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R-89-1382 - 11/21/1989RESOLUTION NO. / ✓ ' 2IR A RESOLUTION AUTHORIZING THE PARTICIPATION OF THE CITY OF ROUND ROCK WITH OTHER SERVICE AREA CITIES OF THE TEXAS UTILITIES ELECTRIC COMPANY IN A STEERING COMMITTEE INQUIRING INTO THE REASONABLENESS OF TU ELECTRIC SERVICE RATES, INCLUDING A REVIEW OF THE ELECTRIC SERVICE RATE STRUCTURE AND EVALUATION AND MANAGEMENT OF THE PRUDENCY OF THE COMANCHE PEAK NUCLEAR PLANT; NAMING A REPRESENTATIVE TO THE STEERING COMMITTEE AND PROVIDING AN EFFECTIVE DATE WHEREAS, TU Electric Company has indicated plans to file a request for a rate increase; and WHEREAS, the City of Round Rock has a statutory duty to investigate and inquire into the reasonableness of such rate; and WHEREAS, other cities within the TU Electric service area expressed interest in coordinating this inquiry; Now Therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, I. That the City of Round Rock agrees to participate with such other TU Electric service area cities in an inquiry into the reasonableness of the rates of TU Electric. Such investigation shall include a review of the electric service rate structure and evaluation of the management and prudency of the Comanche Peak Nuclear Plant. C- RS11219F Th I Y E Po8 /NSonl II. or his designee may participate on the Steering Committee of TU Electric service area cities and is authorized to receive notices concerning Steering Committee activities at the following address: Name /Title: 4q/K A //J5Q/V 77/? I /QR a City /Address: og 1 1 E . MAIN STREET � /OU/VD }'oci - k - '1605 7S'64 Telephone: 5l o f - a 553 ( l aJ III. That the City Manager is authorized to take those steps reasonable and necessary to comply with the intent of this resolution. IV. That this resolution shall take effect immediately from and after its passage. ATTEST: PRESENTED AND PASSED on this the .:2/4.t. day of s , i � iirji E LAND, City Secretary APPROVED AS TO FORM: MIKE ROBINSON, Mayor City of Round Rock, Texas 2. 1989, by a vote of 1 ayes and 0 nays at a regular meeting of the City Council of the City of Round Rock, Texas. IMO STEP L. SHEETS, City Attorney GtyofArhngtonTexas Box 231 Zip Code 76004 -0231 Arlington Phone (817) 275 -3271 Dallas Phone Metro (817) 2653311 September 29, 1989 The Honorable Mike Robinson Mayor, City of Round Rock 221 East Main Round Rock, Texas 78664 Dear Mayor Robinson: RECEIVED OCT 1 0 1989 Recently your city received a letter inviting it to attend a meeting held on September 13, 1989, to discuss the impending TU Electric rate case which will likely be filed before the end of this year. The purpose of the meeting was to receive information and decide whether to form a Steering Committee of representatives of cities in the Texas Utilities Electric service area to discuss various issues in the case, provide information, and to make recommendations to participating cities. Those attending recommended forming a Steering Committee to be composed of any city in the TU service area wishing to participate in the committee. The Steering Committee is currently in the process of naming an Executive Committee made up of elected and appointed officials from participating cities, both large and small, throughout the TU Electric service area. The purpose of the Executive Committee would be to meet on short notice and to investigate and make recommendations to the full Steering Committee concerning such things as extent of participation in the rate case, hiring of common legal counsel and rate consultants as necessary, and be an available contact for legal counsel and consultants. The purpose of this letter is to encourage your Council or Commission to enact a resolution by which your city would participate in and name a representative to the Steering Committee. By doing so, your city could receive pertinent and timely information, as well as participate in the formu- lation of positions throughout the course of the rate case process. Such an organization would also enable TU Electric to have a strategic point of contact during any pre- or post rate case filing negotiations. September 29, 1989 Page 2 Issues in the case are expected to be wide ranging and complex. Please see the attached newspaper article. It is critical that cities exercise their statutory obligation under the Public Utility Regulatory Act to parti- cipate fully in these proceedings rather than relying on the Public Utility Commission to reach a proper result. As you know, the Public Utility Commission itself has been the center of tremendous political controversy and personality clashes. The PUC staff has been decimated by high turnover, lacks experience, and is woefully understaffed. The Commis- sion staff has at times recommended in telephone