R-11-05-26-11B2 - 5/26/2011RESOLUTION NO. R -11-05-26-11B2
A RESOLUTION OF THE CITY OF ROUND ROCK, TEXAS, APPROVING A
SETTLEMENT AGREEMENT BETWEEN THE ALLIANCE OF ONCOR
CITIES ("AOC") AND ONCOR ELECTRIC DELIVERY COMPANY LLC
("ONCOR" OR "COMPANY") REGARDING THE COMPANY'S STATEMENT
OF INTENT TO CHANGE ELECTRIC RATES IN ALL CITIES EXERCISING
ORIGINAL JURISDICITON; DECLARING EXISTING RATES TO BE
UNREASONABLE; ADOPTING TARIFFS THAT REFLECT RATE
ADJUSTMENTS CONSISTENT WITH THE SETTLEMENT AGREEMENT
AND FINDING THE RATES TO BE SET BY THE ATTACHED TARIFFS TO
BE JUST AND REASONABLE; FINDING THE CITY'S RATE CASE
EXPENSES REASONABLE; DIRECTING ONCOR TO REIMBURSE THE
CITY ITS REASONABLE RATE CASE EXPENSES; DETERMINING THAT
THIS RESOLUTION WAS PASSED IN ACCORDANCE WITH THE
REQUIREMENTS OF THE TEXAS OPEN MEETING ACT; DECLARING AN
EFFECTIVE DATE; REPEALING ANY PRIOR RESOLUTIONS
INCONSISTENT WITH THIS RESOLUTION AND REQUIRING DELIVERY
OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL.
WHEREAS, the City of Round Rock, Texas ("City") has exclusive original jurisdiction as a
regulatory authority over Oncor Electric Delivery Company LLC's ("Oncor" or "Company") rates,
operations, and services within the City; and
WHEREAS, the City is also an electric utility customer of Oncor, and has an interest in
Oncor's rates and charges; and
WHEREAS, Oncor filed a Statement of Intent with the City on or about January 7, 2011 to
increase its annual revenue requirement by approximately $353 million on a system -wide basis, which
included an increase in residential base rates of approximately 15%, and in Lighting rates of
approximately 26%; and
WHEREAS, the City took action to suspend the effective date and to coordinate a response to
Oncor's filing with other similarly situated municipalities (such participating cities are referred to
herein as Alliance of Oncor Cities ("AOC")); and
WHEREAS, the City took action on or before February 14, 2011 to suspend the effective date;
and
WHEREAS, AOC's desire to minimize rate -case expenses that would result from a lengthy
contested rate case proceeding before the Public Utility Commission of Texas ("PUCT") and through
the appellate process; and
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WHEREAS, AOC authorized its attorneys and experts to formulate and review reasonable
settlement positions to resolve the pending rate increase request; and
WHEREAS, AOC's attorneys met numerous times with the Company to negotiate a
Settlement Agreement resolving the issues raised in the Company's Statement of Intent filing; and
WHEREAS, after extensive review and analysis, AOC's attorneys and experts found that
Oncor's proposed increase in revenue and its proposed rates are unreasonable; and
WHEREAS, AOC's attorneys and experts have evaluated what a likely outcome from a fully -
litigated proceeding would be and are of the opinion that the increase of approximately $136.7 million
noted in the negotiated Settlement Agreement compares favorably with a likely outcome from a fully -
litigated proceeding; and
WHEREAS, after extensive review and analysis, AOC's attorneys and experts found that the
significantly lower increase of approximately $136.7 million set forth in the Settlement Agreement
instead of the $353 million increase is reasonable; and
WHEREAS, AOC's attorneys and experts recommend that AOC's members approve the
negotiated Settlement Agreement and attached tariffs; and
WHEREAS, the City as a member of AOC has incurred rate -expenses in the collective amount
of $315,919.26 which includes $225,919.26 in actual expenses through March 31, 2011 and
$90,000.00 in estimated expenses through July 1, 2011 for rate proceedings involving Oncor, including
the proceeding to address Oncor's rate case expenses and the appeal of the Public Utility
Commission's final order in Docket No. 35717, are hereby found to be reasonable; and
WHEREAS, under the Public Utility Regulatory Act, the City has a right to reimbursement of
its reasonable rate -case expenses and Oncor has an obligation to reimburse the City's reasonable rate -
case expenses; and
WHEREAS, because the final amount of rate case expenses to be reimbursed cannot be know
until conclusion of Oncor's rate case proceeding and related proceedings before the PUCT, the final
amount of rate case expenses will be subject to adjustment to reflect the actual amount of rate expenses
incurred; and
WHEREAS, the attached tariffs implementing new rates are consistent with the Settlement
Agreement and are just, reasonable, and in the public interest; and
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WHEREAS, the Settlement Agreement as a whole is in the public interest.
