R-11-08-11-8C1 - 8/11/2011RESOLUTION NO. R -11-08-11-8C1
A RESOLUTION OF THE CITY OF ROUND ROCK, TEXAS APPROVING A
MODIFICATION TO THE STIPULATION MADE A PART OF THE
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; 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 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 on or before February 14, 2011 to suspend Oncor's proposed
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, AOC continues its interest in minimizing 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
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
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WHEREAS, the City has previously approved rates arrived at by way of settlement that
produces an increase of approximately $136.7 million; and
WHEREAS, intervening events now require a modification to the Stipulation made a part of
the Settlement Agreement upon which rates the City previously approved are based; and
WHEREAS, AOC's attorneys and experts recommend that AOC's members approve a
modification to the Stipulation made a part of the Settlement Agreement upon which the rates the City
previously approved were based; and
WHEREAS, the rates previously approved by the City included approval for Oncor to recover
from customers certain retrospective franchise fees; and
WHEREAS, the Public Utility Commission of Texas ("Commission") in Docket No. 35717
involving Oncor's prior rate application, determined that Oncor could not recover through rates an
increase in franchise fees agreed to by Oncor and the City; and
WHEREAS, the City as part of the Alliance of Oncor Cities ("AOC") sought judicial review
of the Commission's determination that Oncor could not recover in rates the increased franchise fees
Oncor agreed to pay the cities; and
WHEREAS, the AOC cities sought review of the Commission's decision with regard to
recovery of the increased franchise fees and upon judicial review, the Travis County District Court
entered its judgment and concluded that the Commission erred in concluding that Oncor could not
recover the increased franchise fees from customers, which issue the Commission has appealed to the
Third Court of Appeals where the issue is presently pending; and
WHEREAS, as part of the Stipulation and Settlement arrived at earlier with regard to Oncor's
application to increase rates, the parties to that Stipulation agreed to withdraw from the appeal pending
before the Third Court of Appeals, the issue related to recovery through rates of the retrospective
franchise fees, as is currently contemplated by Paragraph I.D. of the Stipulation; and
WHEREAS, the Commission considered the Stipulation and Settlement at its June 17 and July
8, 2011 Open Meetings and while the Commission has not yet taken any formal action with respect to
the Settlement, the Commission has indicated that it will not withdraw its appeal of the franchise fee
issue from pending before the Third Court of Appeals, and that the Commission will not support those
portions of the Stipulation relating to the payment and recovery of what it has referred to as
"retrospective franchise fees," as set forth in Paragraph I.E. of the Stipulation; and
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WHEREAS, the Commission also indicated that it viewed favorably the remainder of the
Stipulation and Settlement and asked the Signatories to the Stipulation to indicate whether they would
support the Stipulation if it were modified to remove the provisions regarding "retrospective franchise
fees;" and
WHEREAS, considering the Commission's comments, and to avoid the time, expense, and
uncertainty associated with further litigating Oncor's pending rate case at the Commission in Docket
No. 38929, the more expedient course of action is to modify the Stipulation to remove the reference to
the retrospective franchise fees; and
WHEREAS, under a modified Stipulation Oncor would nonetheless pay the cities each city's
share of the $21.8 million in retrospective franchise fees but would not recover those fees from
customers; and
WHEREAS, under a modified Stipulation, should the courts ultimately confirm that it is
proper for Oncor to recover through rates the retrospective franchise fees, Oncor would be allowed to
recover those fees in future rates; and
WHEREAS, under a modified Stipulation, should the courts ultimately confirm the
Commission's position that Oncor may not recover the retrospective franchise fees, then, with regard
to any amounts of retrospective franchise fees that are paid to a city, but found to be not recoverable
from customers, then the franchise fees then due the city would be reduced for a three-year period,
until the total amount of franchise fees retained by Oncor from that city equals the amount of
retrospective franchise fees paid to a city;
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 Stipulation that forms part of the Settlement
Agreement previously approved by the City, should be modified such that the issue of recovery of the
retrospective franchise fees is removed from the Stipulation and the issue be retained in the appeal
pending before the Third Court of Appeals.
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Section 3. That under a modified Stipulation, should the courts ultimately confirm that it is
proper for Oncor to recover through rates the retrospective franchise fees, Oncor would be allowed to
recover those fees in future rates.
Section 4. That under a modified Stipulation, should the courts ultimately confirm the
Commission's position that Oncor may not recover the retrospective franchise fees, then, with regard
to any amounts of retrospective franchise fees that are paid to a city, but found to be not recoverable
from customers, then the franchise fees then due the city would be reduced for a three-year period,
until the total amount of franchise fees retained by Oncor from that city equals the amount of
retrospective franchise fees paid to a city.
Section 5. That to the extent any resolution or ordinance previously adopted by the Council
is inconsistent with this Resolution it is hereby repealed to the extent of any such inconsistency.
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.
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.
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RESOLVED this 11th day of August, 2011.
ATTEST:
te-.(Me-
SARA L. WHITE, City Secretary
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A N MCGRAW, Mayor
City of Round Rock, Texas
ROUND ROCK, TEXAS
PURPOSE. PASSION. PROSPERITY.
Agenda Item No. 8C1
City Council Agenda Summary Sheet
Agenda Caption:
Consider a resolution approving a Modification to the Stipulation made a part of the
Settlement Agreement between the Alliance of Oncor Cities and Oncor Electric Delivery
Company LC regarding the Company's statement of intent to change electric rates in all
cities exercising original jurisdiction.
Meeting Date: August 11, 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 City 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.
At the May 26, 2011 Council Meeting, 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 reached a Settlement on the
increase to be allowed Oncor. Included in the Settlement was a provision whereby Oncor would pay to the cities a total of $21.8
million in retrospective franchise fees they had withheld based on the final order issued by the PUCT in a prior rate case.
The Alliance of Oncor Cities ("AOC") attorneys and experts recommend that AOC's members approve a modification to this
stipulation made a part of the Settlement Agreement upon which the rates the City previously approved were based. The rates
previously approved by the City included approval for Oncor to recover from customers certain retrospective franchise fees.
However, the PUCT has determined that Oncor cannot recover through rates an increase in franchise fees agreed to by Oncor
and the City. To avoid the time, expense, and uncertainty associated with further litigating Oncor's pending rate case at the
PUCT, the better course of action is to modify the stipulation to remove the reference to the retrospective franchise fees. The
effect of this is at that the City will need to consider a modification to the tariff sheets it approved when it approved the
Settlement of Oncor's application to increase rates. The only tariff affected by removal of the issue of retrospective franchise
fee issue is the tariff referred to as the Rider RS tariff. Such a modification will not affect the monies the city will receive for the
retrospective franchise fee to be paid by Oncor. However, should the PUCT prevail in court with regard to recovery of the
retrospective franchise fees, the city would be required to refund those fees to Oncor.
The AOC's special counsel and consultants are of the opinion that, even with removal of the issue of payment and recovery of
the retrospective franchise fees, the Settlement continues to be 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.
Cost:
Source of Funds:
N/A
N/A
Date of Public Hearing (if required): N/A
Recommended Action: Approval