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G-93-05-27-9D - 5/27/1993ORDINANCE NO. 0- -q3-05-- c t7 - 9D AN ORDINANCE AMENDING THE EXISTING FRANCHISE BETWEEN THE CITY AND TEXAS UTILITIES ELECTRIC COMPANY TO PROVIDE FOR A DIFFERENT CONSIDERATION; PROVIDING AN EFFECTIVE DATE; PROVIDING FOR ACCEPTANCE BY TEXAS UTILITIES ELECTRIC COMPANY; FINDING AND DETERMINING THAT THE MEETING AT WHICH THIS ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW. WHEREAS, Texas Utilities Electric Company (hereinafter called "TU Electric") is engaged in the business of providing electric utility service within the City and is using the public streets, alleys, grounds and rights -of -ways within the City for that purpose under the terms of a franchise ordinance heretofore duly passed by the governing body of the City and duly accepted by TU Electric; and WHEREAS, TU Electric has, pursuant to said franchise ordinance, been paying to the City a sum equal to three percent (3%) of its gross receipts from the retail sale of electric power and energy within the City for the rights and privileges set forth in said franchise ordinance and, in addition thereto, has reimbursed the City for its ratemaking expenses pursuant to Section 24 of the Public Utility Regulatory Act; and WHEREAS, the City and TU Electric desire to amend said franchise ordinance to provide for a different consideration to consist of a sum equal to four percent (4%) of its gross receipts from the retail sale of electric power and energy within the City, which different consideration includes, among other things, TU Electric's obligation to reimburse the City for its ratemaking and KSI ORDINANC/OR05273D other regulatory expenses to be incurred by the City involving the regulation of TU Electric; Now Therefore BE IT ORDAINED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, THAT: I. The consideration payable by TU Electric for the rights and privileges granted to TU Electric by the franchise ordinance hereto fore duly passed by the governing body of this City and duly accepted by TU Electric is hereby changed to be four percent (4%) of its gross receipts from the retail sale of electric power and energy within the corporate limits of the City, said changed percentage to be applied to said gross receipts beginning on June 1, 1993, and being payable as specified in said franchise ordinance and based upon the same time periods as specified in said franchise ordinance and being payment for the said rights and privileges during the period specified in said franchise ordinance, said payment being in lieu of and shall be accepted as payment for all of TU Electric's obligations to pay municipal charges, fees, rentals, pole rentals, wire taxes, inspection fees, easement taxes, franchise taxes, certain regulatory expenses under Section 24 of the Public Utility Regulatory Act or any similar or successor law, or other charges and taxes of every kind, except ad valorem taxes, sales and use taxes, and special taxes and assessments for public improvements. II. TU Electric shall make a one-time adjustment to the first payment due after June 1, 1993, under the said franchise ordinance 2. heretofore duly passed by the governing body of this City and duly accepted by TU Electric for the purpose of making the changed consideration as specified in Section 1 hereof effective on June 1, 1993, without altering the payment dates specified in said franchise ordinance, the amount of said adjustment being calculated as follows: (a) TU Electric shall determine the monthly average of its gross receipts from the retail sale of electric power and energy within the City during the period upon which the next franchise payment due to the City following June 1, 1993, is based; (b) the said monthly average of its said gross receipts shall be multiplied by 1% (0.01) and (c) the product so calculated shall be multiplied by the number of whole months from June 1, 1993, through the last day of the last month of the period for which the next franchise payment due to the City following June 1, 1993, is made. The amount of said adjustment shall be added to the said next franchise payment following June 1, 1993, determined in accordance with the provisions of said franchise ordinance as was in effect prior to this amendment. Notwithstanding anything to the contrary in Section I hereof, if TU Electric files general rate cases and the City incurs cumulative expenses, otherwise reimbursable by TU Electric under Section 24 of the Public Utility Regulatory Act or similar or successor law, in excess of $4 million, then in such event, TU Electric shall reimburse all of the expenses incurred by the City in connection with all general rate cases filed during the period ended fifteen (15) years from the effective date hereof in excess of said $4 million. The term "general rate case" as used in this 3. Section means a rate case initiated by TU Electric in which it seeks to increase its rates charged to a substantial number of its customer classes in the City and elsewhere in its system and in which TU Electric's overall revenues are determined in setting such rates. City agrees to exercise reasonable best efforts, considering the facts and circumstances, to keep its expenses on average to under $1,000,000 per general rate case. Iv. Notwithstanding the provisions of Section I hereof, TU Electric will continue to reimburse the City's ratemaking expenses, if any, in connection with the appeal and any remand of Public Utility Commission of Texas Docket No. 9300 that re otherwise reimbursable under Section 24 of the Public Utility Regulatory Act, and will