HomeMy WebLinkAboutO-1995-2026
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ORDINANCE NO. 95- 2026
AN ORDINANCE APPROVING A STIPULATION AND AGREEMENT RELATING TO THE
RATES OF HOUSTON LIGHTING AND POWER COMPANY; DETERMINING JUST AND
REASONABLE RATES TO BE OBSERVED AND IN FORC~ WITHIN THE CITY OF LA
PORTE; ORDERING RATE REDUCTIONS AND CREDITS TO RATEPAYERS' BILLS;
FJ:XJ:NG THE RATES THAT SHALL CONSTJ:TUTE THE LEGAL RATES OF HOUSTON
LJ:GHTING AND POWER COMPANY UNTIL CHANGED AS PROVIDED BY THE PUBLIC
UTJ:LJ:TY REGULATORY ACT; PROVIDJ:NG FOR THE FJ:LJ:NG OF RATE SCHEDULES
AND TARIFFS AND THE APPROVAL OR MODIFICATION OF SAME; PROVIDING FOR
THE REPEAL OF CONFLICTING ORDINANCES; CONTAINING FINDINGS AND OTHER
PROVISIONS RELATING TO THE FOREGOING SUBJECT; PROVIDING FOR
SEVERABILITY; FINDING COMPLIANCE WITH THE" OPEN MEETINGS LAW; AND
PROVIDING AN EFFECTJ:VE DATE HEREOF.
WHEREAS, the City of La Porte (the "City") and various
municipalities comprising the Coalition of cities ethe "Coalition")
in their respective capacity as regulatory authorities of Houston
Lighting and Power Company (the "HL&P"), as listed on Exhibit "A",
have or will have intervened in Docket No. 12065, Complaint of
Kenneth D. Williams Against Houston Liahtina and Power Company, and
Docket No. 13126, Inauirv of the General Counsel Into the Operation
and Manaaement of the South Texas Nuclear Pro; ect, currently
pending before the Public utility commission (the "Commission");
and
WHEREAS, the City and the Coalition have initiated or will
initiate local Section 2 Rate Proceedings that are to be appealed
to the Commission and consolidated with Docket No. 122065; and
WHEREAS, the City and the other members of the Coalition and
HL&P desire to resolve the controversies made the basis of Docket
No. 12065 and Docket No. 13126, including South Texas Nuclear Plant
e"STP") outages addressed in that docket, .to the extent of HL&P's
involvement therein and the municipalities I respective local
Section 42 proceedings in accordance with the provisions of the
Stipulation and Agreement attached hereto as Exhibit "B" (the
"stipulation"); and
WHEREAS, the public interest will be served by the adoption
of an ordinance approving the Stipulation because it provides for
expeditious implementation of just and reasonable rates, promotes
the adequate and efficient provision of service and is in
accordance with applicable law; and
WHEREAS, resolution on a stipulated basis of all the matters
set forth therein would conserve resources, avoid the uncertainties
inherent in further litigation and minimize rate case expenses both
in these cases and in th~ future;
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ORDINANCE NO. 95- 2026
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NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF LA PORTE, TEXAS:
section 1. The facts contained in the recitals hereto are
hereby found to be true and correct.
Further the City Council
finds that the existing rates of HL&P, after reasonable notice and
hearing, are unreasonable and shall be decreased to reflect the
reduction and credits hereinafter ordered.
The rates resulting
from such reductions and credits are hereby determined to be just
and reasonable rates to be observed and in force within the City.
section 20
All terms and conditions specified in the
stipulation are further hereby incorporated by reference as though
set forth verbatim herein and are hereby approved and ratified,
including without limitation the provisions contained and
specifically set forth hereinbelow. The City Manager is hereby
authorized to execute all related documents on behalf of the City
of La Porte, and to take all actions necessary to effectuate the
City's intent and objectives in approving the stipulation in the
event of changed circumstances.
The City Secretary, or in the
absence of the City Secretary, the Assistant City Secretary, is
hereby authorized to attest to all such signatures and to affix the
seal of the City to all such documents.. . The City attorney is
hereby authorized to take all action necessary to enforce all legal
obligations under the Stipulation without further authorization
from the City Council.
section 3. It is hereby ordered that HL&P shall decrease the
base rates it charges for electric power and energy sold with the
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ORDINANCE NO. 95- 2026
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city by the amount of $62.2 Million annually, effective January 1,
1995.
section 4. It is further ordered that HL&P is prohibited from
increasing its base rates from January 1, 1995, through December
31, 1997, subject to exceptions for the occurrence of certain force
majeure events as specified in the Stipulation.
section 5. It is hereby ordered that HL&P's fuel factor be
reduced by $199.5 Million annually. It if further ordered that
HL&P's power cost recovery factor be further reduced by $173
Million annually.
section 6. It is hereby ordered that HL&P' s ratepayers wi thin
the corporate limits of the City receive a one-time bill credit of
$70 Million related to fuel reconciliation issues. It is further
ordered that HL&P ratepayers receive a one-time bill credit of $108
Million related to fuel cost over collection.
section 7. It is hereby ordered that HL&P f ile with the
Director of Finance of the city, Rate Schedules and Tariffs
consistent herewith within 30 days of the effective date hereof.
section 8. All prior Ordinances of the City inconsistent with
the terms and conditions hereof are hereby repealed to the extent
of the inconsistency and are of no further effect.
Section 9. If any provision, section, subsection, sentence,
clause or phrase of this ordinance or the application of same to
any person or set of circumstances is for any reason held to be
unconstitutional, void or invalid, the val{dity of the remaining
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ORDINANCE NO. 95-2026
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portions of this ordinance or their application to other persons
or sets of circumstances shall not be affected thereby, it being
the intent of the City Council in adopting this ordinance that no
portion hereof or provision or regulation contained herein shall
become inoperative or fail by reason of any unconstitutionality,
voidness or invalidity of any other portion hereof, and all
provisions of this ordinance are declared to be severable for that
purpose.
section 10. The City Council officially finds, determines,
recites, and declares that a sufficient written notice of the date,
hour, place and subject of this meeting of the City Council was
posted at a place convenient to the public at the City Hall of the
City for the time required by law preceding this meeting, as
required by the Open Meetings Law, Chapter 551, Texas Government
Code; and that this meeting has been open to the public as required
by law at all times during which this ordinance and the subject
matter thereof has been discussed, considered and formally acted
upon.
The City Council further ratifies, approves and confirms
such written notice and the contents and posting thereof.
section 12. This Ordinance shall be effective from and after
its passage and approval, and it is so ordered.
PASSED AND APPROVED, this 20th day of March, 1995.
By:
CITY OF LA PORTE
be4t~
Mayor
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ORDINANCE NO. 95- 2026
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ATTEST:
~~
Sue Lenes,
City Secretary
AP~:z:J ~
Knox W. ASkins,
City Attorney
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COMPLAINT OF KENNETH D.
WILLIAMS AGAINST HOUSTON
LIGHTING & POWER COMPANY
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DOCKET :-.10. 12065
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PUBUC UTIUTY COMMISSION
OF TEXAS
STIPULA nON AND AGREEMENT
FEBRUARY 21. 1995
EXHIBIT B
ARTICLE 1.
ARTICLE II.
ARTICLE III.
ARTICLE IV.
ARTICLE V.
ARTICLE VI.
ARTICLE VU.
ARTICLE VID.
ARTICLE IX.
ARTICLE X.
ARTICLE XI.
ARTICLE XII.
ARTICLE XIII.
ARTICLE XIV.
ARTICLE XV.
ARTICLE XVI.
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TABLE OF CONTENTS
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Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3
Resolution of Docket No. 12065 ......................... 4
Resolution of Issues In Docket No. 13126 and Other
Dockets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '. 5
Stipulated Rate and Tariff Changes ....................... 6
Calculation of AFUDC ............................... 14
Rate Cap Period . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .. 14
Fuel Reconciliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18
Fuel Factors, PCRF and HB-ll Factor. . . . . . . . . . . . . . . . . . . .. 20
Trinity Mine Investments and Malakoff .
Electric Generating Station Investments . . . . . . . . . . . . . . . . . . . .. 21
STP Deferrals .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 22
South Texas Project Performance Standards. . . . . . . . . . . . . . . . .. 25
Reduction of STP Investments . . . . . . . . . . . . _ . . . . . . . . . . . . .. 26
Accounting Issues .................................. 26
Share and Other Low Income Programs .................... 28
Demand Side Management Programs ...................... 31
Additional Tariff Matters and Studies . . . . . . . . . . . . . . . . . . . . .. 33
ARTICLE XVII. Municipal Rate Case Expenses .......................... 34
ARTICLE xvm. Pending Appeals ................................... 36
ARTICLE XIX. Disclosure Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 38
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ARTICLE XX.
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX 0
APPENDIX E
APPENDIX F
APPENDIX G
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Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Municipalities with ~42 lUte Ordinances that have been
Appealed to the Commission
Municipalities with Pending or to be Initiated ~42
Proceedings
Allocation of Base lUte Reduction
Tariff for Electric Service
Summary of Changes to Tariff for Electric Service
Pending Appeals
Allocation of Reduction Provided in Paragraph A of Article VII
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DOCKET NO. 12065
COMPLAINT OF KENNETH D.
