HomeMy WebLinkAboutPO 6198: ENTERGY TEXAS, INC. RATE INCREASE APPLICATION interoffice CITY
MEMORANDUM 2011 DEC -7 FBI t+• 37
To: Mayor, City Council, and City Manage Q P 1 4 4/12)
From: Valecia R. Tizeno, City Attorney �"
Date: December 2, 2011
Subject: P. O. No. 6198; Council Meeting December 13, 2011
Attached is P. O. No. 6198 as authorizing the suspension of
the effective date for an additional ninety (90) days beyond the
January 2, 2012, 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 November 28, 2011; 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:gt
Attachment
cc: Mr. Daniel J. Lawton
THE LAWTON LAW FIRM, P.C.
s.po6198_memo
THE LAWTON LAW FIRM P.C
701 Brazos Suite 500 • Austin, Texas 78701 • 512/3220019 • Fax 512/716.8917
November 28, 2011
Mr. Richard Ferguson. Mr. Tyrone Cooper
City Attorney — City of Anahuac City Attorney — City of Beaumont
13201 Northwest Freeway, Suite 300 P.O. Box 3827
Houston, Texas 77040 Beaumont, Texas 77704
Mr. Kyle Hayes Mr. Paul Fukuda
City Manager — City of Beaumont City Attorney — Bridge City
P.O. Box 3827 260 Rachal
Beaumont, Texas 77704 Post Office Box 846
Bridge City, Texas 77611
Mr. Phillip Cook Mr. Kenneth Wall
City Manager — City of Cleveland City Attorney — City of Cleveland
907 E. Houston Olson & Olson
Cleveland, Texas 77327 Wortham Tower, Suite 600
2727 Allen Parkway
Houston, Texas 77019
Mr. Mark Winberry Mr. James Black
City Attorney — City of Conroe City Attorney — City of Groves
P.O. Box 3066 BBVA Compass Bank Building
Conroe, Texas 77305 3535 Calder Avenue, Suite 300
Beaumont, TX 77706
Mr. D. E. Sosa Ms. Tina Paez
City Manager — City of Groves City of Houston Administration &
P.O. Box 3286 Regulatory Affairs Department (ARA)
Port Arthur, Texas 77643 611 Walker, 10th Floor
Houston, Texas 77002
Ms. Melba T. Pourteau Mr. Leonard Schneider
City of Houston Legal Department City Attorney — City of Huntsville
P.O. Box 368, Houston, Texas 77001 -0368 2 Riverway, Suite 700
City Hall Annex, 4th Floor Houston, Texas 77056 -1918
900 Bagby
Houston, Texas 77001 -0368
Mr. Bill Baine Mr. Bryan Fowler
City Manager — City of Huntsville City Attorney — City of Montgomery
1212 Ave. M 101 Old Plantersville Road
Huntsville, TX 77340 Montgomery, Texas 77316
Mr. Brad Stafford Mr. Christopher Duque
City Manager — City of Navasota City Manager - City of Nederland
202 E. Washington P.O. Box 967
Navasota, Texas 77868 Nederland, Texas 77627
Mr. Cary Bovey Mr. Jesse Branick
Law Office of Cary L. Bovey, PLLC City Attorney — City of Nederland
2251 Double Creek Dr., Suite 204 221 Hwy. 69 South, Suite 100 (office)
Round Rock, Texas 78664 Nederland, TX 77627
Ms. Vicky Rudy Ms. Clasina Watson
City Manager -- City of Oak Ridge North City Secretary — City of Oak Ridge North
Oak Ridge North 27424 Robinson Road
27424 Robinson Road Oak Ridge North, Texas 77385
Oak Ridge North, Texas 77385
Mr. Shawn Oubre Mr. Rodney Price
City Manager — City of Orange City Attorney — City of Pine Forest
803 W. Green Avenue, Room 201 City Attorney — City of Rose City
Orange, Texas 77630 215 W. Freeway
Vidor, Texas 77662
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 77640
Mr. Andre Wimer Mr. Pete Steele
City Manager — City of Port Neches City Attorney — City of Port Neches
634 Avenue C 3120 Central Mall Drive
Port Neches, Texas 77651 Port Arthur, Texas 77642
409 -719 -4302 (fax)
Mr. Greg Smith Mr. Harry Wright
City Manager — City of Shenandoah City Attorney — City of Silsbee
29955 IH -45 N. PO Box 186
Shenandoah, Texas 77381 Port Neches, Texas 77651
Mr. Totnmy Bartosh Mr. Larry Saurage
City Manager — City of Silsbee City Manager — City of Sour Lake
105 South 3 " Street 655 W. Barkley St.
Silsbee, Texas 77656 Sour Lake, TX 77659
Mayor Dorothy Welch Mr. Ricky E. Jorgensen
City Attorney Leonard Schneider City Manager — City of Vidor
City of Splendora 1395 N. Main St.
