HomeMy WebLinkAboutResolution No. 96-23 RESOLUTION NO. R96-23
A RESOLUTION OF � CITY OF FRIENDSWOOD, TEXAS,
DENYING TEXAS-NEN I�XICO POWBR COMPANY'S APPLICATION
FOR APPROVAL OF ITS COMlsUNITY CHOICE TRANSITION PLAN
AND STATEMENT OF INTENT.
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Wf�REAS, the City of Friendswood, Texas is a regulator authority under the
Public Utility Regulatory Act of 1995 and has original jurisdiction over the
rates and accounting practices of Texas-New Mexico Power Company to
determine if such rates and practices are fair, just and reasonable; and
WFTRRF.AS, Texas-New Mexico Power Company filed an Application for Approval
of its Community Choice Transition Plan with City on May 2, 1996; and
Wf�REAS, pending hearing and decision, the City suspended the effective
date for new rates for a period not exceeding ninety days based upon its
determination that additional information was required from the Company for
analysis and review regarding whether the existing rates of Texas-New Mexico
Power Company are reasonable, unreasonable or are in any way in violation of
any provision of law; if the accounting orders requested by Texas-New Mexico
Power Company are reasonable; and if such rates and practices should be
revised and just and reasonable rates and practices determined; and
WI3EREAS, reasonable and lawful notice of hearing was given in accordance
with applicable law; and
WI�REAS, a public hearing has been held regarding Texas-New Mexico Power
Company's Application and Statement of Intent; and
WHEREAS, after considering the evidence presented at such hearing, the
city Council has found and determined, on its own motion, that Texas-New
Mexico Power Company's Application and Statement of Intent is unreasonable
and should be denied.
NOFi, 'I'HLR�?T''ORE, BE IT RESOLVED BY Tf� CITY COUNCIL OF Tf� CITY OF
FRIENDSWOOD, TEXAS:
1. The findings and recitals set forth in the preamble hereof are hereby
adopted in their entirety.
R96.23/LST03
2. Based on the Company's E�ibit LPG-1, which is a copy of the Settlement
Agreement on Docket No. 12900, the authorized annual revenues ordered by the
Public Utility Commission of Texas for Texas-New Mexico Power Company were
$407,791,713. The Company's Exhibit PLB-4 shows that 1997 expected revenues
under the first year of the Company's proposal will be $448,752,000, or a
$41 million increase in revenues over that previously approved by any
regulatory authority. The Settlement Agreement in Docket No. 12900 also
includes a rate freeze under which Texas-New Mexico Power Company agreed not
ta file for a rate increase for the five year period from March 31, 1994, to
March 31, 1999. Approval of the Company's Statement of Intent would
constitute the approval of an increase in rates to ratepayers-contrary to
the Settlement Agreement in Docket No. 12900 and is therefore unjust and
unreasonable.
3. Legal Counsel retained by the City has advised the City that certain
elements of the Company's request are contrary to the Public Utility
Regulatory Act of 1995 and are therefore outside the scope of that which can
be lawfully approved by the city as a regulatory authority. More
specifically, the Company has requested that it be allowed to keep money
collected as a fuel charge, but would be in excess of the actual cost of
fuel and that the Company be allowed to keep money collected from ratepayers
under the purchased power recovery factor in excess of the actual cost of
purchased power without making a showing that such a mark-up is necessary to
maintain the financial integrity of the Company.
The City will not knowingly act in a manner that is contrary to law and
approval of the Company's Application and Statement of Intent would be
unlawful.
�. Texas-New Mexico Power Company has the burden of proof in this matter and
has failed to meet its burden.
5. The changes in accounting practices and treatments requested by Texas-New
Mexico Power Company relating to depreciation practices, depreciation rates
and the creation of regulatory asset are unjust, unreasonable and not in the
public interest.
6. Texas-New Mexico Power Company's Application for Approval of its
Community Choice Transition Plan and Statement of Intent is, in all
respects, DENIED.
R96.23/LST03
7. It is hereby ORDERED that Zexas-New Mexico Power Company shall reimburse
the City for its reasonably incurred expenses. Such e�enses consist of the
City's proportionate share of, and relate to the City's participation in the
Gulf Coast Coalition of Cities. Reimbursement shall be limited to those
rate case expenses approved by the Gulf Coast Coalition of Cities in
connection with the Company's Application and Statement of Intent.
8. This resolution shall be served on Texas-New Mexico Power Company by
certified U.S. mail, return receipt requested.
9. Nothing contained in this resolution shall be canstrued now or hereafter
as limiting or modifying, in any manner, the right and power of the City
under law to regulate the rates and charges of Texas-New Mexico Power
Company.
PASSED, APPROVED, AND RESOLVED this 4th day of September, 1996.
Evelyn . Newman
Mayor
ATTEST:
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eloris McKenzi , T C
City Secretary
R96.23/LST03