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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 -2- 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 -3- 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. -4- 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 -5- 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 -6-