HomeMy WebLinkAboutR-2004-10 Failed/no Motion-participate with City of Houston/other municipalities in Coalition of Cities
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City of La Porte, Texas, Resolution No. 61 0 O'f- / 0
A RESOLUTION AUTHORIZING THE CITY OF LA PORTE, TEXAS, TO JOIN, A
COALITION AND TO INTERVENE IN PROCEEDINGS RELATED TO THE APPLICATION OF
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC, RELIANT ENERGY RETAIL
SERVICES, LLC AND TEXAS GENCO, LP TO DETERMINE STRANDED COSTS AND
OTHER TRUE-UP BALANCES PURSUANT TO PURA I 39.262; AUTHORIZING THE CITY
ATTORNEY TO REPRESENT THE CITY AND TO TAKE APPROPRIATE ACTIONS
RE~TING TO SUCH PROCEEDINGS; MAKING CERTAIN FINDINGS RELATED THERETO.
* * * * *
WHEREAS, the public Utility Commission will conduct hearings relating to the
Application of CenterPoint Energy Houston Electric, LLC, Reliant Energy Retail Services, LLC
And Texas Genco, LP To Determine Stranded Costs And Other True-Up Balances Pursuant To
PURA I 39.262 and related proceedings (the "Proceedings") affecting rates and services
provided by the companies throughout the State of Texas, including the City of La Porte, Texas;
and
WHEREAS, certain municipalities have indicated their desire to join with the City of
Houston Texas, in a coalition of cities interested in the conduct of the Proceedings and to
authorize the coalition to intervene on behalf of the participating municipalities therein; and
WHEREAS, interested parties must seek party status soon after March 31, 2004 to
comply with the Intervention Deadline to be set in the Proceedings; and
WHEREAS, City Council has determined that it is in the best interests of the City that
the City intervene in the Proceedings to represent the City's interests; NOW THEREFORE, BE
IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LA PORTE, TEXAS:
Section 1: That the facts recited in the preamble hereto are hereby found to be true and
correct and are hereby incorporated herein.
Section 2: That the City is hereby authorized to assist in the organization of, and to join
in, a coalition of municipalities and other parties having similar interests in the Proceedings.
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Section 3: That the City is hereby authorized to intervene in the Proceedings, either as
a member of the coalition or otherwise, and to take legal and other actions as a party in the
Proceedings affecting rates and services provided by the companies throughout the State of
Texas, including the City of La Porte, Texas.
Section 4: That the City Attorney or the City Attorney and such outside counsel as the
Coalition may select, shall represent the City in all of the Proceedings and are hereby
authorized to take all legal and other actions necessary to forward the interests of the City in the
Proceedings and all matters related to such Proceedings, including without limitation any
hearings, conferences, negotiations and related Proceedings.
Section 5: That this Resolution shall take effect immediately upon its passage and
approval in the manner required by the City Charter and ordinances.
PASSED AND ADOPTED this 10th day of May, 2004.
APPROVED this 10th day of May, 2004.
Mayor of the City of La Porte, Texas
K. Askins, City Attorney
Martha Gillett, City Secretary
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CITY OF HOUSTON
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Finance and Administration
Department
Bill White
Mayor
March 9, 2004
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Judy Gray Johnson
Director
Finance and Administration
Department
P.O. Box 1562
Houston, Texas 77251-1562
TO:
Cities Served by CenterPoint Energy
MAR 1 8 20D~
CITY MANAGER'S
OFFICE '
T.713.837.9630
F.713.837.0631 ,
www.cityofhouston.gov
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FROM:
TinaPaez, Assistant Director, Regulatory Services Divis~on
City 'of Houston Finance & Administration Department
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RE:
Participation in Coalition of Cities in CenterPoint Energy
2004 True-Up of Stranded Costs
Senate Bill 7 (SB7) became effective September 1999. SB7 mandated that the electric utility industry be
restructured to permit open competition in most areas of the state effective Januaiy 1, 2002. Authority for
implementation of SB7 was vested in the Public Utility Commission of Texas (pUC).
SB7 also mandated that the Commission conduct a final true-up proceeding for each utility in 2004. The final
true-up is intended to reconcile all fuel balances and determine a final stranded cost figure for each utility.
CenterPoint Energy must submit its true-up application to the Public Utility Commission of Texas (PUC)
within 10 days of March 31, 2004. The City of Houston will intervene in this proceeding. Because the issues to
be addressed in this case will impact all municipalities similarly, we are inviting your participation in a
Coalition of Cities representing municipalities' interests in this proceeding. The deadline for interventions at
the PUC will be set soon after March 31st. However because SB7 requires the PUC to issue its final order
within 150 days of the filing, timetables in this proceeding may be shortened.
An organizational meeting will be held on March 31, 2004 at 2:00 p.m. in the Houston City Hall Annex
Council Chambers, 900 Bagby Street, Public Level (see attached map). At that time, we will provide a current
status of the case, and establish points of contact for further communication. Please confirm your attendance
by calling Sharon Ivy at (713) 837-9626. '
Please Note: Attached is a draft form of resolution for submission to your municipality's governing body.
Action by your governing body is necessary for participation in the Coalition and intervention in the PUC
proceeding.