WILLIAMS AGAINST HOUSTON
LIGHTING & POWER COMPANY
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PUBLIC UTILITY COMMISSION
OF TEXAS
STIPULATION AND AGREEMENT
This Stipulation and Agreement is made and entered into by and among Houston
Lighting & Power Company ("HL&P") and the other entities whose authorized representatives
have signed it.
Whereas, on May 2S, 1993, Kenneth D. Williams fIled with the Public Utility
Commission of Texas ("Commission" or "PUC") a complaint pursuant to Sections 37, 39(b) and
42 of the Public Utility Regulatory Policy Act ("pURA") chaJlenging the propriety of HL&P's
rates; and
Whereas, on February 23, 1994, the Presiding Officer in this Docket issued Order
No. 22 ordering that the Complaint of Kenneth D. Williams proceed to bearing pursuant to PURA
Section 42; and
Whereas, notice of the Section 42 proceeding was provided consistent with all
statutory and regulatory requirements; and
Whereas, on June 16, 1994, the General Counsel of the Commission flied a petition
of inquiry into the operation and management of the South Texas Nuclear Project which became
Docket No. 13126; and
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Whereas, the municipalities listed on Appendix A have acted under PURA
Section 42 to modify HL&P's rates within the geographic areas subject to their jurisdiction: and
Whereas, HL&P has appealed to the Commission the orders of the municipalities
listed on Appendix A; and
Whereas, the municipalities listed on Appendix B presently have pending or will
initiate Section 42 rate proceedings that are to be appealed to the Commission and consolidated
with Docket No. 12065 pursuant to this Agreement; and
Whereas, except as otherwise specified herein. the Signatories desire to resolve
Docket No. 12065; HL&P's appeals of the municipal rate ordinances listed on Appendix A; the
Section 42 proceedings listed on Appendix B; Docket No. 13126 as it relates to HL&P; and
pending appeals of Commission orders in certain prior HL&P rate dockets; and
Whereas, the public interest will be served by the adoption of an order consistent
with this Agreement because it provides expeditious implementation of just and reasonable rates;
promotes the adequate and efficient provision of service; and is in accordance with applicable law;
and
Whereas, resolution on a stipulated basis of all the matters set fonh herein would
conserve resources; avoid the uncertainties inherent in funher litigation; and minimize rate case
expenses both in this case ~ in the future.
NOW. THEREFORE, Signatories, through their undersigned representatives, agree
and stipulate as follows:
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ARTICLE I.
Definitions
A. Agreement -- The term "Agreement" refers to this Stipulation and
Agreement. including all Appendices hereto.
B. Base Rate Unit Charges - The term "Base Rate Unit Charges" means the
charges designated as "facilities charges". "energy charges" and "demand charges" in the rate
tariffs in the Tariff for Electric Service attached hereto as Appendix D. excluding IS-I, IS-I0 and
SBI.
C. Date of Execution - The term "Date of Execution" means the last date 00
which the Agreement is signed by HlAP and all other Signatories but no later than February 21,
1995.
D. HB-ll Factor -- The term "HB-ll Factor" means the rate adjustment for
state franchise taxes pursuant to PUC Substantive Rule f23.21(d).
E. Pending Appeals - The term "Pending Appeals" means the appeals listed
on Appendix F of this Agreement.
F. PCRF - The term "PCRF" means HL&P's Purchased Power Cost Recovery
Factor calculated pursuant to the PCRF Rate Schedule Rider.
G. Rate Cap Period - The term "Rate Cap Period" means, for each regulatory
authority with jurisdiction over HlAP's base rates, the three year period from January I, 1995
through the earlier of December 31, 1997 or the date on which HlAP makes a Section 43 base
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rate increase filing in any applicable jurisdiction as pennitted under paragraph A or paragraph 0
of Article VI.
H. Section 42 Proceeding -- The tenn "Section 42 Proceeding" refers to any
proceeding instituted by a regulatory authority to modify HL&P's rates pursuant to Section 42 of
the Public Utility Regulatory Act.
I. Signatories - The tenn "Signatories" means those parties which execute this
Agreement. including any party that signs this Agreement as a non-opposing party.
J. STP - The term "STP" refers to the South Texas Project.
K. 12065 Final Order - The term "12065 Final Order" means an executed
Commission order on the merits resolving Docket No. 12065 (including Docket No. 13126 insofar
as that Docket relates to HL&P and appeals of municipal rate ordil12~) and related issues dealt
with in this Agreement in accordance with the terms of this Agreement.
L. 12065 Final Order Date - The tenn "12065 Final Order Date" means the
date on which the Commission issues a written 12065 Final Order under 112001.141 of the Texas
Govenunent Code that is subject to motions for rehearing under ii2001.146 of the Texas
Government Code.
ARTICLE II.
Resolution of Docket No. 12065
This Agreement is a compromise and settlement of Docket No. 12065 and appeals
of municipal rate ordinances listed on Appendix A. The Signatories will request that the 12065
Final Order be an order on the merits fmaIly resolving Docket No. 12065 in the manner provided
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in Utis Agreement. HL&P agrees to implement the tenns of this Agreement on a system-wide
basis.
ARTICLE m.
Resolution of Issues In Docket No. 13126 and Other Dockets
A. Docket No. 13126 was created to permit consolidated hearing of issues
regarding prudence of operation and management of the South Texas Project, which issues would
otherwise have been resolved in separate rate proceedings for HL&.P and Central Power & light
Company ("CPL"). This Agreement is a compromise and settlement of Docket No. 13126
insofar as that docket applies to HL&P. Within ten (10) days after the Date of Execution,
Signatories who are panies in Docket No. 13126 shall file a joint motion to dismiss HL&P from
Docket No. 13126 and to provide that all HL&P related issues from Docket No. 13126 will be
resolved in Docket No. 12065. It is recognized that to the extent Docket No. 13126 goes forward
with respect to CPL there may be testimony, repol1S or other documents filed in Docket No.
13126 discussing alleged imprudence in connection with the operation and management of STP.
In any future judicial or administrative proceeding involving the same or similar issues, neither
HL&P nor any other patty sball be bound by any fmdings that result from a trial or settlement of
Docket No. 13126 issues as they relate to CPL, whether such resolution occurs in Docket No.
13126 or in any related CPL Docket. HL&P or other patties will be free to contest or otherwise
respond to any allegations contained in Docket No. 13126 testimony, repol1S or other documents
in any other proceeding in which an attempt is made to use such testimony, repol1S or other
documents against HL&P or other Signatories.
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B. This Agreement is a compromise and settlement of Docket No. 13702
(Application of HL&P for approval of HB-11 Tax Adjustment Factors for 1995). Within ten (10)
days after the Date of Execution, HL&P shall file a motion to suspend that docket pending
Commission consideration of this Agreement and to dismiss that docket as of the Final Order
Date. Signatories agree to suppon, or not oppose that motion.
ARTICLE IV.
Stipulated Rate and Tariff Chanees
A. HL&P shall reduce its base rates for service rendered on or after January
1, 1995. On an adjusted test year basis, the reduced rates would result in base rate revenues of
$2,450,820,000 or an aggregate reduction of $232,918,000 (8.7%). The base rate reduction shall
be allocated among existing rate classes in the amounts set out on Appendix C. The specific rates
applicable to each class after giving effect to the agreed base rate reduction are set out in HL&P's
Tariff for Electric Service, which is Appendix D to this Agreement. All changes to the Tariff for
Electric Service are listed in the summary of tariff changes, which is Appendix E to this
Agreement. Except as identified on that summary or otherwise addressed in this Agreement, none
of the tariff modifications included in HL&P's Docket No. 12065 Rate Filing Package or
proposed by any other party in Docket No. 12065 will be implemented under this Agreement.
B. The ra~ and tariffs contained in Appendix D reflect the following specific
agreements among the Signatories:
1. Except as otherwise provided herein or set fonh in the Tariff for Electric
Service, to the extent possible, the Base Rate decrease was applied to the
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rate design of each rate class on an equivalent basis to all listed charges in
their respective tariffs.
2. The applicability provisions of the GH~ rider to the MGS tariff was
modified to include traffic signals operated by state, county, and municipal
governments and the rider was renamed as the Governmental Lighting &
Traffic Control ("GLTC") Rider. Within 90 days after the 12065 Final
Order Date, HL&P will give notice of the availability of the GL TC Rider
for service to traffic signals to Texas State Agencies and all municipalities
and counties within its service territory. The notice to each governmental
entity will include a listing of all of their accounts which, based on SIC
codes, HL&P knows qualify for Rider GL rc.
3. The Tariff for Electric Service includes a wheeling tariff to enable QF's,
other wholesale power suppliers, and wholesale power purchasers to
purchase transmission wheeling for periods as shan as one hour.
4.
The minimum demand threshold in the LGS rate was lowered to 400 kVa.
Within 90 days after the 12065 Final Order Date, HL&P will give
individual written notices of this change in the minimum demand threshold
to MGS customers taking at demand levels of 400 leVa or greater.
The tail block energy charge in the MGS rate was lowered to
SO.OO575/kwh with corresponding increases to the first two energy blocks.
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6. The tail block in the LGS rate was lowered to SO.OO5/kwh with
corresponding increases to the demand charge and first block energy
charge.