P.O. Box 1087 Vidor, Texas 77662 -3726
Splendora, Texas 77372
Mr. Guy N. Goodson Ms. Theresa Van Meter, TRMC
City Attorney — City of Vidor City Secretary
P.O. Box 4915 City of West Orange, Texas
Beaumont, TX 77704 -4915 2700 Western Avenue
West Orange, Texas 77630
Mr. Joe Alford
City Attorney — City of West Orange
105 Market
Orange, Texas 77630
Re: Entergy Texas, Inc.'s Application to Increase Base Rates and Reconcile Fuel
Costs
Steering Committee of Cities located in Entergy Texas, Inc.'s Service Territory:
As you may know, this week Entergy Texas, Inc. ( "Entergy ") filed its application for a
base rate increase of $111.8 annually with each of your Cities. The annual increase in revenues
from residential customers is $82 million, representing a 21.6% increase in base rate revenues. If
approved, Entergy's request would result in a monthly increase of $14.37 for an average
residential customer using 1000 kWh per month. Entergy has proposed that the base rate
increase become effective on January 2, 2012. As such, the City must take action to approve,
deny, modify, or suspend the rate increase request by the January 2, 2012. We recommend
that the Cities suspend the effective date of the proposed rate increase to permit time to review
Entergy's request and make an informed recommendation to the Cities.
We are providing a proposed ordinance that would suspend the effective date proposed
by ETI to April 1, 2012. Pursuant to Public Utility Regulatory Act, Tex. Util. Code § 36.108,
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 January 2,
2012.
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 base rate proceeding before
the Public Utility Commission and any courts, and to seek reimbursement for rate case expenses
from Entergy.
Cities have been instrumental in maintaining the rates of Entergy at just and reasonable
levels and requiring Entergy to maintain adequate service. In the past five years, Entergy has
filed for two base rate increases and filed two cases for the recovery of storm restoration costs
following Hurricanes Katrina and Ike. In each proceeding the efforts of the Cities have resulted
in reduced rates for customers. In Entergy's last base rate case filed in 2009, Entergy requested
an increase of $211.5 million annually. Witnesses hired by the Steering Committee filed
testimony that the Company's proposed rate increase amount was not warranted. Belbre the
final hearing was scheduled to commence, parties settled the case and rates were set to collect an
increase of $68 million, which is 32% of Entergy's original request. As part of the settlement,
Entergy also agreed to a one -time refund of $22 million to customers as a disallowance of fuel
costs. In the rate proceeding filed in 2007, Entergy requested an increase of $112 million
annually. This proceeding also settled after Cities testimony was tiled and prior to the final
hearing. The settlement resulted in a base rate increase of $28 million, or 25% of Entergy's
original request. As part of the settlement, Entergy also agreed to refund $4.5 million of fuel
disallowances.
For more information on the current rate increase request, Cities are encouraged to
attend the meeting of the Steering Committee scheduled for December 15, 2011, 10:30 a.m.
to noon at the Beaumont City Hall, 801 Main Street, Beaumont, Texas.
After a more thorough review of Entergy's rate increase request, we will provide the
Cities with a recommendation on the actions to be taken.
If you have any questions or concerns, please do not hesitate to •: 11. /
•
S'n erely
A' 1
aniel .1 Lawton
P.O. No. 6198
12/2/11 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
JANUARY 2, 2012, 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 NOVEMBER
28, 2011; 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
WHEREAS, on or about November 28, 2011 Entergy Texas,
Inc. ( "ETI ") filed a Statement of Intent with the City to
increase electric rates in the ETI Service Area by $111.8
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
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
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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 April 1,
2012 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 $111.8 million rate increase request,
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; and
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF
THE CITY OF PORT ARTHUR, TEXAS, THAT:
Section 1. That the statement and findings set out
in the preamble to this resolution 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 April 1, 2012 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 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.
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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.
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 the 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.
READ, ADOPTED AND APPROVED on this day of
A.D., 2011, at a Meeting of the City Council
of the City of Port Arthur, Texas, by the following vote:
AYES:
Mayor ,
Councilmembers
NOES: •
Mayor
ATTEST:
City Secretary
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APPROVED S ' FO'
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City Attorney 1'
APPROVED FOR ADMINISTRATION:
City Manager
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