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Home My WebLink AboutPO 7255: TEXAS GAS SERVICE COMPANY, INCREASE GAS RATES P.O. No. 7255 06/07/2024 gt ORDINANCE NO. AN ORDINANCE OF THE CITY OF PORT ARTHUR, TEXAS AUTHORIZING THE SUSPENSION OF THE EFFECTIVE DATE FOR AN ADDITIONAL NINETY (90) DAYS BEYOND THE EFFECTIVE DATE PROPOSED BY TEXAS GAS SERVICE COMPANY, A DIVISION OF ONE GAS, INC. IN CONNECTION WITH ITS STATEMENT OF INTENT TO INCREASE RATES WITHIN THE INCORPORATED AREAS OF THE CENTRAL-GULF SERVICE AREA, FILED ON JUNE 3, 2024; AUTHORIZING THE HIRING OF LAWYERS AND RATE EXPERTS; AUTHORIZING THE CITY'S PARTICIPATION TO THE FULL EXTENT PERMITTED BY LAW AT THE RAILROAD COMMISSION OF TEXAS; REQUIRING REIMBURSEMENT OF MUNICIPAL RATE CASE EXPENSES; 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 June 3, 2024, 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") to increase gas rates within the unincorporated areas of its Central-Gulf Service Area by $25.8 million per year, with a proposed effective date of July 8, 2024; and WHEREAS, City has exclusive original jurisdiction over the rates, operations and services of a gas utility in areas in the municipality pursuant to Texas Utilities Code § 103.001; and WHEREAS, Texas Utilities Code § 103.021 requires a local regulatory authority to make a reasonable determination of rate base, expenses, investment and rate of return and retain the necessary personnel to determine reasonable rates; and WHEREAS, the City's reasonable cost for regulatory expenses in ratemaking proceedings shall be reimbursed by the gas utility under Texas Utilities Code § 103.022; and WHEREAS, Texas Utilities Code § 104.107(a)(1) authorizes a local regulatory authority to suspend a utility's proposed rate change for not longer than 90 days after the date the rate change would otherwise be effective; and WHEREAS, given the complexity of the proposed rate increase and the need to fully review the proposed rate adjustment it is necessary to suspend the effective date s.po7255 for implementing the proposed rates until October 6, 2024, to allow the City's rate experts sufficient time to determine the merits of TGS's proposed rates; and WHEREAS, to maximize the efficient use of resources and expertise in reviewing, analyzing, and investigating TGS's $25.8 million rate increase request, City's efforts will be coordinated with similarly situated municipalities in TGS's Central-Gulf Service Area; and WHEREAS, the City will join with other municipalities in a steering committee in order to coordinate the hiring and direction of counsel and consultants working on behalf of the steering committee and the City. 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 effective date of TGS's proposed rate increase, and the proposed tariffs related thereto, is hereby suspended for an additional ninety (90) days until October 6, 2024, in order to complete the review and investigation by City's experts. Section 3. That the City is authorized to join with other municipalities as part of the TGS Central-Gulf Service Area Steering Committee with the understanding that the steering committee will provide direction and guidance to the lawyers who are representing said cities. Section 4. That the City employs The Lawton Law Firm, P.C. to represent the City with regard to TGS's proposed rate increase before local and state regulatory authorities and any court of law and authorizes counsel to employ such rate experts as are recommended by the Steering Committee. Section 5. That the Steering Committee shall review the invoices of the lawyers and rate experts for reasonableness before submitting the invoices to TGS for reimbursement. Section 6. That City's legal representatives shall have the right to obtain additional information from TGS through the service of requests for information, which shall be responded to within seven (7) calendar days of receipt of such requests for information. Section 7. That TGS shall reimburse the City, through the designated representative of the Steering Committee, for the reasonable costs of attorneys and consultant fees and expenses related thereto, upon the presentation of invoices reviewed by the Steering Committee. s.po7255 Section 8_ 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 9. That this ordinance shall become effective from and after its passage. READ, ADOPTED AND APPROVED on this day of June, A.D., 2024, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor: Councilmembers: NOES: Thurman Bill Bartle, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED AS TO FORM: ektr- a es M. Black, Interim City Attorney APPROVED • ' ADMINISTRATION: Ronald Burto '�M, City Manager s.po7255 THE LAWTON LAW FIRM, P.C. 12600 Hill Country Blvd.,Suite R•275 • Austin,Texas 78738 • 512/322-0019 June 7,2024 Via E-Mail Ms. Sharae Reed Mr. Kenneth R. Williams City Attorney—City of Beaumont City Manager—City of Beaumont P.O. Box 3827 P.O. Box 3827 Beaumont, Texas 77704 Beaumont, Texas 77704 Mr. Brandon Monk Mr. Kevin Carruth City Attorney—City of Groves City Manager—City of Groves 4875 Parker Drive 3947 Lincoln Avenue Beaumont, TX 77705 Groves, Texas 77619-4604 Mr. Chris Leavins Mr. Christopher Duque City Attorney—City of Nederland City Manager—City of Nederland P.O. Box 4915 P.O. Box 967 Beaumont, Texas 77704-4915 Nederland, Texas 77627 Mr. James Black Mr. Ronald Burton City Attorney—City of Port Arthur City Manager—City of Port Arthur P.O. Box 1089 P.O. Box 1089 Port Arthur, Texas 77641 Port Arthur, Texas 77641 Mr. Lance Bradley Mr. Andre' Wimer City Attorney—City of Port Neches City Manager—City of Port Neches P.O. Box 1148 P.O. Box 758 Port Neches, Texas 77651 Port Neches, Texas 77651 Re: 2024 Statement of Intent of Texas Gas Service Company, a Division of ONE Gas, Inc. ("TGS" or "Company") to Change Gas Utility Rates within the Incorporated Areas of the Central-Gulf Service Area Dear Cities: As you may know, TGS recently filed an application with your City for an increase in gas service rates. The total rate increase requested is $25.8 million annually, representing a 15.59% CONFIDENTIAL/ATTORNEY-CLIENT COMMUNICATION 1 increase in non-gas revenues. If approved,the average increase per residential customer would be $6.26 for usage of 17 Ccf per month and$9.53 for usage of 43 Ccf per month. TGS has proposed that the gas service rate increase become effective on July 8, 2024. As such,the City must take action to approve,deny,modify,or suspend the rate increase request by October 6,2024. We recommend that the City suspend the effective date of the proposed rate increase to permit time to review TGS's request and make an informed recommendation to the City. We are providing a proposed ordinance for your consideration that would suspend the effective date proposed by TGS to October 6, 2024. Pursuant to Gas Utility Regulatory Act, Tex. Util. Code § 104.107, municipal regulatory authorities may suspend the rate change proposed by a utility up to 90 days from the effective date. Once again, this proposed ordinance must be passed by July 8, 2024. Please forward copies of passed ordinances to us at danlawtonlawfirm@gmail.com and molly@mayhallvandervoort.com. The proposed ordinance also authorizes the City to join with the Steering Committee of Cities to retain legal counsel and rate consultants, participate in the gas service rate proceeding before the Railroad Commission and any courts,and to seek reimbursement for rate case expenses from TGS. Once we have had an opportunity to review the case and supporting documentation, we will provide more information on the current rate increase request and a recommendation on the actions to be taken. If you have any questions or concerns,please do not hesitate to call. Sincerely, /s/Daniel J. Lawton CONFIDENTIAL/ATTORNEY-CLIENT COMMUNICATION 2