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Home My WebLink AboutPO 6697: REASONABLE RATES, ENTERGY TEXAS, INC. P.O. No. 6697 9/3/21 gt ORDINANCE NO. AN ORDINANCE BY THE CITY OF PORT ARTHUR, TEXAS ("CITY") DENYING THE DISTRIBUTION COST RECOVERY FACTOR RATE INCREASE REQUEST OF ENTERGY TEXAS, INC. FILED ON OR ABOUT AUGUST 31, 2021; SETTING JUST AND REASONABLE RATES FOR ENTERGY TEXAS, INC. FOR SERVICE WITHIN THE MUNICIPAL LIMITS; FINDING THAT THE MEETING COMPLIES WITH THE OPEN MEETINGS ACT; MAKING OTHER FINDINGS WHEREAS, on or about August 31, 2021, Entergy Texas, Inc. ("Entergy") filed an Application to Amend its Distribution Cost Recovery Factor ("DCRF") with the City to increase electric rates by amending its DCRF rider pursuant to Public Utility Regulatory Act ("PURA") Section 36.210; and WHEREAS, City has exclusive original jurisdiction over the rates, operations and services of an electric utility within its municipal limits pursuant to PURA Section 33.001(a); and WHEREAS, the jurisdictional deadline for the City to act in this rate matter is October 30, 2021; and WHEREAS, Entergy's existing DCRF rider is set to collect approximately $26.3 million per year; and WHEREAS, Entergy's proposed amended Distribution Cost Recovery Factor rider would increase customer rates in the Entergy Service Area by approximately $13.9 million per year, for a total of $40.2 million per year; and WHEREAS, the City retained the Lawton Law Firm, P.C. to review the Company's rate request and make necessary rate recommendations to the City; and WHEREAS, the Lawton Law Firm has recommended that the City deny the Company's request to amend its Distribution Cost Recovery Factor as delineated in Exhibit "A". 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. 1 Section 2. That the City of Port Arthur hereby denies Entergy's request to amend its Distribution Cost Recovery Factor in total. 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 this ordinance shall become effective from and after its passage. READ, ADOPTED AND APPROVED on this day of September A.D., 2021, at a Meeting of the City Council of the City of Port Arthur, by the following vote: AYES: Mayor: , Councilmembers: NOES: . Donald Ray Frank, Sr., Mayor Pro Tenn ATTEST: Sherri Bellard, City Secretary APPROV D AS TO FORM: 01 ' ialt. Valecia Tizeno, ' A •rney APPROVED FOR ADMINISTRATION: Ronald Burton, City Manager 3 EXHIBIT "A" 4 THE LAWTON LAW FIRM, P.C. 12600 Hill Country Blvd.,Suite R-275 •Austin,Texas 78738 • 512/322-0019 • Fax:512/329.2604 CONFIDENTIAL/PRIVILEGED ATTORNEY-CLIENT COMMUNICATION September 3, 2021 Via E-Mail Mr. Richard G. Baker Mr.Tyrone Cooper City Attorney—City of Anahuac City Attorney—City of Beaumont P.O. Box 10066 P.O. Box 3827 Liberty,Texas 77575 Beaumont,Texas 77704 Mr. Kyle Hayes Mr. Paul Fukuda City Manager—City of Beaumont City Attorney—Bridge City P.O. Box 3827 City Attorney—Pine Forest Beaumont, Texas 77704 260 Rachal Post Office Box 846 Bridge City,Texas 77611 Mr. Robert Pennington Mr. David Olson City Manager—City of Cleveland City Attorney—City of Cleveland 907 E. Houston Wortham Tower, Suite 600 Cleveland, Texas 77327 2727 Allen Parkway Houston,Texas 77019 Ms. Angela Smith Mr. Gary Scott City Secretary—City of Cleveland City Attorney—City of Conroe 907 E. Houston P.O. Box 3066 Cleveland, Texas 77327 Conroe, Texas 77305 Mayor Nyla Akin Dalhaus Amy L. Wade City of Cut and Shoot City Secretary—City of Cut and Shoot P.O. Box 7364 P.O. Box 7364 Cut and Shoot,Texas 77306 Cut and Shoot, Texas 77306 1 CONFIDENTWLIPRrVILEGED ATTORNEY-CLIENT COMMUNICATION Mr. Jeff Lambright Mr. Theo Melancon Mayor—City of Dayton City Manager—City of Dayton 117 Cook Street 117 Cook Street Dayton, Texas 77535 Dayton,Texas 77535 Mr. James Black Mr. D. E. Sosa City Attorney—City of Groves City Manager—City of Groves 