7. The Tariff for Electric Service was modified to state that HL&P will
provide annually, in areas served by underground conductors, installation
of a certain number of HL&P' s High Pressure Sodium street lights mounted
on ornamental standards at no installation cost. The number will. be
determined by the municipality but, the annual number will not exceed the
greater of 50 or 6% of the previous year's street light count served by
underground conductors for the municipality. A municipality may request
that a ponion of the residential street lights to be provided under this
paragraph be installed instead in commercial areas; provided, however, that
the municipality shall pay any additional costs.
8. The Tariff for Electric Service was revised to provide that HL&P will
replace existing 3,300, 7,500 and 20,000 lumen Mercury Vapor street
lights with 9,500, 16,000 and 25,500 lumen High Pressure Sodium street
lights, respectively, in the municipalities it serves at no up front cost to
those cities, as individual lamps bum out.
The Tariff for Electric Service was revised to provide that the time of
operation of lights under Rate Schedule SPL will be 4000 hours.
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10. The Base charge for Rates IS-lO and SBI in the Tariff book was set at 3.2
mills/kwh; and the Base charge for Rate IS-I was set at 1.5 mills/kwh.
11. The Tariff for Electric Service continues to include the EIS Tariff.
Signatories agree that, in any future proceeding, Signatories will be free to
make any argument regarding possible revenue imputation relating to the
EIS Tariff.
C. The changed rates and tariff language on Appendix 0 shall be effective
retroactive to January 1, 1995 except the Fuel Cost Factor-Rider FC, which will be effective as
provided in Article VIll. HL&P will refund to each rate class the amount by which the base rate
revenues, adjusted by the PCRF and HB-ll Factor, billed to that class by HL&P, for service
rendered during the Refund Period exceed the base rate revenues HL&P would have billed such
class during the Refund Period at the rates set out on Appendix D. As used in this paragraph the
term "Refund Period" means the period commencing on January 1, 1995 and ending at the
begirming of me fIrst billing cycle of the fIrst calendar month after the 12065 Final Order Date
but will not include the portions of that period during which HL&P billed pursuant to the deferred
billing procedures in paragraph 0 of this Article IV. The refund amount for each transmission
level customer and for each non-transmission rate class will be calculated for each month of the
Refund Period by multiplying. the actual billing detenninants for each transmission customer and
each non-transmission class by the amount, if any, by which the base rates (adjusted by the PCRF
and HB-ll Factor) used for billing in such month exceed the base rates set out on Appendix D.
If the deferred billing procedures in paragraph 0 are implemented as requested and are not
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terminated prior to the 12065 Final Order, the refunds for each class will bear interest at the rate
provided in Section 23.45(g). If the deferred billing procedures in paragraph D are not.
implemented as requested or the deferred billing procedures are terminated prior to the 12065
Final Order, the refunds for each class will bear interest at the rate of six percent (6 % )
compounded annually. The refunds will be made in a single month and will commence not later
than the first billing cycle of the second calendar month after the 12065 Final Order Date
("Refund Month"). The refunds to transmission level customers will be based on actual usage of
each customer for the Refund Period. The Signatories agree that the refund method used to
calculate and remit refunds due transmission level customers will be applied consistently to all
transmission level customers. HL&P will provide workpapers illustrating these calculations to
requesting panies. Refunds to customers other than transmission level customers will be made
by application of a refund factor applied to actual usage during the Refund Month. The refund
factor will be calculated by dividing the refund due non-transmission level customers in the class
by the eswmited kilowatt-hour sales to non-transmission level customers in the class for the
Refund Month. Within 30 days after the Refund Month. HL&P will provide the Signatories with
workpapers showing the calculations of the refund factors and the amount refunded and any
over/under refund balance. Any balances that remain after refunds have been completed shall be
credited or debited (as appropriate) as eligible fuel in HL&P's next fuel reconciliation proceeding.
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D. HL&P agrees that commencing wim the fll"st billing cycle for the month following me date
of the Commission order approving deferred billing, HL&P will. temporarily defer billing a
ponion of the base rates that it is otherwise authorized to charge during such period. Specifically,
HL&P's current effective Docket No. 9850 base rates adjusted for the PeRF and the HB-ll
Factor ("Pre-Settlement Rates") will remain the lawful, effective rates approved by me
Commission. HL&P will be authorized, however, to bill each customer using the base rates
contained in Appendix 0 ("Appendix 0 Base Rates"). Each month, HL&P will maintain a
monthly record of the difference between the revenues billed on the basis of the AppendiX 0 Base
Rates and the revenues that would have been billed at the Pre-Settlement Rates as if that differeuce
were an under-recovery amount pursuant to PUC Substantive Rule 23.23(b)(3)(C). The deferred
amounts shall accrue interest at the rate of six percent (6 %) compounded annuaHy. Although
deferred billing amounts will be treated as if they were an under-recovery amount pursuant to
Substantive Rule 23.23(b)(3)(C), such amounts shan be maintained in accounts separate from fuel
over and under collections.
The deferred billings will be contingent upon issuance of a 12065 Final Order
consistent in all material respects with the terms of this Agreement. If the 12065 Final Order is
consistent in all material respects with the tenns of this Agreement, the deferred balance
accumulated during the period the deferred billings were in effect will be canceled. If, however,
the Commission does not issue a fmal order consistent with the tenns of this Agreement and, as
a result, HL&P withdraws from this Agreement pursuant to Article XX, HL&P shaH have the
right to stop deferred billings and to recover the deferred balance (including accwnulated interest)
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from its customers through surcharges over a number of months equal to the number of months
that HL&P billed at the reduced levels. The surcharges will be allocated among classes and
charged to customers using the procedures for refunds describe,d in paragraph C of this Anicle
IV. The surcharges will commence with the flfSt billing cycle of the month following the date on
which HL&P withdraws from this Agreement. At the time HL&P commences surcharges. it will
file workpapers showing calculation of the surcharge amounts.
Signatories agree that HL&P will not be obligated to commence deferred billing
as described in this paragraph D unless all of the following conditions are met:
1. This Agreement is not opposed by any party in Qocket No. 12065 other
than Michael Hershey;
2. The order approving deferred billing expressly approves deferred billing
as described in the preceding paragraph and expressly authorizes HL&P to
collect any applicable surcharges with interest as set forth in paragraph D
of this Anicle IV without funher authorization from the Commission
provided that such prior authorization shall not preclude any party from
contending that HL&P's surcharges are not calculated in accordance with
the authorized procedures;
The CO,mmission order approving deferred billing expressly recogniZes that
(a) the deferred billing procedures were a part of the negotiated settlement
in this docket, (b) that such procedures reflect compromises among the
Signatories and cannot be construed as an agreement or an admission of
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any party regarding the propriety of these or analogous procedures.
including the appropriate interest rates. in any other context or as an
agreement or admission that a Commission order is required to implement
these or analogous procedures; and (c) that the order shall not be construed
to conftrm or deny that any rates ordered or approved by the Commission
on any basis, other than settlement, can be made effective retroactive to the
date deferred billing was initiated or any other date.
In addition, if after deferred billing is implemented the Agreement is opposed by a party in Docket
No. 12065 other than Michael Hershey, HL&P may prospectively tenninate deferred billings but
may not impose surcharges to recover previously deferred amo~nts until and unless HL&P
withdraws from this Agreement pursuant to Article XX.
Within 7 days after the Date of Execution, HL&P will request a Commission order
authorizing deferred billing as provided in this paragraph D. All Signatories will support that
request and further request that deferred billing be approved in time to permit HL&P to
commence deferred billing at the beginning of HL&P's April 1995 billing month.
E. Signatories agree that the rates and tariff changes set out on Appendix D are
just and reasonable. Signatories will recommend, support and defend in this Docket. approval
of those rates and tariff changes.
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ARTICLE V.
Calculation of AFUDC
For purposes of computing the allowance for funds used during construction rate
during the period from January I, 1995 through the date HL&P's base rates are superseded by
new systemwide base rates made effective under PURA Section 43 or 42, HL&P shall use a return
on equity of 11.55 % .
ARTICLE VI.
Rate C~ Period
A. HL&P shall not file to increase the base rates set out in Appendix 0 during
the Rate Cap Period unless one or more of the following events occur:
1. New laws or regulations are adopted by legislative or regulatory bodies and
as a result of those laws or regulations HL&P's actual revenues
(determined on an accrual basis) will be reduced by more than $60 million
on an annual basis. To the extent that such new laws or regulations would
cause some revemes to decrease while other revenues increase, regardless
of whether the increase in revenues is due to customers taking advantage
of a service that was legal or in existence prior to the new laws or
regula~ons taking effect, a rate increase filing would be permitted only if
the net reduction exceeds $60 million;
2. New laws or regulations are adopted by legislative or regulatory bodies and
as a result of those laws or regulations HL&P's actual cost of service
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(detennined on an accrual basis) will be increased by more than $60 million
on an annual basis. To the extent that such new laws or regulations would
cause some expenses to increase while other expenses decrease, a rate
increase filing would be permined only if the net increase exceeds $60
million; or
3. Any combination of legislative or regulatory actions of the type identified
in 1. or 2. above which will result in actual net cost of service increases
and actual net revenue decreases which in combination exceed $60 million
on an annual basis.
