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HomeMy WebLinkAboutPR 6792: AGREEMENT REGARDING THE STATEMENT OF INTENT OF TEXAS GAS SERVICE COMPANY A DVISION OF ONE GAS, INC. P. O. No. 6792 7/19/19 gt ORDINANCE NO. AN ORDINANCE BY THE CITY OF PORT ARTHUR, TEXAS, APPROVING A SETTLEMENT AGREEMENT REGARDING THE STATEMENT OF INTENT OF TEXAS GAS SERVICE COMPANY, A DIVISION OF ONE GAS, INC., TO INCREASE RATES TO RECOVER HURRICANE HARVEY RESPONSE COSTS WITHIN THE GULF COAST SERVICE AREA; 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, on or about April 16, 2019, Texas Gas Service Company, a Division of One Gas, Inc. ("TGS" or "Company") filed a Statement of Intent with the City of Port Arthur ("City") and concurrently with the Texas Railroad Commission to implement a Hurricane Harvey Surcharge in the Gulf Coast Service Area to collect $357,194 per year for two years, for a total recovery of $714,389; and WHEREAS, the City denied the Company's request on June 17, 2019 under Ordinance No. 19-31; and WHEREAS, the City intervened as an interested party in the concurrent proceedings regarding the Company's Statement of Intent at the Railroad Commission of Texas, Gas Utilities Docket No. 10844 ("GUD No. 10844"); and WHEREAS, on July 17, 2019, TGS filed a Petition for Review of the City's denial ordinance in GUD No. 10844; and WHEREAS, TGS, Railroad Commission Staff, and Gulf Coast Service Area Cities, including the Cities of Groves, Nederland, Port Arthur, and Port Neches and the City of Galveston, participated in settlement discussions to resolve the issues raised in GUD No. 10844 without further litigation; and WHEREAS, in summary, the parties to GUD No. 10844 agreed that (1) no change to base rates will be approved at this time; (2) the Company will seek to recover its Hurricane Harvey response costs in its next comprehensive base rate proceeding; (3) the Cities and other parties reserve the right to dispute the reasonableness and necessity of the Company's Hurricane Harvey response costs in its next comprehensive base rate proceeding; (4) TGS will create and record a regulatory asset to defer the $714,389 in costs at issue so that the reasonableness 1 and necessity of these costs can be considered in its next comprehensive base rate proceeding; (5) TGS will not include carrying costs in the regulatory asset and will not seek to recover any carrying costs associated with the Hurricane Harvey response costs; and (6) TGS will reimburse Cities for their legal and consultant expenses and may request recovery of these expenses along with its own reasonable and necessary rate case expenses in its next comprehensive base rate proceeding; and WHEREAS, a copy of the proposed Settlement Agreement is attached hereto as Attachment A and is incorporated herein by reference; and WHEREAS, the Railroad Commission Staff, the Lawton Law Firm retained to represent the Cities of Groves, Nederland, Port Arthur, and Port Neches, and counsel for the City of Galveston have recommended approval of the Settlement Agreement terms as a reasonable alternative to resolve the issues raised in GUD No. 10844 without litigation and further accrual of rate case expenses. NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR, TEXAS: Section 1. That the statement and findings set out in the preamble to this Ordinance are hereby in all things approved and adopted. Section 2. That the City of Port Arthur hereby approves the attached Settlement Agreement terms resolving the issues raised in GUD No. 10844, currently pending at the Railroad Commission of Texas. Section 3. That the meeting at which this Ordinance was approved was in all things conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. Section 4. That a copy of the caption of this Ordinance be spread upon the Minutes of the City Council. Section 5. That this ordinance shall become effective from and after its passage. READ, ADOPTED AND APPROVED on this day of July A.D., 2019, at a Regular Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: 2 Mayor: Councilmembers: NOES: Thurman "Bill" Bartie, Mayor ATTEST: Sherri Bellard City Secretary APPROVED AS TO FORM: 4e‘g )CO Val •-��. �izeno Ci . ttor f y APPROVED FOR ADMINISTRATION: Rebecca Underhill Interim City Manager 3 ATTACHMENT A Page 1 of 4 GAS UTILITIES DOCKET NO. 10844 STATEMENT OF INTENT OF TEXAS § GAS SERVICE COMPANY,A DIVISION § BEFORE THE OF ONE GAS, INC., TO INCREASE § RATES TO RECOVER HURRICANE § RAILROAD COMMISSION HARVEY RESPONSE COSTS WITHIN § THE GULF COAST SERVICE AREA § OF TEXAS UNANIMOUS SETTLEMENT AGREEMENT IN SUPPORT OF A REGULATORY ASSET This Unanimous Settlement Agreement is entered into by and between Texas Gas Service Company, a Division of ONE Gas, Inc. ("TGS"), the Staff of the Railroad Commission of Texas ("Staff'), the City of Galveston ("Galveston"), and the Cities of Groves,Nederland, Port Arthur, and Port Neches("Cities") (collectively,the"Signatories"). WHEREAS, on April 16, 2019, TGS filed a Statement of Intent to Increase Rates to Recover Hurricane Harvey Response Costs Within the Gulf Coast Service Area; WHEREAS, TGS proposed in its Statement of Intent to recover $714,389, which reflects an offset for insurance proceeds,through a two-year surcharge; WHEREAS,the Commission docketed the rate request as GUD No. 10844; WHEREAS, Staff, Galveston,and Cities sought intervention and were granted party status in GUD No. 10844; WHEREAS, on May 7, 2019, the Commission suspended the implementation of the Company's rate request for one hundred fifty (150) days from the date on which the rates would otherwise become effective, until October 18, 2019; WHEREAS, TGS filed direct testimony with its Statement of Intent; WHEREAS, Staff, Galveston, and Cities will not file testimony in reliance on this Unanimous Settlement Agreement; WHEREAS, the Signatories agree that resolution of this docket by settlement agreement will significantly reduce the amount of reimbursable rate case expenses that would, if further litigation is pursued, be allocated to