rate cases revenue requirements which exceeded that which the utility itself requested! The TU rate case will have billions of dollars at stake, largely as a result of the consideration of the Comanche Peak Nuclear Plant. It is incumbent on each city to ensure that the public interest is served by its full participation in this regulatory process. I believe that this can best be served by each city's active participation in the Steering Committee of Texas Utilities service area cities. Attached is a model resolution your city may wish to consider. If your city adopts such a resolution or a similar resolution, please forward a copy to the Chairman of the Steering Commit- tee at the address indicated in the model resolution so that your city can be contacted promptly concerning the next Steering Committee meeting. If you have any questions, please do not hesitate to call the Steering Committee Chair- man, Jay Doegey, at (817)459 -6878. Richard E. Greene Mayor, City of Arlington REG /mcb Attachments RESOLUTION NO. A RESOLUTION AUTHORIZING THE PARTICIPATION OF THE CITY OF WITH OTHER SERVICE AREA CITIES OF THE TEXAS UTILITIES , ELECTRIC COMPANY IN A STEERING COMMITTEE INQUIRING INTO THE REASONABLENESS OF TU ELECTRIC SERVICE RATES, INCLUDING A REVIEW OF THE ELECTRIC SERVICE RATE STRUCTURE AND EVALUATION AND MANAGEMENT OF THE PRUDENCY OF THE COMANCHE PEAK NUCLEAR PLANT; NAMING A REPRESENTATIVE TO THE STEERING COMMITTEE AND PROVIDING AN EFFECTIVE DATE WHEREAS, TU Electric Company has indicated plans to tile a request for a rate increase; and WHEREAS, the City of has a statutory duty to investigate and inquire into the reasonableness of such rate; and WHEREAS, other cities within the TU Electric service area expressed interest in coordinating this inquiry; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF , TEXAS: I. That the City of agrees to participate with such other TO Electric service area cities in an inquiry into the reasonable- ness of the rates of TU Electric. Such investigation shall include a review of the electric service rate structure and evaluation of the management and prudency of the Comanche Peak Nuclear Plant. II. or his designee may participate on the Steering Committee of TU Electric service area cities and is authorized to receive notices concerning Steering Committee activities at the following address: Name /Title: City /Address: Telephone: That the City Manager is authorized to take those steps reasonable and necessary to comply with the intent of this resolution. IV. That this resolution shall take effect immediately from and after its passage. PRESENTED AND PASSED on this the day of , 1989, by a vote of ayes and nays at a regular meeting of the City Council of the City of , Texas. Mayor ATTEST: APPROVED AS TO FORM: City Secretary City Attorney i * 1!JPlease forward a copy Of your resolution to the Chairman of the 1 Steering Committee, Yak Doegey, Post Office Box 231, Arlington, Texas i 76010] t — 1 a11 , °-5 f c9',1 i nc N�..'S ,, ; a....�..L , -y S Piz .b - 21e, 19s9 1 staff que TU Electric rate pledge B e Marie Kilday inn hikes called inadequate for N 13nt costs clear lac l ty or g unity was sched- By ma.q imruaW ita a atxm t uled to cost 5779 million and begin AUSTIN —The staff of the Public plant crease — a 10 percent increase — operations In 1980. tflity Commission has questioned The impact of Comanche Peak this year or early next year. Jerry Green, manager of Roan- , whether Texas Utilities can keep its on TU's rates Is an increase of 2114 The Dallas -based company plena clef analysis for TU Electric. said promise to limit an upcoming rate percent for Until and s89 percent to follow up with a second 10 per- the utility is confident it can accom- increase on electric bills to 10 per- for Unit 2," PVC planner Jeffrey cent rate increase later to finance plash its goal of two 10 percent in- cent Rosenblum wrote la' an Aug: 10 construction of the plant's second creases. Memos obtained by The Dallas memo to Jay 7arnikau, director of unit. scheduled for completion In "It still said can hold the Morning News show that PUC the agency'selectric division- 1992. staffers recently estimated that TU But officials of TU Elea-trig insist The utility will file its rate re- rate increases associated with both Electric's rates could Increase by as that they can pay for the first unit quest after Comanche Peak's first units of the 2,300-megawatt nuclear much as 30 percent because of the of the 39.1 billion Comanche Peak reactor is loaded with nuclear fuel, plant to 10 percent because of lower Comanche; Peak nuclear power plant with, a 3915 million rate lit- scheduled in I mld-October. The nu- Please see PVC au Pane 10A. 40 MU'A alle Atormu %Jtr... C staff questions pledge utility to limit rate