4. The $60 million thresholds referred to in sub-paragraphs 1, 2 and 3 above
are in addition to any amounts HL&P may be entitled to recover through
recovery factors. A change in methodology required by new laws or
regulatory action shall not entitle HL&P to make a Section 43 filing under
sub-paragraph 1, 2. or 3 unless the change in methodology increases the
actual net cost of service or reduces actual net revenue by more than $60
million.
S. The provisions of this paragraph VI.A establish triggers permining HL&P
to ~ a Section 43 ming but do not pennit HL&P to increase rates based
solely on the impacts of the legislative or regulatory action. Rather. any
Section 43 base rate increase filing by HL&P pursuant to this paragraph A
must be based on HL&P's total costs of service and revenues. In no event
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shall rates be increased (including for example. increased rates under bond)
as a result of a filing under this Article until HL&P actually begins
experiencing the cost of service increase or revenue decrease the
anticipation of which caused the triggering event to occur.
B. HL&P may file to implement a voluntary reduction in base rates at any time
during the Rate Cap Period. In addition, at any time during the Rate Cap Period, HL&P. or other
parties. may make filings to (1) modify tariffs, riders or tenns and conditions while ~ot increasing
base rate revenues or Base Rate Unit Charges from any of the rate tariffs in the Tariff for Electric
Service attached hereto as Appendix D and which do not increase the base charge for IS-I, S81
or IS-lO service; (2) add tariffs, riders, and tenns and conditions to address changed conditions
provided such additions do not result in an increase to base rate revenues or Base Rate Unit
".
Charges as reflected in the Tariff for Electric Service attached hereto as Appendix D. and do not
increase the base charge for IS-I, S81 or IS-I0 service; (3) increase or decrease the charges in,
or otherwise modify any experimental tariffs provided such changes do not result in an increase
to base rate revenues or an increase in Base Rate Unit Charges for non-experimental tariffs as
reflected in the Tariff for Electric Service attached hereto as Appendix 0 and do not increase the
base charge for IS-I. S81 or IS-IO service; (4) change fIXed fuel factors or otherwise provide for
the recovery of fuel costs and. the disposition of fuel over-recoveries and under-recoveries; or (5)
change the peRF in accordance with the PeRF Rate Schedule. Except to the extent provided
elsewhere in this Agreement, nothing herein will preclude any entity from contesting such matters
as they choose in any proceeding initiated under this paragraph B. The Signatories further agree
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that none of the five types of filings set out in this paragraph shall constitute force majeure events
described in paragraph VI.A (unless such filings are required by new laws or regulations.)
C. During the Rate Cap Period, HL&P shall not initiate any proceeding to
increase, directly or indirectly, the O&M charge applicable to Rates IS-I, [S-10, SBt and NEP,
which charge shall remain at 1.204 mills/kwh. This provision shall not limit the right of any
entity other than HL&P to seek to change the O&M charge in any proceeding during the Rate Cap
Period nor shall it limit in any way the positions HL&P or any other entity may take.in response
to another entity's proposal to change the O&M charge for anyone or more of Rates IS-I, 15-10,
SBI and NEP. Thus, if in any proceeding during the Rate Cap Period, any entity proposes to
change the O&M charge applicable to one or more of the Rates IS-I, 15-10, 581 and NEP, HL&P
and any other entity may take any position it chooses regarding the O&M charges for the same
Rates as are covered by that entity's proposal or for any or all of the other Rates IS-I, 15-10, S81
and NEP. This paragraph shall not limit the right of any entity, including HL&P, to propose
changes to the methodology for calculating the Period Avoided Cost under Rates IS-I, IS-10, SBI
and NEP, as approved by the Final Order in Docket No. 7044.
D. Each regulatory authority exercising jurisdiction over HL&P retains the
right, on complaint or on its own motion, to initiate a Section 42 proceeding against HL&P. If,
during the Rate Cap Period, any proceeding is initiated by the Commission or any other regulatory
authority to reduce HL&P's rates below the levels set out in Appendix C, nothing in this
Agreement shall restrict HL&P's right to defend against the proceeding in any manner it deems
appropriate including a right to file and make effective a Section 43 base rate increase in the
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geographic area subject to the jurisdiction of that regulatory authority. Regardless of what
measures HL&P takes to defend itself in a Section 42 proceeding, HL&P may not file a Section
43 base rate increase in any jurisdiction that has not initiated a Section 42 proceeding except as
provided in paragraph VI.A.
E. Except as expressly set out in this Agreement, the senlement will not
prejudice any position a pany may take regarding any issue, including rate base treatment of any
item, in any proceeding or earnings monitoring evaluation during or after the Rate Cap Period.
F. During the Rate Cap Period, HIAP shall not defer costs which are nonnally
expensed by public utilities.
G. Nothing in this Agreement shall limit any customer's right to file a billing
complaint against HL&P.
ARTICLE VIT.
Fuel Reconciliation
A. Effective August 1, 1994, HL&P shall reduce the total eligible fuel costs
for the fuel reconciliation period ended July 31. 1994 by $70 million (the $70 million includes
interest through July 31. 1994) and shall not seek to recover such $70 million from its ratepayers.
All fuel revenues, other fuel costs, and related interest through July 31. 1994 shall be deemed
reconciled in accordance wi~ PUC Substantive Rule 23.23(b)(3) with the same effect as if the
Commission had issued a fmal order in a fuel reconciliation proceeding for that period.
B. As soon as practical after January data becomes available, HlAP will file
in Docket No. 12065 a request to refund the fuel over~ollection balance through January 31,
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1995 with such refund to begin the first billing cycle of the calendar month following approval
of the refund. For purposes of the refund under this paragraph. the over-collection balance shall
be calculated as if the $70 million reduction provided in paragraph Vll.A had not been made. The
refund shall include interest on the over-collection balance calculated pursuant to PUC Substantive
Rules 23.23(b)(3)(C)(i) and 23.45(g).
C. Commencing during the first billing cycle of the calendar month following
the 12065 Final Order Date, HL&P will refund the $70 million provided in paragraph A of this
Article VII. with interest on the $70 million calculated pursuant to the PUC Substantive Rules
23.23(b)(3)(C)(i) and 23.45(g). The refund will be allocated among customer classes as set out
on Appendix G. Refunds to transmission level customers will be based on those customers'
respective usage during the period February 1993 through May 1994. Refunds to customers other
than transmission level customers will be made by application of a refund factor applied to actual
usage during the month in which the refund is made. The refund factor will be calculated as
provided in PUC Substantive Rule 23.23(b)(3)(C)(iv). The allocation on Appendix G is the result
of compromises and should not be treated as precedential.
D. HlAP's eligible fuel costs for the period beginning August 1, 1994 shall
be subject to reconciliation in a future fuel reconciliation proceeding. The reconcilable costs and
revenues for the fuel reconciliation period staning on August 1, 1994 shall be governed by
Substantive Rule 23.23(b). The parties specifically agree that (i) the revenues from the steam
sales to DuPont; spent nuclear fuel disposal costs; wheeling charges paid by HL&P in connection
with power purchases; Department of Energy decontamination and decommissioning fees; IS-I,
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IS-IO and SBI Revenues; and ETSI litigation credits will be classified as eligible fuel costs; and
(ii) wheeling revenues and expenses associated with HL&P providing wheeling services to others
will be considered in the detennination of base rates. To the extent any of the above classifications
of costs as eligible or non-eligible could be construed as inconsistent with the PUC Substantive
Rule 23.23(b)(2)(B), the Signatories request Commission approval of the classifications delineated
above.
ARTICLE VIn.
Fuel Factors. PCRF and HB-ll Factor
A. Within 10 days after the Date of Execution of this Agreement. HL&P sba1l
file in Docket No. 12065 a request for an interim order reducing its fuel factors by approximately
17 % effective as of the fltSt billing cycle of the calendar mO,nth following the date of approval of
that request, whether or not this Agreement is approved. The Signatories agree to support. or not
oppose, such a request.
B. HL&.P's PCRF shall be set at zero effective retroactive to January I, 1995.
For purposes of computing adjustments under the PCRF for periods after January 1, 1995, the
purchased power costs used to fix the base rates contained in Appendix D shall be deemed to be
$31,784,178.
C. HL&P~s HB-ll Factor shall be reduced to zero effective retroactive to
January I, 1995.
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ARTICLE IX.
Trinity Mine Investments and Malakoff
Electric Generatinll Station Investments
A. The costs incurred by HL&P in connection with its previously planned, but
now cancelled, Malakoff Electric Generating Station and the related Trinity lignite reserves shall
be amonized as follows:
(1) Malakoff costs for which amortization was authorized in Docket No. 8425
shaU continue to be amortized on the schedule approved in that docket.
(2) Malakoff costs for which amortization was fltSt requested in Docket
No. 12065 shall be amonized over a period not exceeding seven (7) years
commencing January 1, 1993.
(3) Trinity lignite related costs shall be amortized over a period not exceeding
seven (7) years commencing on a date to be determined by HL&P but not
later than January 1, 1996.
Under this amortization schedule, HL&P's entire investment in Malakoff and Trinity shall be
written off HL&P's books not later than December 31, 2002. HL&P shall not accrue, for
amortization. any additional Trinity or Malakoff amounts (including amounts incurred under fuel
contracts) after the Date of Execution, nor shall it accrue carrying costs on the unamortized
balances.
