1977-01-24 Special Meeting - Laserfiche WebLink

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' ~ • • CITY OF HOUSTON INTER OFFICE CORRESPONDENCE ~o Mr. David F. Webb, Director FROM James R. Watkins Department of Public Service DATE January 6, 1977 Sus~ECT Entex at Shoreacres In reading the letter to honorable Mayor and City Officials from Entex pertaining to an application for a rate increase, I note the letter states that in order to help understand the necessity fora rate increase they are making the following information available: 1. Inflationary pressures continue to force upward the price of various goods and services which we must buy. Exhibit 1 shows that inflation has been a problem through the post war era but especially since the late 60's. Al- though the current rate of inflation is down somewhat, my thoughts--the current rate of inflation is down somewhat and we have had inflation since the post war era, especially since the late 60's. How in the world did the company manage to survive? Are they telling us that they are using cost data from those years to justify a rate increase today and that they sur- vived all through those years without a rate increase? Entex has increased wages of virtually all of its employees each year for the past eleven (11) years. Are we using an eleven (11) year rate base period in this case? Why go back eleven (11) years? Eleven (11) years ago very few circumstances i were pertinent to today's circumstances. Rates are made for the future. What happened to the increased efficiency resulting from the merger of com- bining of the Houston Natural Gas distribution system with Entex? This question is more relevant than what happened eleven (11) years ago. 3. Company is claiming that they have maintained a high level of service despite inflationary pressures. Customers there may have some opinions on this point. 4. They claim that inflation has resulted in continuous yearly increases in investment per customer. So what? Isn't this about true of everything? I see no real information here. 5. The cost of money has increased dramatically over the past ten (10) years. What has happened to the cost of money in the last four (4) years? Ac- cording to my~memory the prime interest rate was approdching 12% about four (4) years ago and now I understand it is going down and back near 6% again. Perhaps it is time for Entex to consider possible refinancing. 6. The Company claims its rate of return is 4%. Of course I have no way to .dispute this since I do not know anything about what is behind the numbers that go to make the figure. I notice no details are given for the claimed rate base. The Company purportr to be attempting to bargain with the Council by claiming that they are asking for less than they are really entitled to and that they are willing to forego this difference in order to get a speedy • settlement. This is an attempting appeal but could be dangerous.