To: Mark R. Hafner, City Manager
From: Carolyn J. Nivens, Director of Administrative Services | Human Resources
Subject:
Title
Consider a resolution of the City of Keller, Texas finding that Oncor Electric Delivery Company LLC’s (“Oncor” or “Company”) application to change rates within the City should be denied; finding that the City’s reasonable rate case expenses shall be reimbursed by the Company; finding that the meeting at which this resolution is passed is open to the public as required by law; requiring notice of this resolution to the company and legal counsel.
Action Requested:
City Council consideration of a resolution finding that Oncor’s application to change rates within the City should be denied; finding that the City’s reasonable rate case expenses shall be reimbursed by the company; finding that the meeting at which this resolution is passed is open to the public as required by law; and requiring notice of this resolution to Oncor and legal counsel.
Background:
The City, along with 158 other cities served by Oncor Electric Delivery Company LLC (“Oncor” or “Company”) is a member of 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.
On March 17, 2017, Oncor filed an application to change rates with cities retaining original jurisdiction. In the filing, the Company seeks to increase system-wide transmission and distribution rates by $317 million or approximately 7.5% over present revenues. The Company asks the City to approve an 11.8% increase in residential rates and a 0.5% increase in street lighting rates. If approved, a residential customer using 1000 kWh per month would see a bill increase of about $6.68 per month.
In March, the Steering Committee engaged the services of three consultants, Mr. Lane Kollen, Mr. Richard Baudino, and Mr. Karl Nalepa, to review the Company’s filing. The consultants identified numerous unreasonable expenses and propose significant reductions to the Company’s request. Accordingly, the Steering Committee’s attorneys recommend that all members adopt the resolution denying the rate change. Once the Resolution is adopted, Oncor will have 30 days to appeal the decision to the Public Utility Commission of Texas where the appeal will be consolidated with Oncor’s filing (i.e. PUC Docket No. 46957) currently pending at the Commission.
Under the law, cities with original jurisdiction over this matter have 125 days from the initial filing to take final action on the application. By the agreement of the parties, this deadline was suspended until August 19, 2017. As such, all cities with original jurisdiction will need to adopt the resolution no later than August 19.
The staff recommends approval of the resolution denying Oncor’s application to change rates. All cities retaining jurisdiction (which includes Keller) should take action by August 19, 2017. Otherwise, Oncor is legally authorized to charge the proposed rate increase to all customers within the city’s jurisdiction after that date.
Budget Impact:
Not Applicable
Financial Considerations:
The denial resolution allows time for the Steering Committee and its consultants to continue to negotiate the rates. At this time, we cannot say what the end result of that negotiation would be insofar as rates are concerned.
Reasonable rate case expenses are reimbursed to the Steering Committee by the Company. No individual municipality incurs liability for payment of rate case expenses by approving the denial resolution.
Citizen Input/Board Review:
Not Applicable
Legal Review:
Proposed resolution has been reviewed and submitted by the Oncor Cities Steering Committee (OCSC) general counsel at Lloyd Gosselink Rochell & Townsend. The proposed resolution has been reviewed by the City Attorney’s office.
Alternatives:
City Council has the following alternatives:
- Approve as submitted
- Approve with changes
- Denial
Council Action:
The OCSC Executive Committee and its designated legal counsel and consultants recommend that all member cities pass a denial resolution, and in doing so, deny the application to change rates finding the rates to be unreasonable and excessive.