3535 Calder Avenue, Suite 310 P.O. Box 3286 Beaumont,TX 77706 Port Arthur,Texas 77643 Ms. Tina Paez Ms. Yushan Chang City of Houston Administration& Regulatory City of Houston Legal Department Affairs Department(ARA) P.O. Box 368, Houston,Texas 77001-0368 611 Walker, 13 th Floor City Hall Annex, 4th Floor Houston, Texas 77002 900 Bagby Houston,Texas 77002 Mr. Leonard Schneider Mr. Aron Kulhavy City Attorney—City of Huntsville City Manager—City of Huntsville City Attorney—City of Splendora 1212 Ave. M Liles Parker PLLC Huntsville, Texas 77340 2261 Northpark Dr., Suite 445 Kingwood,TX 77339 Mr. Brandon Davis Mr. Tom Warner City Attorney—City of Liberty City Manager—City of Liberty City Attorney—City of Dayton 1829 Sam Houston 1517 Trinity Liberty, Texas 77575 Liberty,Texas 77575 Mr. Alan P. Petrov Mr. Richard Tramm City Attorney—City of Montgomery City Administrator—City of Montgomery Johnson Petrov LLP 101 Old Plantersville Road 2929 Allen Parkway, Suite 3150 Montgomery, TX 77316 Houston,Texas 77019 Mr. Cary Bovey Mr. Brad Stafford City Attorney—City of Navasota City Manager—City of Navasota Bovey & Cochran,PLLC 202 E. Washington 2251 Double Creek Dr., Suite 204 Navasota, Texas 77868 Round Rock, Texas 78664 Mr. Christopher Duque Mr. Jesse Branick City Manager—City of Nederland City Attorney—City of Nederland P.O. Box 967 221 Hwy. 69 South, Suite 100 Nederland, Texas 77627 Nederland, Texas 77627 2 CONFIDENTIALlPRIVILECED ATTORNEY-CLIENT COMMUNICATION Ms. Elizabeth Harrell Ms. Heather Neeley City Secretary—City of Oak Ridge North City Manager—City of Oak Ridge North 27424 Robinson Road 27424 Robinson Road Oak Ridge North, Texas 77385 Oak Ridge North, Texas 77385 Mr. Guy Goodson Mr. Mike Kunst City Attorney—City of Orange City Manager—City of Orange GERMER PLLC 812 North 16'h Street 550 Fannin, Suite 400 P.O. Box 520 Beaumont, Texas 77701 Orange,Texas 77630 Mr. Rodney Price Mr.Jerry Hood City Attorney—City of Rose City City Administrator—City of Pinehurst P.O. Box 310 2497 Martin Luther King Jr. Drive Vidor, Texas 77670 Orange, Texas 77630 Mr. Tommy Gunn Ms. Val Tizeno City Attorney—City of Pinehurst City Attorney—City of Port Arthur 202 S. Border P.O. Box 1089 Orange,Texas 77630 Port Arthur, Texas 77641 Mr. Ronald Burton Mr. Pete Steele City Manager—City of Port Arthur City Attorney—City of Port Neches P.O. Box 1089 3120 Central Mall Drive Port Arthur, Texas 77641 Port Arthur, Texas 77642 Mr. Andre' Wimer Mr. Larry L. Foerster City Manager—City of Port Neches City Attorney—City of Roman Forest P.O. Box 758 Darden, Fowler and Creighton,LLP Port Neches,Texas 77651 414 West Phillips, Suite 100 Conroe, Texas 77301 Ms. Kathie Reyer Mr. Solomon Freimuth City Administrator—City of Shenandoah City Attorney—City of Silsbee 29955 IH-45 N. P.O. Box 186 Shenandoah,Texas 77381 Port Neches, Texas 77651 Ms. DeeAnn Zimmerman Mr. Alex Stelly City Manager—City of Silsbee City Attorney—City of Sour Lake 105 South 3`d Street 2615 Calder Ave., Ste. 1070 Silsbee, Texas 77656 Beaumont,Texas 77702 3 CONFIDENTIAL/PRIVILEGED ATTORNEY-CLIENT COMMUNICATION Mr.Jack Provost Mayor Dorothy Welch City Manager—City of Sour Lake City Attorney Leonard Schneider 625 Hwy 105 W City of Splendora Sour Lake, Texas 77959 P.O. Box 1087 Splendora,Texas 77372 Mr. Robbie Hood Mr. Chris Leavins City Manager- City of Vidor City Attorney—City of Vidor 1395 N. Main St. City Attorney—City of West Orange Vidor,Texas 77662-3726 P.O. Box 4915 Beaumont,Texas 77704-4915 Mayor Roy McDonald Mr. Michael S. Stelly Mayor—City of West Orange City of West Orange, Texas 2700 Western Avenue 2700 Austin Avenue West Orange,TX 77630 West Orange,TX 77630 Ms. Marissa Quintanilla City Secretary—City of Willis 200 N. Bell Willis,Texas 77378 Re: Entergy Texas,Inc.'s 2021 Application to Amend its Distribution Cost Recovery Factor Dear Cities: On or