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HomeMy WebLinkAboutOrdinance No. 97-19 ORDINANCE NO. 97-14
AN ORDINANCE OF TNE CITY OF FRIENDSWOOD, TEXAS,
F1NDING THAT THE EXISTTNG RATES OF TEXAS-NEW MEXiCO
POWER C4MPANY FOR ELECTRIC UTILITY SERViCES WITHIN
THE CITY ARE UNREASONABLE; PROVIDING FOR RATE
REDUCTI�NS; ESTABLISHING JUST AND REASONABLE RATES
TO BE OBSERVED AND IN FORCE WITHIN THE CITY;
PROViD1NG THE UTILITY WITH THE OPPORTUNITY TO
IMPLEMENT AN ASSESSMENT FOR THE RECOVERY OF
CERTAIN ACTUAL AND VERIFIABLE STRANDED INVESTMENT
COSTS ALOIYG W1TH A REASONABLE RETURN TI3EREON;
PROVIDING FOR AN EXIT FEE; PROVIDING FOR THE
CUNTINUATION OF THE PURCHASE COST RECOVERY FAC'I'OR;
PR4ViD1NG THAT THIS ORDiNANCE BE SERVED ON TEXAS-
1VEW MEXICO POWER COMPANY; PROVIDING FQR THE
REIMBURSEMENT OF RATEMAKING EXPENSES; PRESERVING
REGULATORY RIGHTS OF THE CITY; MAKING CERTAIN
FINDINGS; AND PROVIDING FOR REPEAL OF ALL ORDINANCES
OR PARTS OF ORDINANCES INCONSISTENT OR IN CONFLICT
HEREWITH.
WHEREAS, the City of Friendswood, Texas, is a regulatory authority under the
Public Utility Regulatory Act, 75th Leg. R.S., ch. 166, § 1, 1997 Tex. Sess. Law Serv. 713
(to be codified at TEX. UTII,. CODE ANN. §§ 11.00]-36.Ob3} and has original jurisdiction
aver the rates and accounting practices of Texas-New Mexico Power Company ("TNMP"
or"the Company")to deternune if such rates and practices are fair,just and reasonable; and
WHEREAS, TNMP's currently effective rates were established in October, 1994, as
a result of settlement in Public Utility Commission Docket No. 12900; and
WHEREAS, after TNMP withdrew its first transition plan proposal on November 20,
1996, the City iniriated an investigation inta the rates, services and tariffs of the Company;
and
WHEREAS, at the request of the Company and by resolution, the date for filing the
Company's rate filing package was extended to July 1, 1997; and
WHEREAS, on July 31, 1997, TNMP filed an Application for Approval of its
Transition Plan and Statement of Intent to Decrease Rates with the City; and
WHEREAS, pending hearing and decision, the proposed effective date set forth in
Texas-New Mexico Power Company's Application for Approval of a Transition Plan and
Statement of Intent to Decrease Rates was suspended for a period of one hundred twenty
(120) days after Juiy 31, 1997, as pernutted under §2.212(d) of the Public Urility Regulatory
Act, 75th Leg_ R.S., ch. 166, § 1, 1997 Tex. Sess. Law Serv. 713 [to be codified at TEX.
UTII.. C(JDE ANN. § 36.108(a){l}]; and
WHEREAS, TNMP's Applicarion for Approval of a Transition Plan and Statement
of Intent to Decrease Rates was, by resolution, consolidated with City's inquiry into the
rates, tariffs, and services of the Company;
NOW,THEREFORE, BE IT ORDAINED BY THE CITY COMMISSIUN OF
THE CITY OF FRIENDSWOOD, TEXAS:
1. T'he findings and recitals set forth in the preamble hereof are hereby adopted
in their entirety.
2. The existing rates of TNMP are hereby found to be unreasonable and shall be
decreased to reflect the reductions hereinafter ordered The rates resulting from such
reduclions and credits are hereby deternuned to be the just and reasonable rates to be
observed and in force within the City.
3. It is hereby ordered that the base rates of TNMP for electric power and energy
sold within the City be decreased by $23,422,000 per annum on a Texas retail system-wide
basis, based on a test year ending December 31, 1996. Such base rate decrease sha11 be
implemented for each class of customer as fallows: Residential (9.16%), General Service
(4.93%), Municipal Power(5.48%), Street Lighting (4.42%), Outdoor Lighting(3.19%) and
Industrial Firm {4.0%).
4. TNMP shall file with the City, no later than the effective date of the rate
reduction ordered herein, revised Schedules of Rates and Tariffs, together with rate design
workpapers and supporting data as requested, setting forth those rates, tariffs, and charges
based upon such decreases and credits as prescribed herein. Such Schedule of Rates and
Tariffs may be modified or amended by the City to comply with the provisions hereof within
ten {10) days from the date of filing with the City, otherwise the same sha11 be considered
approved as filed.
5. The rate reducrion ordered herein shatl be effecrive for bills rendered on and
after May 15, 1997, and shall be implemented within thirty (30) days after the date of
adoption hereof. The Company is hereby ordered to catculate the refund due customers for
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the period from May 15, 1997, to the date that the new rates become effective, along wi th
simple interest at the rate of six percent (6%). The Cornpany sha11 fiIe a plan for refunding
overcollections within thirty (30) days of the effective date of this Ordinance. The plan for
refunding overcollections shall address, among other things, the Company's proposal for
dealing with customers that have left the system, the method to be employed in
accomplishing refunds, and the time and timing of the refunds. The Company's plan of
refund may be modified or amended by the City to comply with the provisions hereof within
thirty(30)days from the da.te of filing with the City, otherwise the same shall be considered
approved as filed.
