To: Mark R. Hafner, City Manager
From: Lupe Orozco, Administrative Services Manager
Subject:
Title
Consider a resolution of the City of Keller, Texas suspending the June 17, 2022 effective date of Oncor ("Oncor" or "Company") Electric Delivery Company's requested rate change to permit the City time to study the request and to establish reasonable rates.
Background:
The City of Keller is a member of a 169-city coalition known as the Steering Committee of Cities Served by Oncor ("Steering Committee"). The Steering Committee has been in existence since the late 1980s. It took on a formal structure in the early 1990s when cities served by the former TXU gave up their statutory right to rate case expense reimbursement in exchange for higher franchise fee payments. Empowered by city resolutions and funded by per capita assessments, the Steering Committee has been the primary public interest advocate before the Public Utility Commission, the Courts, and the Legislature on electric utility regulation matters for the last 30 years.
Although Oncor has increased rates many times over the past few years, this is the first comprehensive base rate case for the Company since March 2017.
On Friday, May 13, 2022, Oncor filed a Statement of Intent to Increase Rates with all cities in its service area that retain original jurisdiction. The Company is seeking to increase rates by approximately $251 million over rates currently in place, or approximately 4.5% over present revenues. Residential customers would see an 11.2% increase in rates. If approved, a residential customer using 1,300 kWh per month would see a bill increase of about $6.02 per month. Additionally, the Company proposes to increase street lighting rates by 1.6%.
The Steering Committee intends to conduct a review of the Company’s filing, hire and direct legal counsel and consultants to prepare a common response, and negotiate with the Company prior to getting reasonable rates and direct any necessary litigation.
The Public Utility Regulatory Act (PURA) § 36.108 grants local regulatory authorities the right to suspend the effective date of proposed rate changes for ninety (90) days after the date the rate change would otherwise be effective. The city must take action to suspend the effective date by June 17, 2022.
Financial Impact:
The resolution suspends the June 17, 2022 effective date of the Company's rate increase for the maximum period permitted by law to allow the City, working in conjunction with the Steering Committee of Cities Served by Oncor, to evaluate the filing, determine whether the filing complies with law, and if lawful, to determine what further strategy, including settlement, to pursue.
The Company will reimburse the Steering Committee for its reasonable rate case expenses.
No individual city incurs liability for payment of rate case expenses by adopting a suspension resolution.
Legal Review:
The proposed resolution has been reviewed and submitted by the Oncor Cities Steering Committee (OCSC) general counsel at Lloyd Gosselink Rochell & Townsend.
Alternatives:
City Council has the following alternatives:
- Approve as submitted
- Approve with changes
- Denial