about August 31, 2021, Entergy Texas Inc. ("Entergy" or "Company") filed an application to amend its Distribution Cost Recovery Factor("DCRF") with each of the Cities in its service area and concurrently with the Public Utility Commission of Texas ("Commission"). Cities have 60 days to pass a Rate Ordinance accepting, modifying, or rejecting a DCRF Application. Accordingly,Cities' deadline to pass a Rate Ordinance is October 30,2021. After the 60 days have passed, Cities' rate decisions will be joined with the Company's DCRF application pending with the Commission, and the Commission will make the final determination to approve or deny the Company's request.' Cities that do not pass a rate ordinance by the 60-day deadline will also be joined. We have intervened in the Commission proceedings and will represent Cities' interests there. The purpose of a DCRF tariff is to allow a utility to recover increased distribution investment expenses it has incurred since its last base rate case. DCRF tariffs can be amended thereafter as the Company continues making distribution investment between rate cases.This will be the fourth DCRF amendment since the Company's last base rate case. ' The Commission has original jurisdiction over Entergy service areas outside the City limits and appellate jurisdiction over City decisions.See Tex. Util.Code§32.001. 4 CONFIDENTIAL/PRIVILEGED ATTORNEY-CLIENT COMMUNICATION Entergy's current DCRF tariff was set to collect approximately $26.3 million annually. Entergy now requests to collect an additional$13.9 million in annual revenue, for a total of$40.2 million. Residential customers would be charged approximately $24.8 million or 62% of the requested revenue requirement, which amounts to approximately$3.91 per month for an average residential customer using 1000 kWh per month. This represents a $1.34 increase, or 52 percent. over the current DCRF charge of about$2.57 per month for the average residential customer. The DCRF procedure differs significantly from a base rate case in that it is strictly limited in scope. Discovery is limited in DCRF cases, and parties will not be allowed to explore whether the requested investment complies with PURA,or is prudent, reasonable,or necessary. Instead, if approved, the DCRF will be reconciled in the next base rate case, and Entergy will be required to pay back, with carrying costs, any revenue received for investment that does not comply with PURA,or is not prudent, reasonable,or necessary. We are currently reviewing the Company's application to determine whether the Company properly calculated its proposed DCRF revenue requirement, class billing determinants, and resulting rates.Despite the limited scope,Cities and other intervening parties in Entergy's previous DCRF cases have identified numerous issues regarding Entergy's calculations and assumptions. In a previous DCRF case, Cities contested the Company's attempt to include ineligible retired meters in its DCRF calculation. The Commission agreed with Cities and disallowed $4.1 million from the Company's requested revenue requirement. We will ensure that the Company has attempted to include these ineligible retired meters in its current application.Other previous DCRF cases have also ultimately been resolved with Entergy agreeing to less than its initial proposed revenue requirement. Because of the limited timeline,we recommend that the Cities deny Entergy's application in total by October 30,2021. We have attached a recommended Rate Ordinance denying Entergy's DCRF application. Please forward passed ordinances to us at molly@mayhallvandervoort.com mayhallvandervoort.com and danlawtonlawfirm@gmail.com. If there are any questions or concerns, please do not hesitate to call. Sincerely, • Daniel J. Lawton 5 CONFIDENTIAUPRIV(LEGED ATTORNEY-CLIENT COMMUNICATION