B. Until the earlier of (i) HL&P's next Section 43 base rate increase filing, or
(ii) completion of amortization of the costs as set out above, the amortization amouqts provided
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in paragraph IX.A shall be included as part of HL&P's cost of service as "operating expenses"
for purposes of each earnings monitoring evaluation and any Section 42 proceeding initiated to
modify HL&P's rates. Except for correction of mathematical errors. the Signatories agree that
no portion of such amortization amounts may be removed from HL&P's cost of service during
that time-frame. In any future Section 43 rate increase proceeding (including but not limited to
a Section 43 filing in response to a Section 42 proceeding). all Signatories shall be free to propose
or contest inclusion of such amortization amounts in HL&P's cost of service or inclusion of
unamortized amounts in rate base. Any treatment or assumed treatment of the Malakoff and
Trinity amortization amounts or of the unatnortized Malakoff and Trinity costs under this
Agreement shall not have any precedential value for putposes of d~tennining how such amounts
should be treated in such future Section 43 proceedings.
ARTICLE X.
STP Deferrals
A. In Docket No. 8425, the Commission authorized 1UAP to defer certain STP
Unit 1 costs under a phase-in plan (Qualified Deferrals) and in Docket Nos. 8230, 8425, and 9010
authorized HL&P to use deferred accounting for certain other STP Unit 1 and 2 costs incurred
between the dates those units went into commercial operation and the date the costs of the units
were reflected in rate base '(Accounting Deferrals) (the Qualified Deferrals and Accounting
Deferrals are referred to jointly as "STP Deferrals").
In any future earnings monitoring evaluation or Section 42 proceeding, whether
during or after the Rate Cap Period, and in any future Section 43 base rate increase proceeding,
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any Signatory may raise any of the following reserved issues relating to the calculation of the STP
Deferrals:
AFUDC (Carrying Cost) Rate Differences
Depreciation Rate Differences
Balance Subject to Carrying Costs Reduced Monthly
by Accumulated Depreciation
Balance Subject to Carrying Costs Reduced Monthly by ADm
Balance Subject to Carrying Costs Reduced Monthly by Bonded Rates
Effect of STP-l Accounting Deferral Differences
on STP-l Qualified Defemls
Combined Effects of the Calculation Differences
In earnings monitoring evaluations or Section 42 proceedings. the parties are not limited as to the
methodology they may use when calculating the reserved issues.
In exchange for the mutual consideration that is being exchanged through this
Agreement, except for the right to propose adjustments associated with the reserved issues (which
adjustments to STP Deferrals balances may not exceed $88 million), no Signatory may contest
inclusion of the STP Deferrals in rate base or contest amortization of STP Defemls as an
operating expense in cost of service in any Section 42 proceeding or earnings monitoring
evaluation during the Rate Cap Period.
Except as provided in paragraphs B and C of this Article X, the position on the
STP Deferrals that parties are obligated to take as a result of this Agreement is without prejudice
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to any position that any Signatory may take in any Section 43 proceeding during the Rate Cap
Period and in any proceeding after the Rate Cap Period. No Signatory may refer to the position
that a party is obligated to take on the STP Deferrals under this Agreement during the Rate Cap
Period in any Section 43 proceeding, any proceeding after the Rate Cap Period, or in any appeal
at any time.
B. Except as set out in paragraph X.A. aU issues relating to calculation of the
STP Deferrals as of December 31, 1993 are resolved and HL&P's balances as of such date (except
'to the extent that they may be modified as a result of the reserved issues) are determined to have
been correctly calculated. The STP Deferrals shall continue to be antortized under the schedules
established in Docket No. 9850.
C. In Docket No. 12065, certain "fmancial integrity" issues were raised
relating to inclusion of the STP Deferrals in rate base and inclusion of amortization of such
deferrals in the cost of service. If, in order to recover the STP Defemls, HL&P is required to
prove a fmanciaJ integrity need only once, then HL&.P has made that financial integrity showing.
However, if HL&P is required to prove a fmancial integrity need in each rate case in which
HL&P seeks to reflect the STP Deferrals and amortization in its cost of service, then nothing in
this Agreement prejudices any claim a party may make on the issue of fmancial integrity and the
recovery of the accounting deferrals in any future rate cases. The provisions in this paragraph
about the fmancial integrity finding regarding the accounting deferrals is limited solely to the issue
of the STP Deferrals and is not a general statement about HL&P's fmancial integrity and is not
a finding that is applicable to any other issue.
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D. It is recognized that two of the Pending Appeals relate to deferred
accounting, and those appeals will not be dismissed under this Agreement. If as a result of those
appeals it is finally determined that HL&P's STP Deferrals balance as of December 31, 1993
should be reduced, then notwithstanding the provisions of paragraphs A and B of this Article X,
such reduction shall be applied prospectively in future proceedings, but will not be applied
retroactively to modify HL&P's rates as approved in this or prior proceedings.
ARTICLE XI.
South Texas PrQject Perfonnance Stand3rd~
During the 135 day period commencing on the Date of Execution of this
Agreement, HL&P and the other Signatories shall negotiate in good faith to develop perfonnance
standards to be applied prospectively to HlAP's interest in STP. Other interested parties,
including the parties to Docket No. 12065 and Docket No. 13126, will be allowed to attend but
not to panicipate in negotiations. However, to the extent any non-Signatory interested party is
allowed to panicipate in the negotiations, all non-Signatory interested parties will be allowed to
participate to the same extent. The fltSt meeting will occur within fourteen (14) days after the
Date of Execution. During these negotiations, the parties will consider standards that reflect fuel
costs, operation and tnaintenance expenses and capital additions. Failure of the parties to agree
on appropriate performance. standards for STP will not affect any of the other terms of this
Agreement. Notwithstanding any other provision of this Agreement, if an agreement concerning
performance standards is not reached within that 135 day period, then the parties are free to
pursue any available remedy.
If some or all parties are able to reach an agreement on
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perfonnance standards, those parties will support a docketed proceeding requesting PUC approval
of those standards. Any party with a justiciable interest may seek to intervene in the docket to
adopt perfonnance standards.
ARTICLE XII.
Reduction of STP Investtnents
HL&P shall have the right to write-down a portion of its invesnnent in STP, but
may not write-up any other assets to offset such a write-down. For purposes of earnings
. '
monitoring and any Section 42 proceeding during the five year period conunencing January 1,
1995, the Signatories agree that any write-down. up to S50 million in anyone calendar year, will
be treated as a reasonable and necessary expense. For purposes of each earnings monitoring
report and any Section 42 proceeding, whether during or after that five year period. and each
future Section 43 proceeding, the portion of HL&P's rate base attributable to its invesnnent in
STP shall be reduced by the amount of the write-downs, if any, actually taken by HL&P. HL&P
will not use a write-down to justify a Section 43 rate increase filing. Should HL&P file a Section
43 proceeding requesting cost of service treatment of any write-down. the parties will be free to
take any position as to whether such write-down was a reasonable and necessary expense.
ARTICLE xm.
Accountina Issues
A. For the period from January 1, 1995 through the effective date of HL&P's
next base fate change pursuant to PURA Sections 43 or 42, HIAP will continue to use the
depreciation rates approved in Docket No. 9850.
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B. The Signatories agree that HL&P shall maintain its accumulated nuclear
production 'plant depreciation accounts on a "per unit" basis, instead of a "plant" basis. This is
similar to the manner in which HL&P maintains its Plant in Service (Schedule D-4)
C. The Signatories agree that HL&P shall accrue decommissioning expenses
for its interest in STP at the rate of $14,828,815 per year. Such decommissioning expenses shall
be recognized as a reasonable and necessary expense in any Section 42 proceeding or earnings
monitoring evaluation initiated during the Rate Cap Period. and during such period, no Signatory
shall contest inclusion of such amounts in HL&P's cost of service.
D. For purposes of calculating AFUDC on nuclear fuel in process, the
Signatories agree that test year end balance for account 120.1 of $4,982,654 is assumed to be
included in rate base in this docket. Such inclusion shall not prejudice any claims a party may
make regarding such balance in future proceedings.
E. HL&P's cost of service includes 521,967,612 of Post-retirement Benefits
Other than Pension (PASB 106) expense on a full accrual basis in accordance with Generally
Accepted Accounting Principles (GAAP) and PUC Substantive Rule 23.21(b)(l)(H). HL&P's
cost of service includes Post Employment Benefits (FASB 112) expense on a full accrual basis in
accordance with GAAP. HL&P will comply with funding requirements of the Commission's
Substantive Rules, and will notify Signatories when funding commences.
F. All rate case expenses associated with Docket No. 12065, Docket No.
13126 and municipal rate proceedings will be deferred and fully amonized over the three year
period beginning January 1, 1995.
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G. HL&P agrees that it will change the accounting method for gas inventory
from LIFO to average cost by December 31, 1995.
H. HL&P's cost of service includes the restoration of the deficiency in
unprotected deferred taxes over a 10 year period. which deficiency is $9,909,946 as of January
1. 1995.
I. HL&P agrees it will compare its coal and lignite inventory determination
methodology with an appropriate software package prior to its next Section 43 base rate increase
filing.
ARTICLE XIV.
