Agenda

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Work Session and Regular Meeting

Meeting Date:	04/11/2017
Department:	City Manager

AGENDA CAPTION:

Consider Action On A Resolution Of The Town Of Addison To Suspend The April 21, 2017, Effective Date Of Oncor Electric Delivery Company's Requested Rate Change To Permit The City Time To Study The Request And To Establish Reasonable Rates; Approving Cooperation With The Steering Committee Of Cities Served By Oncor To Hire Legal And Consulting Services And To Negotiate With The Company And Direct Any Necessary Litigation And Appeals; 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 For The Steering Committee.

BACKGROUND:

The purpose of this item it to suspend Oncor Electric Delivery Company's (Oncor)  request to increase electricity rates effective April 21, 2017 to allow additional time for the Steering Committee of Cities Serviced by Oncor (Steering Committee) to study the rate filing. The Town must take action by April 21, 2017 or the rates will become effective. State law permits cities to extend the effective date by up to 90 days in order to study the filing.

Oncor filed an application on or about March 17, 2017 with cities retaining original jurisdiction seeking to increase system-wide transmission and distribution rates by $317 million or approximately 7.5% over present revenues.  Oncor asks the Town 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. Although Oncor has increased rates many times over the past few years, this is the first comprehensive base rate case for the Ccmpany since January, 2011.

The resolution suspends the April 21, 2017 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, to evaluate the filing, determine whether the filing complies with law, and if lawful, to determine what further strategy, including settlement, to pursue.

The Town of Addison is a member of a 156-city coalition known as the Steering Committee of Cities Served by Oncor which is represented by the legal firm of Lloyd Gosselink. 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 Energy gave up their statutory right to rate case expense reimbursement in exchange for higher franchise fee payments.   Please see attached document for a list of cities which represent the Steering Committee.

Listed below is an explanation of the actions that will be taken with the resolution:

Section 1: The City is authorized to suspend the rate change for 90 days after the date that the rate change would otherwise be effective for any legitimate purpose. Time to study and investigate the application is always a legitimate purpose. Please not that the resolution refers to the suspension period as "the maximum period allowed by law" rather than ending by a specific date. This is because the Company controls the effective date and can extend the deadline for final city action to increase the time the City retains jurisdiction if necessary to reach settlement on the case. If the suspension period is not otherwise extended by the Company, the City must take final action on Oncor's request to raise rates by April 21, 2017.
Section 2: This provision authorizes the Steering Committee, consistent with the City's resolution approving membership in the Steering Committee, to act on behalf of the City at the local level in settlement discussions, in preparation of a rate ordinance, on appeal of the rate ordinance to the PUC, and on appeal to the Courts. Negotiating clout and efficient are enhanced by the City cooperating with the Steering Committee in a common review and common purpose. Additionally, rate case expenses are minimized when the Steering Committee hires one set of attorneys and experts who work under the guidance and control of the Executive Committee of the Steering Committee.
Section 3: The Company will reimburse the Steering Committee for its reasonable rate case expenses. Legal counsel and consultants approved by the Executive Committee of the Steering Committee will submit monthly invoices that will be forwarded to Oncor for reimbursement. No individual city incurs liability for payment of rate case expenses by adopting a suspension resolution.
Section 4: This section merely recites that the resolution was passed at a meeting that was open to the public and that the consideration of the resolution was properly noticed.
Section 5: This section provides that both Oncor and Steering Committee counsel will be notified of the City's action by sending a copy of the approved and signed resolution to certain designated individuals.

There is no budgetary impact to this item.

RECOMMENDATION:

Administration recommends approval.

Attachments
Resolution
Steering Committee Cities Listing 2017