R-2008-03 Tabled/suspend effective date of CenterPoint’s rate increase for 90 days

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MODEL STAFF REPORT CenterPoint Energy Gas has filed an application with cities retaining original jurisdiction over rates and services to increase rates within their Texas Coast Division by $7.36 million. The Company's application was filed with the City on March 6, 2008. Purpose of the Resolution: The resolution suspends the effective date of the Company's rate increase for the maximum period permitted by law to allow the City time to evaluate the filing, determine whether the filing complies with law, and if lawful, to determine what further strategy, including settlement, to pursue. The law provides that a rate request made by a natural gas utility cannot become effective until 35 days following the filing of the application to change rates. The law permits the City to suspend the effective date for 90 days. If the City does not take action to suspend the filing, CenterPoint may begin charging increased rates after April 10, 2008. According to CenterPoint, annual rates would increase by approximately $42 for residential customers. The City has participated in prior rate matters with a coalition of cities now known as Gulf Coast Coalition of Cities (GCCC). GCCC is a coalition of thirteen cities who have passed resolutions authorizing GCCC to intervene on behalf of the city in numerous utility matters pending before regulatory agencies, the Courts or the Legislature. A list of the current members impacted by this application is attached. Explanation of "Be It Resolved" Paral!raphs: Section 1. The city is authorized to suspend the effective date for 90 days for any legitimate purpose. Time to study and investigate the application is always a legitimate purpose. Please note 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 that the City retains jurisdiction if necessary to reach settlement on the case. If the suspension period is not increased by the Company, the City must take final action on CenterPoint's request to raise rates by April 10, 2008. Section 2. Negotiating clout and efficiency are enhanced by the City cooperating with other GCCC cities in a common review and common purpose. Additionally, rate case expenses are minimized when GCCC hires one set of attorneys and experts who work under the guidance and control of the GCCC. This provision authorizes the GCCC to act on behalf of the City at the local level in settlement discussions, and in preparation of a rate ordinance and on appeal of the rate ordinance to the Railroad Commission and on appeal to the Courts. Any settlement negotiated by GCCC must be approved by all GCCC member city councils through new rate ordinances.