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Home My WebLink AboutPO 6074: DENYING ENTERGY TEXAS, INC. RATE INCREASE REQUESTInteroffice MEMORANDUM To: Mayor, City Council, and City Manager l~ ~ a From: Valecia R. Tizeno, City Attorney V Date: April 9, 2010 Subject: P. O. No. 6074; Council Meeting April 20, 2010 Attached is P. O. No. 6074 denying the rate increase request of Entergy Texas, Inc., filed on December 30, 2009; 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.po6074_memo THE LAWTON LAW FIRM, P.C. 701 Btazos Suim 500 • Austin, Texas 78 i01 • 5 1 2/3 2 240 19 • Fax: 5 12/7 1689 17 ATTORNEY/CLIENT COMMUNICATIONS -PRIVILEGED AND CONFIDENTIAL Mazch 23, 2010 Mr. Richard Ferguson City Attorney - City of Anahuac 13201 Northwest Freeway, Suite 300 Houston, Texas 77040 Mr. Tyrone Cooper City Attorney -City of Beaumont P.O. Box 3827 Beaumont, Texas 77704 Mr. Kyle Hayes City Manager -City of Beaumont P.O. Box 3827 Beaumont, Texas 77704 Mr. Phillip Cook City Manager - City of Cleveland 907 E. Houston Cleveland, Texas 77327 Mr. Mack Winberry City Attorney -City of Conroe P.O. Box 3066 Conroe, Texas 77305 Mr. Paul Fukuda City Attorney -Bridge City 260 Rachal Post Office Box 846 Bridge City, Texas 77611 Mr. Kenneth Wall City Attorney -City of Cleveland Olson & Olson Worthacn Tower, Suite 600 2727 Allen Parkway Houston, Texas 77019 Mr. James Black City Attorney -City of Groves 3627 Professional Drive Port Arthur, Texas 77643 ATTORNEY/CLIENT COMMUNICATIONS -PRIVILEGED AND CONFIDENTIAL Mr. D. E. Sosa City Manager -City of Groves P.O. Box 3286 Port Arthur, Texas 77643 Mr. Leonazd Schneider City Attorney - City of Huntsville 2 Riverway, Suite 700 Houston, Texas 77056-1918 Mr. Brad Stafford City Manager - City of Navasota 202 E. Washington Navasota, Texas 77868 Ivfr. Christopher Duque City Manager -City of Nederland, P.O. Box 967 Nederland, Texas 77627 Mr. Tony Butler Oak Ridge North 27424 Robinson Road Oak Ridge North, Texas 77385 Mr. Shawn Oubre City Manager -City of Orange 803 W. Green Avenue, Room 201 Orange, Texas 77630 Mr. Tommy Gunn City Attorney - City of Pinehurst 202 S. Border Orange, Texas 77630 Mr. Andre Wimer City Manager - City of Port Neches 634 Avenue C Port Neches, Texas 77651 409-719-4302 (fax) Mr. Gteg Smith. City Manager - City of Shenandoah 29955 IH-45 N. Shenandoah, Texas 77381 Mr. Bill Baine City Manager - City of Huntsville 1212 Ave. M Huntsville, TX 77340 Mr. Bryan Fowler City Attorney - City of Montgomery l0l Old Plantersville Road Montgomery, Texas 77316 Mr. Cary Bovey- Law Office of Cary L. Bovey, PLLC 2251 Double Creek Dr., Suite 204 Round Rock, Texas 78664 Mr. Jesse Branick City Attorney -City of Nederland 221 Hwy. 69 South; Suite 100 (office) Nederland, TX 77627. Ms. Vicky Rudy Oak Ridge North 27424 Robinson Road Oak Ridge North, Texas 77385 Mr. Rodney Price City Attorimey -City of Pine Forest City Attorney -City of Rose City 215 W. Freeway Vidor, Texas 77662 Ms. Val Tizeno City Attorney -City of Port Arthur P.O. Box 1089 Port Arthur, Texas 77640 Mr. Pete Steele City Attorney -City of Port Neches 3120 Central Mall Drive Port Arthur, Texas 77642 Mr. Harry Wright City Attorney -City of Silsbee PO Box 186 Port Neches, Texas 77651 ATTORNEY/CLIENT COMIviUNICATIONS -PRIVILEGED AND CONFIDENTIAL Mayor Dorothy Welch Mr. Joe Alford City Attomey Leonazd Schneider .City Attomey - City of West Orange City of Splendora 105 Mazket P.O. Box 1087 Orange, Texas 77630 Splendora, Texas 77372 Re: Entergy Texas, Inc.'s Current Ratecase Steering Committee of Cities in Entergy's Service Area: This letter is to recommend that the Cities deny Entergy Texas, Inc.'s ("Entergy") proposed rate increase request filed with the Cities on, or about December 3Q, 2009. The recommendation is based upon the analyses and evaluations conducted to date by the rate experts retained to review Entergy's filing. The recommendation of the Lawton Law Firm, P.C. is appended to this letter as Attachment 1. , We are also