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Home My WebLink AboutPO 6059: ENTERGY TEXAS, INC. IMPENDING RATE CASEInteroffice MEMORANDUM To: Mayor, City Council, and City Manager ~/~ From: Valecia R. Tizeno, Acting City Attorney `(/ `~ Date: January 6, 2010 Subject: P. O. No. 6059; Council Meeting January 12, 2010 Attached is P. O. No. 6059 authorizing the suspension of the effective date for an additional ninety (90) days beyond the February 3, 2010 effective date- proposed by Entergy Texas, Inc., in .connection with its rate increase application, entitled "Application of Entergy Texas, Inc. for Authority to Change Rates and to Reconcile Fuel Costs", filed on December 30, 2009;- authorizing the hiring of lawyers and rate experts; authorizing the City's participation to the full, extent permitted. by law at the Public Utility 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. VRT:ts Attachment s.po6059_memo rt '~.~ 'c -•-- F,'3 x S~ ~~ e ~* :..~ Its''' ..~~; ~1 °~ $~ i~ iil THE LAWTON LAW FIRM, P.C. 701 Brazos Suite 500 • Austin, Texas 78701 • 512/322-0019 • Fax: 5 L2/716-8917 January 4, 2010 Mr. Steve Fitzgibbons City Manager -City of Port Atthur P.O. Box 1089 Port Arthur, T~ 77641=1084 Ms. Valecia Tizeno Acting City Attorney -City of Port Arthur P.O. Box 1089 Port Arthur, Texas 77640 Re: Entergy Texas, Int.'s Impending Ratecase Steering Committee of Cities located in Entergy Texas, Inc.'s Service Territory As you are awaze, on December 30, 2009, Entergy,Texas Inc. ("Entergy" or "Company") has filed its Statement to of Intent to Increase Rates with each city that retains exclusive original jurisdiction over electric rates and services in the Entergy service area. The Co-chairmen of the Cities Steering Committee, Tyrone Cooper, City Attorney of Beaumont and Harry Wright, City Attorney of Silsbee, have asked that we organize a meeting of the Entergy Service Area Cities in an effort to coordinate efforts in this case and maximize our efforts in addressing the Company's rate request. The Company's proposed rate increase would increase rates about $198,662,992 annually.89 An average residential customer using 1,000 kWh's of electricity per month can expect a $25.87 or 20.30% monthly increase under the Company's rate proposals. In addition, city municipal lighting service is proposed to be increased by about ten percent above the current authorized levels. You may remember that Entergy requested about $107 million per year increase, but ended up with a fraction of their original request. Historically, Cities participation in Entergy rate proceedings have had a substantial impact on the ultimate rate Entergy is authorized to charge. The January 2010 residential rate level of $81.66 for 1,000 kWh's shown in Attachment 1 is substantially lower than comparable deregulated rates in the Houston area and is among the lowest rates in Texas so s9 ETI Rate Filing Volume 9; Schedule Q-1. ~~ As shown on Attachment 1, [he current residential rate reflects a $29.81 refund through March of 2010. Each city retaining exclusive original jurisdiction must make a determination regarding. Entergy's rate increase request, and suspend Entergy's proposed effective date, within thirty five days of Entergy's filing, or by February 3, 2010. If a determination is not made by a municipality by the proposed effective date, or the effective date is not suspended, the rate increase proposed by Entergy can go into effect by operation of law. Moreover, if a city does not act timely, it will lose jurisdiction over the pending rate matter. The Steering Committee has requested that we provide the Cities a proposed Ordinance to suspend the effective date of Entergy's proposed rate increase to May 4, 2010. The Ordinance also authorizes the City to join in the Entergy Texas, Inc. Cities Service Area Steering Committee so that Cities may combine their efforts to review the rate filing package at the City level and participate in the rate case filed before the Public Utility Commission. of Texas. The Ordinance also authorizes the City to hire the Lawton Law Firm, P.C: to represent the Steering Committee and requires the Steering Committee to seek reimbursement for any rate case expenses from the utility. The Steering Committee is proposing [o convene two meetings for Cities to receive information on the rate case and discuss expected issues for Entergy customers, one meeting for Cities located in the Beaumont area will take place on January 13, 2010,. starting at 10:30 a.m. at the Beaumont City Hall, 801 Main St., Beaumott, Texas. A second meeting for Cities located in the Conroe area will take place on January 20, 2010, starting at 10:00 a.m. at the Conroe City Hall, Conroe Tower at 300 W. Davis, Conroe, Texas. We.look forward to discussing this case as well as other matters involving Entergy and the Cities at the upcoming meeting. If you have any questions or concerns regarding the Entergy case or issues outlined in this letter, please call. The Steering Committee Co-chairmen may be reached at the following numbers: Tyrone .Cooper, City Attorney of Beaumont (409). 