hikes girl frolp Page 1A. i ts , decreased operations and { ef expenses and other " - , e,cpsts, such as savings from 1p'g tirementprogram. • ,fgel pretty good about the 10 Ur. Green Said. • t�ld r 2 5 utility to two 10 per e increases, the agency j ive to disallow 90 percent uclegr plant's costs, accord - I ■IQ tie Aug In PUG ;tuff memo. pret the analysts in the memo as an indication that the staff does not be. lleve It is possible for TU to have two 10 percent rate increases and recover 100 percent of the costs of Comanche Peak," he mild. "Rather. the memo reinforces a concern on the part of the staff as to bow TU Electric will Implement its commit• meal to two, 10 percent rule in- and probably something less than a creases." glorious rate of return on equity Mr. Rosenblum emphasized that (closer to 12 percent);' Ms. Kelley - his analysis examined only the ef- Alston said in u May 19 report by teas of Comanche Peak on TU's Merrill- Lynch. rates. Greg Enholm, utilities analyst "Many other circumstances aF for New York.buse0 Salomon tiros., feeling TU's revenue requirement said that two factors will and TU will have changed since its last rote Electric in its request for a 10 per - case in 19119;" Mr. Rosenblum wrote. cent rate increase — the power In 1989; TU Electric asked the from Comanche Peak is needed and PUC for. a 5304 million rate in- the companys charges to ru- d' state law, the PUC cen Grease. The PUC denied the rate in• to uyers have dropped In recent t electric utilities to charge crease and lowered the company's years because of lower fuel Cacti. rs only for construction rates by 57 milliau annually. teat have been prudently tric''s revenues factors �twhichgu6o Elec. ust for Steve Moody Roberts, Inves or Se zit said 4 f1JC. recently hired The • be considered by the PUC In a rate TU's biggest challenge may not be iVurster Group Inc., 1 New case — including changeO in th 001 holding ts requestsgt0 us 0 pled nuclear consulting company's fuel costs, revisions e percent, (JAS. a $2.3 million "pro• federal rat lows and other company prove! from the PUC for thin 10- p "of the Comanche °eak espouses, veral Mr. Wall Street analysts say ere " They are probably es good as . tEdC ' _.. . rules n..,.... any utility in Texas when it comes can sive,,as ; Unit because it includes Merrill Lynch vice president to putting on a very good, well. tho410Tpetrrs• tchLughhtetidand believable rate the fact that rates will already have . at for Comanche Peak "appears to Mr. Roberts said that TU Elec. been raised by the Impact of Unit 1 be doable." tric's request "seems relatively wheu Unit 2 comes on line," Mr. lu a July 19, 1988, analysis of the small, given the enormity of the as- Rosenblum wrote. effects of Comanche Peak on 'rU set (Comanche Peak) that Ihey are He noted that TU Electric "has Electric's rates, Ms. Kelley-Alston trying to include in rate base," committed to not asking for more mentioned TU's plan to hold the But, he said. "instability" at the than a 10 percent Increase for Unit rate increases to 20 percent. Texas Public Utility CommissiOn 1 and has stated an intention (not a Ms. Kelley•Alston wrote: "We Makes ii hard to predict how state commitment) to ask for no more think the company bus additional regulators will react to any rate in. then 10 percent for Unit 2." ways to bring the rate needs down crease request. In an Aug. 18 follow•up memo to without any cost disallowance." "It is just had to believe the co. former Commissioner William Cas• • Lower fuel costs and tux changes mission is going to buy off on any. Slit and PUL: executive aid director Bob - - - -- reduce Oro. Rosenblum lief by as much as 11.3 percent Ms. said. He also predicted n tough battle "It lt would not be correct ld not be correct to inter. Kell Alston said ey- A more recent analysis by Mer- between customers and the utility rill -Lynch confirms TU's commit- over the 10 percent request. meat to hold its Initial increase to come company put an going to have eit "W 10 percent. and I have no reason to "We believe this target can be fon¢unce, a achieved possibly through the units believe they won't do that," he said. partial sale and leaseback, along "And yet, I don't believe this is with revenue benefits frpm fuel going to he it storybook kind of pro- coat savings, tax rate reductions ceeding" DATE: November 17, 1989 SUBJECT: City Council Agenda, November 21, 1989 ITEM: 9E. Consider a resolution authorizing the participation with other service area cities of the Texas Utilities Electric Company in a Steering Committee and naming a representative to the Steering Committee. STAFF RESOURCE PERSON: Joanne Land STAFF RECOMMENDATION: Mayor Robinson received the attached correspondence and asked that this item be placed on the agenda.