6. Upon the filing of a sworn affidavit executed by an appropriate officer of the
Company with the City within twenty (20) days hereof indicating an unconditional
commitment by the Company to open TNMP's system to fuil retail competition effective
January 1, 2000, and upon filing within thirty (30) days thereafter, a resolution approved by
the Board of Directors of TNP Enterprises, Inc., affirnung the commitment to retail
competition made by the Company, TNMP is authorized to recover from ratepayers certain
actual and verifiable siranded investment costs with a reasonable return thereon, atl as more
fully set forth hereinbelow.
7. If TNNII' agrees to open its system to competition, as set out in paragraph 6
above, then:
(a) l 998 base year base rates shall be reduced by a total of$38,400,Ofl0
or $0.00878/kwh for all firm customer classes.
(b) Effective January 1, 1998, a non-bypassable Cost Over Market
Assessment shall be applied at the rate of$O.fl08494/kwh on all firm customer sales.
{c) The Cost �ver Market Assessment mechanism sha11 be adjusted
annually ta reflect changes in investment recovery as well as the then current economic
condirions, and adjusted bi-annually to reflect the then current estimated uneconomic
investment associated with TNP One, a11 as more fully set forth in the October, 1997,
consultant's report to the Gulf Coast Coalition of Cities attached hereto and made a part
hereof for all purposes.
(d) The Company and its investors shall be allowed to recover one
hundred percent (100%) of the uneconomic invested capital in TNP One along with a
reasonable return thereon. The return shall reflect the Company's embedded cost of debt and
preferred stock. Company's cost of equity sha11 approximate the return associated with a
largely risk-free investment as reflected by rates for Federal Treasury Notes having a
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maturity date corresponding with the remaining undepreciated period of the uneconomic
invested capital in TNP One. The cost of these capital components shall be weighted by
their respecrive positions within the Company's capital structure.
$. TNMP is hereby ordered ta implement an Exit Fee applicable to ratepayers
who desire to use alternarive energy suppliers, all as more fully set forth in the attached
consultant's report.
9. TNMP is hereby ordered to develop and file with the City, for its approvai,
proposed procedures and proposed customer information for narifying existing TNMP
ratepayers regarding the implementation of the Cost Over Market Assessment and the Exit
Fee.
10. TNMP is hereby ordered to identify and implement practices to make it easy
for customers to select their energy service provider while providing necessary safeguards
to prevent customers from being switched against their will, a practice somerimes referred
to as "slamming".
11. The Company shall not jeopardize or compromise the safety or reliability of
TNMP's power system or reduce the Cornpany's historical commitment to system
maintenance and improvements.
I2. The Company sha11 file a fully allocated and unbundied cost of service study
with the City no later than July i, 1999.
13. TNMP shall identify and request approval of the disclosure requirements to be
made by energy service providers proposing to use "TNMI''s system.
14. The City supports, and urges the Company to support, the creation of a
universal service fund, to be administered by an independent organization and created for
irnportant public purposes such as providing low-income custorner assistance, renewable
energy resource development and selected energy efficiency services.
15. TNMP's request to eliminate the Power Cost Recovery Factar is DENIED.
16. The City fynds that the Campany failed to meet its burden of proof and did not
establish that there is any economic cost over market associated with rITTMI''s purchase
power contracts.
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17. The City finds that TNMP's transition plan proposal is anti-competirive and
would perntit TNMP to compete on more favorable terms and under more favorable
conditions than generally available to other energy providers, all at the expense of TNMP's
exisring and future ratepayers.
1 S. All other requests by TNMP for affirmative relief are hereby DENIED.
19. The City finds that all of the rate case expenses incurred by the City and
reviewed and approved by the Gulf Caast Coalition of Cities through the effective date of
thi s Ordinance, for attorneys and rate consultants selected and engaged by the Gulf Coast
Coalition of Cities, of which City is a member, to conduct investigations, present evidence,
advise, and represent the City, are reasonable. Further, the City hereby approves the
reimbursement of its proportionate share of esrimated addirional rate case expenses in an
amount not to exceed $i 0,000 for any remaining costs incuned by and approved by the
Coalition in this matter. TNMP shall reimburse the City its propartionate share of these
expenses by paying such amounts ta the Gulf Coast Coalition of Cities, through its
designated agent, within thirty (30) days of the date of adoption of this Ordinance.
20. This Ordinance shall be served on TNMP by certified U.S. Mail, return receipt
requested.
21. Nothing contained in this 4rdinance shall be construed now or hereafter as
limiting or modifying, in any manner, the right and power of the City under law to regulate
the rates and chazges of TNMP.
22. All ordinances,resolutions, or part thereof,inconsstent or in conflict herewith
are, ta the extent of any such inconsistency or conflict, hereby repealed.
PASSED AND APPROVED on first reading t6is 3rd day of
November , 1497.
PASSED, APPRO�ED, AND ADOPTED on second and fwal reading this
17th day of November , 1997.
Hazold Whitaker, Mayor
City of Friendswood, Texas
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ATTEST: APPROVED AS TO FORM:
. �
,
. .
Deioris McKenzie Jo �lson
City Secretary City Attomey
c:,oRnuant+c�,�w�nsw.00D
*Councilmember Austin - Motion
Councilmember Manison- 2nd
A.pproved- Unanimous
#97-1�9
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