880-3715 and Harry Wright, City Attorney of Silsbee (409) 722-0486. For questions regarding the Conroe meeting, please call Marcus Winberry at (936) 522-3030. Sincerely, Daniel J. Lawton Entergy Texas, Inc. Current Average 1,000 Kilowatt-Hour Line Item Residential Bill* Item Description Jan-10 Includes the six charges described Electric Charge below. Base Rates Basic charge for providing electricity. $48.94 Customer Charge Covers metering costs. $4.57 Rate Case Rider Recovers costs of filing the 2007 rate $0 22 case. Funds weatherization projects for low $0 90 Energy Efficiency . income customers Transition to Recovers money spent on deregulation. $1.08 Cempetitien __ Reflects securitized recovery of costs from both Hurricanes Rita and Ike. Rita Hurricane charges are now $3.85 per month while Reconstruction Cost Ike charges are $5.41 per month. The Ike $7.99 I Recovery charge is offset by $1.27 because a different method of securitization allowed greater savings for customers. Includes the following fuel-related costs as described below. Fuel costs are Fuel Charges passed through and reflect no pro£t for Entergy Texas, Inc. Reflects cost of fuel purchased to make Fixed Fuel Factor electricity. Set twice yearly with change $47.77 reflected in Mar and Sep billing cycles. A new fuel refund of $29.81 per month Fuel Refund will remain on bills through March and. ($24.81) reflects over-recovery from Apr 09 to Oct 09. Equalization Rider Includes the following temporary refund as described below. An anticipated credit reflecting payments RPCE Credit [o Entergy Texas, Inc. to equalize $0.00 electricity production costs among Entergy's various operating wmpanies. Entergy Texas Total Bill $81.66 *Line items do not include various city franchise fees or municipal sales taxes. P. O. No. 6059 01/06/10 is 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 FEBRUARY 3, 2010, EFFECTIVE DATE PROPOSED BY ENTERGY TEXAS, INC., IN CONNECTION WITH ITS RATE INCREASE APPLICATION ENTITLED "APPLICATION OF ENTERGY TEXAS, INC. FOR AUTHORITY TO CHANGE RATES AND TO RECONCILE-FUEL COSTS", FILED ON DECEMBER 30, 2009; AUTHORIZING THE HIRING- OF LAWYERS AND RATE EXPERTS; AUTHORIZING THE CITY'S PARTICIPATION TO THE FULL EXTENT PERMITTED BY LAW AT -THE PUBLIC UTILITY COMMISSION OF TEXAS, REQUIRING REIMBURSEMENT .OF MUNICIPAL RATE CASE EXPENSES; FINDING THAT THS MEETING COMPLIES WITH THE OPEN MEETINGS ACT; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THS SUBJECT, AND DECLARING AN EFFECTIVE DATE WHEREAS, on or about December 30, 2009, Entergy Texas, Inc. ("ETI") filed a Statement of Intent with the City to increase electric rates in the ETI Service Area by $198.7 million per year; and WHEREAS, Cities have exclusive original jurisdiction over the rates, operations,- and services of an electric utility in areas in the municipality, pursuant to the Public Utility Regulatory Act- §33.001(a); and WHEREAS, Public Utility Regulatory Act. § 33.021 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 s.po6059 WHEREAS, the City's reasonable cost for regulatory expenses in ratemaking proceedings shall be reimbursed by the Electric Utility, under Public Utility Regulatory Act §33.023; 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 for implementing the proposed rates until at least May 4, 2010, in order to allow the City's rate experts sufficient time to determine the merits of ETI's proposed rates; and WHEREAS, in order to maximize the efficient use of resources and expertise in reviewing, analyzing, and investigating ETI's $198.7 million rate increase request, the City's efforts will be coordinated with similarly situated municipalities through the Entergy Texas, Inc. Cities Service Area Steering Committee; and WHEREAS, the City will. join with other ETI service area 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, THAT: s.po6099 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 ETI's proposed rate increase, and the proposed tariffs related thereto, is hereby suspended for an additional ninety (90) days until May 4, 2010 in order to complete the review and investigation by the City's experts. Section 3. That the City is authorized to join with other municipalities as part of the Entergy Texas, Inc. 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 the proposed rate increase of ETI before local and state regulatory authorities and any court of law, and authorizes counsel to employ such rate experts as are recommended by the Cities' 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 ETI for reimbursement. s.po6059 Section 6. That the City's legal representatives shall have the right to obtain additional information from ETI through the service of requests for information. Section 7. That ETI shall reimburse the City, through the designated representative city of the Steering Committee, for the reasonable costs of attorneys and consultant and expenses related thereto, upon the presentation of invoices reviewed by the Steering Committee. 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. Section 10. That a copy of this Ordinance shall be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this day of A.D., 2010, at a Regular Meeting of the City Council of the City of Port Arthur, Texas, by the following vote AYES: Mayor ; Councilmembers ; NOES: s.po6099 MAYOR ATTEST: CITY SECRETARY APP VED AS O FORM: ~'- c~' ~ ACTING CITY AT RNEY APPROVED FOR ADMINISTRATION: STEVE FITZGIBBONS, CITY MANAGER s.po6059