attaching; as Attachment Z, a proposed Rate Ordinance denying Entergy's rate increase request. This Ordinance.must be passed on or before May 4, 2010. If the Ordinance is not passed by that date, the rate increase proposed by Entergy may take effect by operation of law under Texas Public Utilities Regulatory Act § 36.108(c). It is anticipated that Entergy will appeal the Cities' rate decisions. The cases will then be consolidated with the rate case currently pending before the Public Utility Commission of Texas ("Commission"). The experts retained to review the rate case on behalf of Cities will make their recommendafions regazding the rate increase proposed by Entergy through their testimony currently due to the Commission on June 9, 2010. If you have any questions or concerns, please do not hesitate to call. Sincerely, Daniel J. Lawton ATTORNEY/CLIENT COMMUNICATIONS -PRIVILEGED AND CONFIDENTIAL P. O. No. 6074 04/09/10 is ORDINANCE NO. AN ORDINANCE DENYING THE RATE INCREASE REQUEST OF ENTERGY TEXAS, INC., FILED ON DECEMBER 30, 2009; FINDING THAT. THE MEETING COMPLIES- WITH THE OPEN MEETINGS ACT; HARING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE WHEREAS, on or about December 30, 2009, Entergy Texas, Inc. ("Entergy") filed a Statement of Intent with the City to increase electric rates in the Entergy Service Area by $210.5 million per year; and WHEREAS, per Ordinance No. 10-04, authorized at the January 12, 2010 Council Meeting, the City suspended the effective date of Entergy's rates within its jurisdictional limits until at least May 4, 2010, and hired the Lawton Law firm, P.C. to review ' the Company's rate change request and proposed tariffs; and WHEREAS, the expert utility rate consultants retained to review the Company's rate increase request have made a range of proposed adjustments for areas where Entergy has not justified the need for a rate increase or has failed to comply with regulatory ratemaking requirements. These adjustments, on average, reduce the Company's purported annual revenue increase to zero dollars, as set out in the recommendations made to the City in the Final Rate Report to Cities Steering Committee ("Report"). The average of the adjustment range, $207.3, would essentially eliminate any increase requested by Entergy; and S.po6074 WHEREAS, the rate experts retained for. the rate review have concluded that Entergy's rate filing request includes rate increases for Entergy's proposed cost of capital, cost~of cash working. capital, accumulated deferred income taxes, depreciation rates, cost of purchased power capacity, employee compensation - including bonus, stock awards. and other compensation - benefits, federal income tax estimates, and storm reserves charges, which are unjustified by Entergy's filing; and WHERES, Entergy has failed to justify increasing the rates previously determined to be reasonable and necessary by this City and other Texas regulatory authorities; and WHEREAS, the statutory deadline to act on Entergy's rate increase request in May 4, 2010. NOW THEREFORE,. BE IT ORDAINED BY THE CITY COUNCIL OF THE. CITY OF PORT ARTHUR: Section 1. That the facts and opinions in the preamble are true and correct. Section 2. That the City of Port Arthur hereby denies the rate increase and proposed tariff revisions requested in Entergy's Statement of Intent. Section 3. That Entergy is hereby Ordered to continue operating under its existing approved rates. Section 4. 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. s.po6074 Section 5. That a copy of the caption of this Ordinance be spread upon the Minutes of the City Council. Section 4. That this Ordinance shall become effective immediately from and after its passage. READ, ADOPTED-AND APPROVED on this day of A.D., 2010, at a Council Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor City Council NOES: MAYOR ATTEST: CITY SECRETARY APP OVED A TO FORM: CITY ATTORNEY APPROVED FOR ADMINISTRATION: CITY MANAGER s . po60'l9