NOW THEREFORE, BE IT RESOLVED BY THE CITY 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. That the City Council finds that the Settlement Agreement, which is attached
hereto and incorporated herein as Attachment A, is in the public interest and is hereby endorsed in all
respects.
Section 3. That the revenue and resulting rates set forth in the Settlement Agreement and
schedule of rates and tariffs for electric service provided by Oncor, which are attached hereto and
incorporated herein as Attachment A, are just and reasonable, and are hereby adopted.
Section 4. That the AOC's rate -expenses in the amount of $315,919.26, are hereby found
to be reasonable and that Oncor is hereby directed to reimburse AOC's rate case expenses within thirty
days from adoption of this Resolution and that Oncor is hereby authorized to recover through the rates
approved by this Resolution, the amount of rate case expenses found reasonable, subject to adjustment
to reflect the actual expenses ultimately incurred, including any related proceedings that addresses rate -
case expenses.
Section 5. That to the extent any resolution or ordinance previously adopted by the Council
is inconsistent with this Resolution, it is hereby repealed.
Section 6. That 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 7. That if any one or more sections or clauses of this Resolution is adjudged to be
unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining provision
of this Resolution and the remaining provisions of the Resolution shall be interpreted as if the
offending section or clause never existed.
Section 8. That this Resolution shall become effective from and after its passage with rates
authorized by the attached tariffs to be effective for service delivered on or after the earlier of thirty
(30) days after a final written order of the Public Utility Commission of Texas approving rates
consistent with the Stipulation, or July 1, 2011.
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Section 9. That a copy of this Resolution shall be sent to the Company, care of Don J.
Clevenger, Oncor Electric Delivery Company LLC, 1601 Bryan Street, Suite 22-070, Dallas, Texas
75201-3411 and to Mr. Alfred R. Herrera, Herrera & Boyle, PLLC, 816 Congress Ave., Suite 1250,
Austin, Texas 78701.
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 26th day of May, 2011.
ATTEST:
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SARA L. WHITE, City Secretary
ALAN MCGRAW, Mayor
City of Round Rock, Texas
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ROUND ROCK, TEXAS
PURPOSE. PASSION. PROSPERITY;
City Council Agenda Summary Sheet
Agenda Item No. 1162.
Agenda Caption:
Consider a resolution approving a settlement agreement between the Alliance of Oncor
Cities and Oncor Electric Delivery Company LLC regarding Oncor's Statement of Intent to
raise rates.
Meeting Date: May 26, 2011
Department: Finance
Staff Person making presentation: Cheryl Delaney
Finance Director
Item Summary:
On or about January 7, 2011, Oncor Electric Delivery Company LLC (Oncor)filed a Statement of Intent to increase
rates by approximately $353 million, which equates to an increase of approximately 12.6% overall and an
approximate increase of 15% for Residential customers. At the February 10, 2011 council meeting the Council took
action on Oncor's Statement of Intent and suspended Oncor's proposed rate increase to allow its special counsel
and rate consultants to review Oncor's application. After extensive review by the City's special counsel and rate
consultants and other parties in the rate proceeding pending at the Public Utility Commission of Texas (PUCT), the
parties have reached a Settlement on the increase to be allowed Oncor.
Under the Settlement pending before the PUCT, Oncor's increase in rates is limited to $136.7 million. An increase of
$136.7 million results in a bill increase of about $1.60 per month for a customer using 1,300 kWh per month. This
compares very favorably with the increase Oncor proposed of $5.00 per month.
FINAL ACTION AND RECOMMENDATION
Special counsel and consultants are of the opinion that the Settlement is a reasonable result and believe that the
outcome is well within the range of likely outcomes from a fully litigated proceeding at the PUCT and is one that
helps minimize rate case expenses materially, while at the same time resulting in just and reasonable rates. In short,
AOC's special counsel and consultants believe the Settlement is a sound result that they recommend be approved.
The City must take action no later than June 10, 2011. If the City does not take action by June 10, 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.
If the City approves the Settlement and its resulting rates, those rates would be effective on July 1, 2011 for service
rendered on and after that date. Further, approval by the City means that Oncor would not submit an appeal of the
City's decision to the PUCT, thereby concluding the matter entirely before at the City level. An approval by the City
brings certainty with regard to the terms and conditions of the Settlement. The PUCT could not change the terms
and conditions of the Settlement as it applies within the City.
CONTINUED ON NEXT PAGE
ROUND ROCK, TEXAS
PURPOSE. PASSION. PROSPERITY
City Council Agenda Summary Sheet
Strategic Plan Relevance:
8.0 — Maintain and enhance public confidence, satisfaction and trust in City Government.
Cost:
N/A
Source of Funds: N/A
Date of Public Hearing (if required): N/A
Recommended Action: Approval