Share and Other Low Income PrQlraMS
A. HL&P currently sponsors a program ("SHARE") of customer and
shareholder contributions to certain disadvantaged customers. HL&P agrees that it will continue
to contribute not less than $1.5 million to SHARE during each year of the Rate Cap Period. The
Signatories agree that the SHARE expense will be excluded from cost of service for all purposes
during the Rate Cap Period. The Signatories also agree that they are free to advocate any
ratemaking treatment of the SHARE expenses after the Rate Cap Period is over.
B. HL&P will fund a total of up to $62,000 for design experts specializing in
low income program design. ,
1. HL&P will fund up to $37,000 (from the 562.000 total) for design experts
to assist in the design of cost effective low income DSM programs rDSM Consultant"). The
DSM Consultant must be mutually agreeable to HL&P and Low Income Intervenors. HL&P will
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work cooperatively with the DSM Consultant and provide necessary assistance to the DSM
Consultant such as data gathering, program design and benefit cost evaluation. The DSM
Consultant will be selected within 60 days of the 12065 Final Order Date. The low income DSM
programs developed by the DSM Consultant will be filed at the PUC within 180 days after
selection of the DSM Consultant. A public meeting will be scheduled in HL&P's service area to
present the fmdings of the DSM Consultant, to receive input and to respond to questions. HL&P
will in good faith consider the programs developed from this effort for possible implementation.
2. HL&P will fund up to $44,000 (from the $62,000 total) during the Rate Cap
Period, with up to $22,000 being funded during the first year, for a low-income rate design expert
to be selected by Low Income Intervenors ("Rate Design Expert"). The Rate Design Expert will
be selected by the Low Income Intervenors within 30 days after the 12065 Final Order Date and
will assist in monitoring the Balanced Billing Pilot Program and assist in designing and monitoring
the Shadow Program described below.
a. HL&P will implement and monitor a BsilanrPd Billing Pilot Program
for a targeted group of between 1,500 - 3,000 customers identified as low income unless a lower
number is otherwise agreed upon between the Rate Design Expert and HL&P. The program will
follow the design and schedule of HL&P's existing Balanced Billing Program with some
modifications to the guidelines and qualifying criteria agreed upon by HL&P and the Rate Design
Expert. A control group agreed upon between HL&P and the Rate Design Expert will be
established and monitored to assess the effectiveness of the program.
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b. The Balanced Billing Pilot Program will.be mirrored with a Shadow
Program designed by the Rate Design Expert and HL&P. The Shadow Program will collect
infonnation for a targeted group of between 1.500 - 3,000 customers, unless a lower number is
otherwise agreed upon between the Rate Design Expert and HL&P. The Shadow Program will
compare the payments of electric bills of participants to the amounts that would have been
received by HL&P under a Direct Payment Section 8 Utility Allowance Program. HL&P agrees
to work with the Rate Design Expert and provide nonconfidential infonnation from the program
to the Rate Design Expert. HL&P will perfonn appropriate and reasonable data gathering and
cost effectiveness screening of the program.
c. The Balanced Billing Pilot and Shadow Programs will be developed
within 60 days after the 12065 Final Order Date. The program will be implemented within 90
days after the 12065 Final Order Date. HL&P will file the results of the programs with the
Commission at the end of the three year pilot period.
C. :m.&P will establish an Earned Income Tax Credit Utility Outreach program
for the Rate Cap Period, in partnership with the Internal Revenue Service and the Volunteer
Income Tax Assistance Program (IRS/VITA). Under this program, HlAP will provide
infonnation in several languages on the earned income tax credit to customers through various
outlets targeting low income customers, including customer mailings (bill inserts) to all residential
customers at least twice a year during December and January (or those months determined most
appropriate by IRS/VITA).
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ARTICLE XV.
Demand Side Manaiement Proirams
HL&P agrees to undertake the following Demand Side Management ("DSM")
1. HL&P will publicly announce the DSM Solicitation Short List of bidders
within 60 days after the 12065 Final Order Date, or as soon as the Short
List is available.
2.
HL&P will meet with the PUC Staff and other interested parties within 60
days after the 12065 Final Order Date to review HL&P's current DSM
evaluation plan and activities. HlAP will take input from the parties and
file a revised plan. if necessary, at a date agreed upon by the parties.
HL&P will share information with the parties regarding its future DSM
evaluation Request for Proposals.
HL&P will modify its Cool Storage Program beginning in 1996 to require
new participants to obtain an energy audit of their facility. The participants
may choose who will conduct the audit.
HL&P will continue to modify its Good Cents New Home program to
reduce incentives for structural improvements. Within 180 days after the
12065 Final Order Date, HL&P will propose a plan to move the program
toward a home rating system and will share its findings with the PUC Staff
3.
4.
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and other interested parties and obtain input from the PUC Staff and those
parties.
5. HL&P will modify its residential walk-thrqugh audit program beginning in
1996 to provide water heater wraps and low flow showerheads or
showerhead flow restrictors to interested participants who have electric
water heating.
6. HL&P will provide to the PUC Staff and other interested. parties the
infonnation it has available (such as demographic and awareness data) on
the Energy-Efticiency-Environment program including the Our House TV
series.
7. HL&P recognizes the potential for DSM in the commercial and industrial
market sector and intends to pursue cost-effective energy and demand
reductions in these sectors through its current solicitation. future
solicitations and. possibly, other appropriate mechanisms.
8. HL&P will meet on an informal basis with the PUC Staff and other
interested parties twice a year (or as otherwise agreed to by the parties) to
provide a review and consider input on DSM activities and issues. The
first meeting will occur within 60 days after the 12065 Final Order Date.
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ARTICLE XVI.
Additional Tariff Maners and Studies
A. HL&P will file the foUowing experimental real time pricing tariffs:
1. Within 180 days after the 12065 Final Order Date, HL&P shall file
an experimental Real Time Pricing tariff for the LOS rate classes
with all regulatory authorities having rate jurisdiction.
2. Within ISO days after the 12065 Final Order Date, HL&P shall file
an expermental Real Time Pricing tariff for the commercial rate
classeS (LOS and MGS) with aU regulatory authorities having rate .
jurisdiction.
3. Within 30 days after the 12065 Final Order Date, HlAP shall file
an experimental Real Time Pricing tariff for the residential rate
class with all regulatory authorities having rate jurisdiction.
As pan of HL&P's experimental real time pricing proposals, HL&.P will not increase base rate
revenues or increase Base Rate Unit Charges for non-experimental tariffs as reflected in the Tariff
for Electric Service attached hereto as Appendix D. Nothing herein shall be construed to require
any Signatory to support any of the experimental real time pricing tariff filings or to prejudice any
argument a party may wish to make in favor of, or opposition to, such filings. Moreover, nothing
herein will restrict any Signatory's rights to make any claims or arguments regarding the
experimental real time pricing tariffs (for example the ratemaking treatment of any revenue shifts
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or revenue shortfalls due to the experimental real-time pricing tariff) at the time of HL&P's next
Section 42 or Section 43 rate proceeding.
B. HL&P agrees to provide interruptible customers who have multiple facilities
taking interruptible service with appropriate operational flexibility for complying with requested
curtailments. Within 60 days after the Date of Execution of this Agreement. HL&P will negotiate
in good faith with interested interruptible customers to develop specific procedures for achieving
such flexibility. These procedures will be developed within the guidelines of HL&P's current
interruptible tariffs.
C. HL&P is currently studying potential control area services. HL&P will
complete the study by December 31, 1995 and. upon such completion, provide copies of that
study to all intervenors.
ARTICLE XYll.
Municipal Rate Case Expenses
A. Within seven (7) days after the later of (i) the Date of Execution or
(ii) receipt of an invoice detailing all rate case expenses incurred to such Date of Execution,
HL&P will pay to each signatory coalition an amount equal to all rate case expenses incurred to
the Date of Execution including expenses incurred in Docket No. 12065, Docket No. 13126 and
in any municipal rate proc~ings. HL&P will also reimburse all reasonable rate case expenses
related exclusively ~o "any pending or to be initiated municipal rate proceeding listed on Appendix
B through the date that such municipalities take fmal action in those proceedings. To the extent
that any cost incurred to the applicable cut-off'date is not known at the time a municipality submits
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its initial invoice, the municipality may submit an additional invoice to recover such costs.
HL&P, without prior Commission approval, will also reimburse up to S10,OOO of additional rate
case expenses actually incurred in Docket No. 12065 and Docket No. 13126. If the expenses
incurred by a signatory coalition in Docket No. 12065 and Docket No. 13126 after the Date of
Execution exceed SlO,OOO, HL&P will reimburse such expenses after a fmding by the
Commission that the expenses were reasonable. HL&P shall not oppose any request of a
signatory coalition for reimbursement of such excess post-execution expenses.
B. For the purpose of participating in the negotiation of STP PerformalK'.J!
Standards pursuant to Article XI during the 135 days after the Date of Execution of this
Agreement, the Gulf Coast Coalition of Cities and the Coalition of Cities will form a joint
coali~on. The leadership team for this joint coalition will be composed of the City of Houston.
GDS Associates Inc. and Wickliff and Hall on behalf of the Coalition of Cities, and the City of
Friendswood and the Law Offices of Robert A. Rima on behalf of the Gulf Coast Coalition of
Cities.
HL&P, without prior Commission approval. will ~imburse up to S50,000 of
additional expenses that are related to the joint coalition's participation in the negotiations for
developmem of STP performance standards and are actually incurred during the 135 day period
provided in Article XI for those negotiations. These expenses will be deemed rate case expenses.