continue to reimburse the City's ratemaking expenses, if any, in connection with Public Utility Commission of Texas Docket No. 11735 that are otherwise reimbursable under Section 24 of the Public Utility Regulatory Act to the extent that said ratemaking expenses are incurred through the entry of the last action by the Public Utility Commission of Texas (i.e., the said Commission's order overruling the last motion for rehearing) in said Docket No. 11735; the City hereby agrees that any ratemaking expenses incurred in connection with said Docket No. 11735 that the City incurs on appeal of said order will be the City's sole responsibility and further agrees -- in the events that the City is a participant in the joint intervention of cities managed by the Steering Committee of TU Electric Service Area Cities intervening in Docket No. 11735, that the City decides to continue to participate with the Steering Committee in such appeal of said order, and TU Electric is required 4. to reimburse said Steering Committee for ratemaking expenses under Section 24 of the Public Utility Regulatory Act that are incurred on appeal of said order in Docket No. 11735 -- to reimburse TU Electric the City's share of reimbursable expenses related to said appeal and owed by TU Electric to said Steering Committee determined by the methodology chosen by the said Steering Committee (the City to notify TU Electric of the method so chooses by the Steering Committee prior to the submission of an invoice by the Steering Committee for the payment by TU Electric of said reimbursable expenses related to said appeal). V. In all respects, except as specifically and expressly amended by this ordinance, the said franchise ordinance heretofore duly passed by the governing body of this City and duly accepted by TU Electric shall remain in full force and effect according to its terms until said franchise ordinance terminates as provided therein. VI. This ordinance shall take effect from and after its final passage and TU Electric's acceptance. TU Electric shall, within fifteen (15) days from the passage of this ordinance, file its written acceptance of this ordinance with the Office of the City Secretary in substantially the following form: To the Honorable Mayor and City Council: Texas Utilities Electric Company (TU Electric), acting by and through the undersigned authorized officer, hereby accepts, on this the day of , 1993, Ordinance No. amending the current franchise between the City and TU Electric. 5. TEXAS UTILITIES ELECTRIC COMPANY By: , President VII. It is hereby officially found and determined that the meeting at which this ordinance is passed is open to the public as required by law and that public notice of the time, place and purpose of said meeting was given as required. VIII. A. All ordinances, parts of ordinances, or resolutions in conflict herewith are expressly repealed. B. The invalidity of any section or provision of this ordinance shall not invalidate other sections or provisions thereof. Alternative 1. By motion duly made, seconded and passed with an affirmative vote of all the Council members present, the requirement for reading this ordinance on two separate days was dispensed with. READ, PASSED, and ADOPTED on first reading this t� day of , 1993. Alternative 2. READ and APPROVED on first reading this the day of , 1993. READ, APPROVED and ADOPTED on second reading this the day of , 1993. 6. ATTEST: JO NE LAND, City Secretary APPROVED AS TO FORM: STEPHAN L. SHEETS, City Attorney CHARLES CULPE E , Mayor City of Round Rock, Texas 7. TU ELECTRIC/RRK TEL. No .5122445808 May , ,2.6 , 93 13:07 No .005 P.02 RESPONSE STATEMENT 5UPPLErY1EA)T 7D As a part of TU Electric's commitment to fairness to the cities it serves, the company plans to offer an additional 1% of its gross revenue from retail electricity sales for franchise payment to those cities that it currently pays 3%, to bring them to the level it compensates the City of Dallas. Prior to the merging of Texas Power & Light, Texas Electric Service, and Dallas Power & Light to form TU Electric, the City of Dallas was paid a 4% franchise fee, while the cities served by the other companies were paid 3%. The commitment was made at that time, that when the Dallas franchise was renegotiated, all of the "1'U Electric cities would be treated consistently. TU Electric has paid the City of Dallas 4% of its gross revenues from retail sales of electricity since the first franchise was granted in 1917 to form Dallas Power & Light, and that level not only represented payment for the use of city streets and alleys for its facilities, but also served as payment for other permits and fees within the city with the exception of sales and ad valorem taxes. It also covered the expenses of the city's regulatory staff which took a very active role in the regulation of electric rates and services. The city's current regulatory responsibility is changed somewhat by the Public Utility Regulatory Act but is still reflected in the current franchise. The Public Utility Regulatory Act, which is the law governing both cities and the Public Utility Commission in Austin, provides for utilities to reimburse certain expenses to cities for the regulation of rates. In the future, reimbursement for these expenses will be covered by the additional 1%, as it is in Dallas. DATE: May 25, 1993 SUBJECT: City Council Meeting - May 27, 1993 ITEM: 9.D. Consider an ordinance amending the Texas Utilities Electric Company franchise ordinance. (First Reading). STAFF RESOURCE PERSON: Bob Bennett This item was discussed during the presentation portion of the meeting.