customers within the Gulf Coast Service Area; WHEREAS, the Signatories represent diverse interests and the Unanimous Settlement Agreement resolves the issues in GUD No. 10844 in a manner that the Signatories agree is consistent with the public interest; and NOW,THEREFORE,in consideration of the mutual agreements and covenants established herein, the Signatories, through their undersigned representatives, agree to and recommend for 1 ATTACHMENT A Page 2 of 4 approval by the Commission, Cities and Galveston the following Settlement Terms as a means of fully resolving the rate request pending before the Commission, Cities and Galveston without the need for additional litigation: Settlement Terms 1. The Signatories agree that TGS is no longer seeking to implement a surcharge and change utility rates for customers within the Gulf Coast Service Area through the statement of intent filed in this case. Accordingly, no change to base rates will be approved in this docket. 2. The Signatories agree to postpone consideration of the reasonableness and necessity of TGS's costs incurred in its response to Hurricane Harvey until the next comprehensive base rate proceeding in which base rates for the Gulf Coast Service Area are determined. 3. The Signatories do not take any position at this time on the reasonableness or necessity of the costs that TGS proposed to recover through this statement of intent filing. 4. The Signatories agree that TGS will create and record a regulatory asset to defer the costs at issue in this case so that the reasonableness and necessity of these costs can be considered in the next proceeding in which base rates for the Gulf Coast Service Area are determined. The amount of deferred costs is $714,389, which represents total Hurricane Harvey response costs net of insurance proceeds and other adjustments,as proposed in this docket. 5. The Signatories agree that TGS will not include carrying costs in the regulatory asset and will not seek to recover any carrying costs associated with the Hurricane Harvey response costs. 6. TGS agrees to reimburse Cities and Galveston for their legal and consultant expenses associated with GUD No. 10844. Such reimbursement shall be made on or before thirty (30)days from the date the Commission approves this Settlement Agreement and upon the Company receiving legal invoices or other documentation reflecting Cities' and Galveston's incurred costs. The Signatories agree that TGS is entitled to request the recovery of rate case expenses incurred by TGS, Galveston and Cities related to this case, in the next proceeding in which base rates for the Gulf Coast Service Area are determined. The reasonableness, necessity, and total amounts of the proposed rate case expenses to be recovered will be determined in the next proceeding in which base rates for the Gulf Coast Service Area are determined. 7. The Signatories agree to the admission of the following items: • TGS's filed Statement of Intent to Increase Rates to Recover Hurricane Harvey Response Costs Within the Gulf Coast Service Area, inclusive of all attachments and including the direct testimony of Stacey McTaggart. • Affidavit of Jeffrey J. Husen, Vice President, Chief Accounting Officer and Controller, ONE Gas, Inc., attesting to the accounting treatment for Hurricane Harvey costs reflected in Item 1 (attached as Exhibit 1). 2 ATTACHMENT A Page 3 of 4 • Affidavit of Stacey McTaggart attesting to the completion of notice on June 20, 2019. 8. The Signatories agree to support and seek approval by the Commission, Cities, and Galveston of this Unanimous Settlement Agreement. 9. The Signatories agree that all negotiations, discussions, and conferences related to the Unanimous Settlement Agreement are privileged, inadmissible, and not relevant to prove any issues associated with the next proceeding in which base rates will be determined for the Gulf Coast Service Area. 10. The Signatories agree that neither this Unanimous Settlement Agreement nor any oral or written statements made during the course of settlement negotiations may be used for any purpose other than as necessary to support the entry by the Commission of an order approving this Unanimous Settlement Agreement. 11. The Signatories agree that the terms of the Unanimous Settlement Agreement are interdependent and indivisible, and that if the Commission intends to enter an order that is inconsistent with this Unanimous Settlement Agreement, then any Signatory may withdraw without being deemed to have waived any procedural right or to have taken any substantive position on any fact or issue by virtue of that Signatory's entry into the Unanimous Settlement Agreement or its subsequent withdrawal. 12. The Signatories agree that this Unanimous Settlement Agreement is binding on each Signatory only for the purpose of settling the issues set forth herein and for no other purposes, and except to the extent the Unanimous Settlement Agreement governs a Signatory's rights and obligations for future periods, this Unanimous Settlement Agreement shall not be binding or precedential upon a Signatory outside this proceeding. 13. The Signatories agree that this Unanimous Settlement Agreement may be executed in multiple counterparts and may be filed with facsimile signatures. 3 • ATTACHMENT A Page 4 of 4 Agreed to this 18t day of July 2019. TEXAS GAS SERVICE COMPANY, a Division of ONE Gas, Inc. By: Stephanie G. Houle Attorney for Texas Gas Service Company STAFF OF THE RAILROAD COMMISSION OF TEXAS By: Natalie Dubiel Attorney for Staff of the Railroad Commission of Texas THE CITY OF GALVESTON By: Jamie Mauldin Attorney for the City of Galveston Agreed in principle, subject to approval of the City Council of the City of Galveston THE CITIES OF GROVES,NEDERLAND, PORT ARTHUR,AND PORT NECHES By: Molly Mayhall Vandervoort Attorney for the Cities of Groves,Nederland, Port Arthur, and Port Neches Agreed in principle, subject to approval of the City Councils of the Cities of Groves, Nederland, Port Arthur, and Port Neches 4