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ARTICLE XVIII.
Pendin~ Appeals
It is recognized that HL&P and various other parties have filed the Pending Appeals
aU of which relate to Commission orders in other HL&P dockets. As described in this Article
XVIII, this Agreement resolves certain issues that have been raised by the Signatories in the
following Pending Appeals: Docket No. 6668 appeals initially filed by HL&P, the Office of
Public Utility Counsel (OPC) and the City of Houston and Coalition of Cities [but nc;>t the appeal
of that same order fiRed by the Cities for Fair Utility Rates ("CFUR")); Docket No. 8230 and
9010 appeals originally filed by OPC (but not appeals of those same orders filed by the State of
Texas); Docket No. 9850 appeal originally tiled by OPC; and Docket No. 10092 appeal originally
flIed by HL&P (such appeals are referred to jointly as "Resolved Appeals"). Within 10 days after
,the date of execution of this Agreement, all Signatories who are parties to any of the Resolved
Appeals shall jointly notify the court in which the appeal is now pending that, subject to
Commission action on this Agreement, the issues raised in the Resolved Appeals have been
resolved in favor of upholding the Commission's order. Such notice shall request that further
action on the appeal be delayed pending Commission consideration of the Agreement. and confirm
the Signatories' intention to tile appropriate motions with the court. following Commission
approval, seeking affinnance of the Commission's order as to aU issues raised by the Signatories.
Subject to qualific'ations set out below, within 10 days after the 12065 Final Order
Date, the Signatory Parties who are parties to the Resolved Appeals shall tile appropriate motions
with each appellate court to affirm the applicable Commission order as to issues raised by the
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Signatories (other than the State of Texas, if it is a Signatory), and to dismiss with prejudice each
of the pending appeals brought by anyone of the Signatories (other than the State of Texas, if it
is a Signatory). The precise form of the motions shall be tailored to each case, but will be
substantially as described below with respect to each Signatory and proceeding:
1. In Docket No. 9850, now pending in the Austin Court of Appeals on
remand from the Texas Supreme Court, OPC agrees to dismiss and
withdraw any points attacking the Commission's order, and to request that
the judgment of the District Court affmning the Commission's order be
affirmed in all respects;
2. In Docket No. 8230/9010, now pending on remand in the Austin Court of
Appeals, Ope agrees to withdraw and dismiss such of its arguments, if
any, as remain pending questioning the validity of the Commission's order,
and request that as to the issues originally raised by OPC [but not issues
raised by the State of Texas] the judgment of the District Court affirming
the Commission's order be affmned in all respects;
In Docket No. 6668, OPC, HL&P and the City of Houston each agree to
dismiss their respective appeals pending in the District Court with
prejudice, and request that the order of the Commission be affmned;
HL&P agrees to dismiss with prejudice its appeal from the Commission's
order in Docket No. 10092 and request that the Commission's order be
affirmed.
3.
4.
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It is recognized that the Resolved Appeals do not include appeals filed by CFUR
in Docket Nos. 6668 and 8425 and by the State of Texas in Docket Nos. 8230/9010 and 8425.
Signatories with appeals (other than the State of Texas, if it is a Signatory) shall make good faith
effons to cause CFUR and the State of Texas to similarly file to dismiss with prejudice their
Pending Appeals of Commission orders in prior HL&P dockets and seek affinnance of the
Commission's order. If CFUR does not agree to dismiss its appeal in Docket No. 6668, HL&P
shall have the right to maintain its appeal of the Commission's order in Docket No. 6668.
However, if HL&P elects to maintain that appeal, then prior to the deadline for filing to dismiss,
HL&P shall provide each Signatory with Resolved Appeals notice that HL&P will maintain its
Docket No. 6668 Appeal. If HlAP elects to maintain the Docket No. 6668 Appeal, all
Signatories will have the right. but not the obligation, to maintain any, or all, of its Resolved
Appeals. However, if HL&P subsequently dismisses the Docket No. 6668 Appeal, each
Signatory that maintained a Resolved Appeal shall simultaneously dismiss each of its appeals.
ARTICLE XIX.
Disclosure Allreement
Signatories represent that they have reached no agreements or understandings
concerning this rate case other than as set forth in this Agreement or disclosed to the panies in
Docket No. 12065 prior to the Date of Execution either with HL&P or .with any other entity. If
prior to the 12065 Final Order, any Signatory enters into any other agreements for the purpose
of settling and compromising Docket No. 12065, Docket No. 13126 or any municipal rate
proceedings related thereto, other than as set forth in this Agreement, then each component of the
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consideration granted by any Signatory shall be made known immediately to all Signatories: and
any Signatory may in that Signatory's discretion freely withdraw from this Agreement and request
reopening of hearings on the merits of the settlement. The terms of this anicle will also be
applicable to Pending Appeals of past Commission proceedings involving HL&P, including
appeals related to Commission Docket Nos. 8230/9010,6668. 8425,9850 and 10092. The above
provisions notwithstanding, if HL&P voluntarily or by order of the Commission reimburses a
municipality for reasonable expenses incurred in participating in either Docket Nos. 12065 or
13126 or any appeals of Commission rate proceedings, then such reimbursement shall be made
known to all Signatories but shall not permit any Signatory to withdraw from this Agreement.
This Article was agreed to by the Signatories as pan of the overall consideration for other
provisions of this Agreement. It is based upon the unique conditions underlying this Agreement.
Its inclusion in this Agreement shall not be cited by any entity as a recognition that the provisions
of this paragraph would be appropriate or that these provisions are more appropriate than other
types of disclosure or preferential tteaanent provisions in any other proceeding involving the same
or different parties.
ARTICLE XX.
Other Provisions
A. The Signatories after extensive negotiations have reached a compromise and
settlement to resolve Docket No. 12065, Docket No. 13126 as it relates to HL&P and Section 42
proceedings initiated by municipalities with regulatory jurisdiction over HlAP's rates and other
matters discussed herein. Signatories state that this Agreement is in the public interest and shall
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urge the Commission to approve and accept the provisions of this Agreement and to adopt a 12065
Final Order consistent with all the tenns hereof. If the Commission does not adopt a 12065 Final
Order consistent with aU the [enns of this Agreement, neither oral and written statements made
during the course of the settlement negotiations nor the tenns of this Agreement may be used as
an admission or concession of any sort or as evidence in Docket No. 12065 or any other
proceeding.
B. This Agreement reflects a compromise. settlement and accommodation
among Signatories, and all Signatories agree that the terms and conditions herein are
interdependent. If the Commission does not accept this Agreement as presented and enters an
order inconsistent with any material terms of this Agreement. the Signatories agree that any
Signatory has the right to withdraw from this Agreement. proceed to hearings on all issues and
present evidence. It is specifically recognized that the Signatories, except for HL&P, will not
submit pre-filed testimony regarding the merits of the Agreement and will forego cross-
examination of the testimony that is submitted in suppon of the Agreement; provided, however,
that any Signatory may submit rebuttal testimony in support of the cost allocation and rate design
under this Agreement if the cost allocation and rate design is contested by a non-Signatory. If this
Agreement is not accepted. the Signatories agree to acknowledge each other's right, and to further
confirm by oral or written statement to the Presiding Officer or Commission, the agreement of
the Signatories to allow each other to proceed with a full hearing, to present evidence, and to
cross-examine witnesses.
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C. This Agreement is binding on each of the Signatories only for the purpose
of settling the issues herein and for no other purpose. Specifically, by entering this Agreement.
no party admits to any wrongdoing, or the absence of wrongdoing, imprudence or prudence,
unreasonableness or reasonableness of any expenses, capital expenditures or rate design or
otherwise admits any liability; and no Signatory agrees to the propriety of any ratemaking theory
or principle that may be said to underlie any of the issues resolved by this Agreement. The
matters resolved herein are resolved on the basis of a compromise and settlement. Except to the
extent that this Agreement expressly governs Signatories' rights and obligations for future periods.
this Agreement shall not be binding or precedential upon such Signatories outside of this case.
It is acknowledged that a Signatory's support of the matters contained in this Agreement may
differ from its position or testimony in other dockets. To the extent that there is a difference, the
Signatories are not waiving their position in other dockets. Because this is a stipulated agreement,
the Signatories are under no obligation to take the same positions as set out in this Agreement in
other dockets whether those dockets present the same or a different set of circumstances.
D. Signatories recognize that a 12065 Final Order consistent with this
Agreement must determine that the Appendix D rates and other provisions of this Agreement are
supported by record evidence satisfying the requirements of the Public Utility Regulatory Act.
To support the foregoing, HL&P shall prepare, file and defend appropriate testimony and
supporting schedules. HL&P and any Signatory submitting rebuttal testimony under paragraph B
of this Article XX will consult with other Signatories before making its filing. Signatories shall
support such testimony solely as a compromise and not as acquiescence in any rate making
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principle, valuation methodology, method of cost-of-service detennination, method of revenue
calculation, or cost allocation or rate design principle underlying such testimony or underlying
the provisions and agreements contained in this Agreement or the attachments hereto. Any and
all exhibits and testimony to be submitted in suppon of this Agreement will be offered for the
limited purpose of supponing this Agreement. In the event any exhibits or testimony are admitted
in this proceeding or in any other proceeding for any other purpose, then Signatories reserve their
full rights to challenge such exhibits and testimony, including objections to admission, rights to
file rebuttal testimony and the right of cross-examination.
