and related proceedings in courts of law. Section 5. The City hereby orders Oncor to pay the City's rate case expenses as provided in the Public Utility Regulatory Act, and orders that Oncor shall do so on a monthly basis and within 30 days after submission of the City's invoices for the City's reasonable costs associated with the City's activities related to this rate review or to related proceedings involving Oncor before the City, the Public Utility Commission of Texas, or any court of law. Section 6. Subject to the right to terminate employment at any time, the City retains and authorizes the law firm of Herrera & Boyle, PLLC to act as Special Counsel with regard to rate proceedings involving Oncor before the City, the Public Utility Commission of Texas, or any court of law, and to retain such experts as may be reasonably necessary for review of Oncor's rate application subject to approval by the steering committee of the AOC. Section 7. The City, in coordination with the Steering Committee, shall review the invoices of the lawyers and rate experts for reasonableness before submitting the invoices to Oncor for reimbursement. Section 8. A copy of this resolution shall be sent to Mr. Alfred R. Herrera, Herrera & Boyle, PLLC, 816 Congress Ave., Suite 1250, Austin, Texas 78701, and to the local Oncor representative. Section 9. The meeting at which this resolution was approved was in all things conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. Section 10. This resolution shall become effective from and after its passage. PAGE 3 of 4 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. RESOLVED this 10th day of February, 2011. ATTEST: SARA L. WHITE, City Secretary ALAN MCGRAW, Mayor City of Round Rock, Texas PAGE 4 of 4 ROUND ROCK, TEXAS PURPOSE. PASSION. PROSPERITY Agenda Item No. 1167. City Council Agenda Summary Sheet Consider a resolution suspending for 90 days Oncor's effective date for a proposed rate Agenda Caption: increase. Meeting Date: February 10, 2011 Department: Finance Staff Person making presentation: Cheryl Delaney Finance Director Item Summary: BACKGROUND On or about January 7, 2011, Oncor Electric Delivery Company LLC ("Oncor" or "Company") filed a Statement of Intent to increase rates by approximately $353 million, which equates to an increase of approximately 12.6%. As part of its application, Oncor proposes an effective date of February 14, 2011. As proposed by Oncor a residential customer that uses 1300 kWh per month would see an increase in their bill of about $5.00, and as a class the residential customers would experience an increase of about 15% while the small commercial rate class would see a 13% to 16% increase in base rates, and the Targe commercial rate class would see a 5% increase. Also, Oncor's request would increase rates for Lighting services by 26%. Oncor is also asking for a return on equity of 11.25%; the Public Utility Commission of Texas in Oncor's last rate case approved a return on equity of 10.25%. Oncor's requested return on equity appears high. Oncor is also proposing to recover its costs for vegetation management through a surcharge that would produce an additional $34.6 million per year over its test year amount. INTERVENTION AT THE PUBLIC UTILITY COMMISSION OF TEXAS Oncor filed its Statement of Intent to raise rates with the City and the Public Utility Commission of Texas ("PUCT") on the same date. Also, under the Public Utility Regulatory Act, absent an extension of the timeframe within which to act by agreement with Oncor, the PUCT has 185 days within which to enter a final order on Oncor's request. This means that a schedule for the case will be set in short order. Discovery will begin immediately. Discovery involves asking for information from Oncor. This is a critical stage in the proceeding. The City's participation in this stage of the process is very important. The City will be able to participate in the Steering Committee for AOC in selecting experts and in setting goals and objectives for the case. SUSPENSION In order to have time to review what this voluminous rate -filing package, the Council is requested to suspend the effective date for ninety (90) days as provided by PURA. It is a virtual impossibility for the City to set just and reasonable rates without suspending the rate request for ninety days; suspension of Oncor's proposed effective date will permit its special regulatory counsel and experts an opportunity to perform a better review of Oncor's application. It is recommended that the City continue its participation in the Alliance of Oncor Cities and retain the law firm of Herrera & Boyle, PLLC to represent the City's interest in proceedings related to Oncor's rate case and to advise the City with regard to Oncor's application and that the City intervene in the proceeding before the Public Utility Commission of Texas. Continued on Next Page ROUND ROCK, TEXAS PURPOSE. PASSION. PROSPERITY Strategic Plan Relevance: City Council Agenda Summary Sheet 8.0 — Maintain and enhance public confidence, satisfaction and trust in City Government Cost: Source of Funds: N/A N/A Date of Public Hearing (if required): N/A The recommendation is also to suspend Oncor's proposed effective date for its proposed increase in rates as set forth in Oncor's Statement of Intent. Recommended Action: The City must take action no later than February 14, 2011. If the City does not take action by February 14, 2011, Oncor's proposed rates will be deemed approved by operation of law, subject to the City's right to hold hearing to address Oncor's rate application.