E. The titles assigned to each Article are for convenience only, are not part of
this Agreement and shall not be considered in the resolution of any dispute or question arising
with respect to this Agreement.
F. Execution of this Agreement by representatives of a municipality constitutes
a commianent to seek approval of the Agreement by the governing body of the municipality but
shall not bind the municipality until it has been approved by that governing body.
G. Each person executing this Agreement represents that (s)he is authorized
to sign this Agreement on behalf of the party represented. Facsimile copies of signatures are valid
for purposes of evidencing an Agreement.
H. References to Sections of PURA are to those sections in effect at the Date
of Execution of this Agreement.
I. This Agreement may be executed in multiple counterparts.
4
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Signed this.}./ day of
February, 1995
Signed this21 ~ day of
February, 1995
Signed this ~Jtday of
February, 1995
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fj,~'217t1c &~
David M. McClanahan
Group Vice-President -- Finance and Regulatory
Relations
HOUSTON LIGHTING & POWER COMPANY
~.
~~)/) -
Thomas Brocato
Assistant General Counsel
PUBUC UTILITY COMMISSION OF TEXAS
The Office of Public Utility Counsel is signing to
indicate that it does not oppose entry of an order
consistent with the Agreement becauseJ taken as a
whole the document resolves the issues in a manner
that il consistent with the public interest.
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Signed (his~ay of
February, 1995
Signed thi~y of
February, 1995
Signed thi~y of
February, 1995
Signed this _ day of
February, 1995
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Alton Hall
Wickliff & Hall
Attorney for CITY OF HOUSTON and
COALITION OF CITIES (consisting of Bay town,
Bellaire, Brookshire, Brookside Village, Clute. Deer
Park, EI Lago, Fulshear, Galveston. Houston,
La Porte, Meadows, Pasadena, Santa Fe, Seabrook,
Surfs ide Beach, Thompsons. Webster, West University
Place)
~.u;f.\.~
Robert A. Rima
Law Offices of Robert A. Rima
Attorney for GULF COAST COAUTION OF
CITIES (consisting of Alvin, Bunker Hill
Village, Dickinson, Friendswood, Jersey Village,
La Marque, Missouri City, Oak Ridge Nonh, Sealy,
Simonton. Spring Valley, Stafford)
Jo than Day
r, Day, Caldwell & Keeton
Attorney for TEXAS INDUSTRIAL ENERGY
CONSUMERS
Richard Noland
Sutherland, Asbill & Brennan
Attorney for OCCIDENTAL CHEMICAL
CORPORATION
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~ _CS"d '"1:I1Cl
U...I.'iO;J.I.I.I.I.
~.'\AlI.D .\ L ~ L 1."
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Signed this _ day of
FebtuaIY, 1995
Aiton HaJI
Wic:k:1iff &: Hall
Anomey for CITY OF HOUSTON and
COAllTION OF CITIES (coasisting of Bay town,
BcUaite, Braobhire. Brookside Village, Clute. Deer
Park, EI lago, FulIhcar. Galves1DD, HoUStOn,
La Pone, Madows. ~Pc:te-na.. Sama Fe, Seabrook.
5urfside Beach. Thcmpscas, Webster, West UDiversily
Place)
" ,
SigDed this day of
Febcuary, -1995
,Raben A. Rima
Law Of&cs of:Robert A. Rima
Anomey for GULP COAST COAUIlON OF
CITIES (coDSist1Dg of AlVin. Bunker HiD.
Village, DictlDsoa,' PrieDdswooc1, 1erser Village,
La Marque. Missouri City,. Oak RIdge North, Sealy,
Simoaroa, SpdDg VaDey. Staftani)
Signed this _ day of
February. 1995
Joaaman Day
Mayor. Day, Caldwell & KeetOD.
Acrorm:y tw TEXAS INDUSTRIAL ENERGY
CONSUMERS
SigDed this _ day of
Febnmy. 1995
ZS'd
6~;9t S66t-t(,;-EG::i
Signed this _ day of
February, 1995
Signed this day of
February, 1995
Signed this _ day of
February, 1995
Signed this ~day of
February, '1995
Signed this 2/ ~y of
. February, 1995
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James E. Miller
DESTEC ENERGY, INC.
Marianne Carroll
Akin, Gump, Strauss, Hauer & Feld
Attorney for CLEAR LAKE COGENERATION
LIMITED PARTNERSHIP
Paul W. Phillips
DEPARTMENT OF ENERGY
~,()o ~.~
Tony D. Iiams
TEXAS cOTION GINNERS' ASSOCIATION
~ p'a~
Michael G. shfrley -
Jenkens & Gilchrist, P.C.
Attorney for TEXAS-NEW MEXICO POWER
COMPANY
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Signed this _ day of
February, 1995
Signed this _ day of
February, 1995
Signed this day of
February, 1995
Signed this _ day of
February, 1995
Signed this day of
February, 1995
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Richard M. McElvaney, Jr.
Gulf Coast Legal Foundation
Attorney for LOW INCOME INTERVENORS
5
homas S. Hunter
oster & Hunter, L.L.P.
Attorney for RET AlL MERCHANTS
ASSOCIATION OF HOUSTON, INC.
Greg Lucero
I.B.E.W. LOCAL NO. 66
Richard A. Muscat
STATE OF TEXAS
Public Agency Representation Section
Don E. Walden
TEXAS RATEPAYERS' ORGANIZATION TO
SA VE ENERGY ("TEXAS ROSE")
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Signed ~ day of
February, 1995
Signed this _ day of
February, 1995
Signed this _ day of
Fcbnaary, 1995
Signed this day of
Ff!bruary. 1995
SiaDed this _ day of
Febnwy. 1995
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Gulf Coast Legal Foundation
Attarney for LOW INCOME INTERVENORS
Thomas S. Hunter
Foster & Hunter. L. L.P.
Atromey for RETAIL MERCHANTS
ASSOCIATION OF HOUSTON. INC.
Greg Lucero .
lB.B.W. LOCAL NO. 66
Rk:.bard A. Muscat
STATE OF TEXAS
Public AI~Y Repra~t:iOD Sec..1ion
Dan E. WaldcA
TEXAS RAT~^ YERS' ORGANIZATION TO
SA VB ENERGY ("TEXAS ROSE-)
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I
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TOTAl.. P. 02
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Signed this _ day of
February, 1995
Ricbard M. McElvaney, Jr.
Gulf Coast Legal Foundation
Attorney for LOW rNCOME INTERVENORS
Signed this _ day of
February, 1995
Thomas S. Hunter
Foster & HUDter, LLP.
Attorney for RETAIL MERCHANTS
ASSOCIATION OF HOUSTON, INC.
Signed this _ day of
February, 1995
~~~~
I.B.E.W. LOCAL NO. 66
--'"
Signed this _ day of
February, 1995
Ric:bard A. Muscat
STATE OF TEXAS
Public Apnc:y RepreseuutiOD Section
Signed this _ day of
February, 1995
0oll E. Walden
TEXAS RATEPAYERS' ORGANIZATION TO
SAVE ENERGY ('1'EXAS ROSEj
~
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I.
t
,
HOtJUt9llM6.13
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Signed this day of
February. 1995
Adan Maninez
ENVIRONMENTAL DEFENSE FUND
Signed this day of
February, 1995
Rodney Doerscher
Representing MICHAEL HERSHEY
Signed this day of
February, 1995
Kenneth D. Williams
Signed this _ day of
February, 1995
Charles Pace
Representing
ASSOCIA nON OF LAID-OFF EMPLOYEES
r
~
.,
,
t
I
I.
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APPENDIX A
Municipalities Whose Rate Ordinances Have Been Appealed
Alvin
Bunker Hill Village
Dickinson
Friendswood
Jersey Village
Lake Iackson
La Marque
Missouri City
Oak Ridge North
Spring Valley
Stafford
Bay town
Bellaire
Brookshire
" Brookside Village
Clute
Deer Park
El Lago
Fulshear
Galveston
Houston
LaPorte
Meadows
Pasadena
Santa Fe
Seabrook
Simonton
Surfside Beach
Thompsons
Webster
West University Place
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APPENDIX Q
Municipalities With Pending or To Be Initiated
Section 42 Proceedings That Are To Be Appealed
To The Conunission and Consolidated
With Docket No. 12065 Pursuant To This Agreement
,
,
APPENDIX C
Purchased Non-purchased
Power-Base Power-Base
Rate Reduction S Rate Reduction $ Total S
(000) (000) (000)
Residential 75,164 24.900 100,064
MGS 42,655 23,700 66,355
LGS 32,653 410 33,063
LOS-A 12,168 1,620 13,788
LOS-B 9,308 1,141 10,449
IS-I 0 1 1
IS-I0 0 1 1
IS- 30 0 121 121
IS-S 0 129 129
TNP 587 1,300 1,887
SPL 277 6,000 6,2771
Wheeling 0 200 200
Standby 0 337 337
Contract Lighting 106 140 246
172.918 60,000 232,918
I HL&P has agreed to reduce the SPL class by an additional 52.2 million. That
$2.2 million, which is not reflected on this sheet, is reflected in Appendix D and will
not impact any other classes.
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