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Tina Paez C"
Assistant Director, Regulatory Services Division
City of Houston Finance & Administration DqJartment
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Council Members: Toni Lawrence Carol Mims Galloway Mark Goldberg Ada Edwards Addie Wiseman M.J. Kahn Pam Holm Adrian Garcia Carol Alvarado
Mark Ellis Gordon Quan Shelley Sekula-Gibbs. M.D. Ronald C. Green Michael Berry Controller: Annise 0, Parker
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CITY OF HOUSTON
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Finance and Administration
Department
TO:
T.713.837,9630
F. 713,837.0631 ~
www.cityofhouston.go
Tina Paez, Assistant Director, Regulatory Services Division 'tl ...
, City of Houston Finance & Administration Department y
Summary of Organizational Meeting for Participation in Coalition of Cities in CenterPoint "
Energy 2004 True-Up of Stranded Costs
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Judy Gray Johnson
Director
Finance and Administration
Department f)
P.O. Box 1562 '
Houston, Texas 77251-1562
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April 7, 2004
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Cities Served by CenterPoint Energy ,
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FROM:
RE:
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On March 31, 2004, the City of Houston hosted an organizational meeting for municipalities interested in
participating in a Coalition of Cities in the CenterPoint Energy 2004 True-Up of Stranded Costs proceeding at
the Public Utility Commission of Texas (PUC). Present at the meeting representing the City of Houston were
myself, Melba Pourteau, Senior Assistant City Attorney, Alton Hall, a partner with the firm of Epstein,
Becker, Green, Wickliff & Hall, and Jim Daniel, a principal in the consulting firm of GDS Associates, Inc.
Epstein, Becker, Green, Wickliff & Hall has been retained by the City to represent its interests before the PUC
and it is contemplated that Mr. Hall will represent. the interests ofthe Coalition members as well.
Mr. Hall gave a presentation of the issues before the PUC and the advantages to other municipalities in
participating with the City of Houston in forming a Coalition of Cities. A summary of those comments is
presented below.
Senate Bill 7 (SB7) became effective September 1999. SB7 mandated that the electric utility industry be
restructured to permit open. competition in most areas of the state effective January 1,2002. The conversion to
a competitive market was ultimately intend.ed to lower costs to c'onsumers. Authority for implementation of
SB7 was vested in the Public Utility Commission of Texas (PUC). '
Under the statute, electric utility companies were required to separate their operations into three core
components: (1) power generation;" (2) transmission and distribution (T&D - commonly referred to as
"wir~s"); and, (3) a retail energy provider (REP). The power generation and REP components were
deregulated, while the T &D remains regulated.
Due to the restructuring of the industry in this manner, the legislature created a means for utilities to recover
any stranded costs incurred as a result of deregulation. Stranded costs are those costs incurred to increase or
diversify a utility's power generation capacity that are in excess of what the competitive market will pay - Le.
the difference between the book value of the utility's generation plants and the market value of those assets.
To the extent stranded costs are positive, the T&D (CenterPoint Energy) will be permitted to adJust T&D rates
to recover the stranded costs.
SB7 mandated that the Commission conduct a final true-up proceeding for each utility in 2004. The fma1 true-
up is intended to reconcile all fuel balances and determine a final stranded cost figure for each utility.
CenterPoint Energy submitted its true-up application to the PUC on March 31, 2004. If CenterPoint is awarded
stranded costs in the amount requested ($4.4 billion), the impact to the average residential customer's bill will
amount to an estimated additional $12.92 per month. The cumulative rate impact since the onset of
deregulation is a staggering 43% increase in residential electric rates.
Council Members: Toni Lawrence Carol Mims Galloway Mark Goldberg Ada Edwards Addie Wiseman M.J, Kahn Pam Holm Adrian Garcia Carol Alvarado
Mark Ellis Gordon Quan Shelley'Sekula-Gibbs, M.D, Ronald C. Green Michael Berry Controller: Annise D. Parker
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In response to questions from the audience, the following points were discussed:
· Any City who becomes a member of the Coalition who wished to intervene separately, if that City felt
its interests nO longer coincided with ~hose of the Coalition, would be free to do so with the approval
of the PUC.
· No fmancial contributions of member cities will be necessary. Houston will fund outside counsel and
consultants, and will make all necessary filings for recovery of expenses.
· The issue o(forming a steering committee for the Coaliti<;m was also discussed. One ,concern about the
composition of a steering committee is the 'need for quick decision-making ability, as the pace 'of
events in the rate case is anticipated to accelerate rapidly.
In summary, Mr. Hall stressed the importance of cities presenting a unified front in this case. If a significant
number of cities in CenterPoint's service area are represented by this Coalition, this will add weight to the
arguments of the Coalition before the PUC.
A pro-forma resolution to participate in the Coalition was included with the first organizational letter sent to
the cities. If you need another copy of the resolution, or would like an electronic copy, please call me at (713)
837-9630 or send an email totina.oaez@citvothouston.net. Once your governing body has acted, please
forward a certified copy to my attention, and Mr. Hall will make the necessary filings at the PUc.
The next meeting of the Coalition is anticipated to occur several weeks prior to the filing of testimony, and we
will notify members closer to that time as to the date, time and location. If you have any questions or concerns
in the mean time: please do not hesitate to call me or send me an email.
J;~
Assistant Director, Regulatory Services Division
City of Houston Finance & Administration Department
tina. oaez@citvofhouston.net
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CITY OF HOUSTON
Finance and Administration
Department
Bill White
Mayor
Judy Gray Johnson
Finance and Administration
Department
P.O. Box 1562
Houston, Texas 77251-1562
T.713.837.9630
F.713.837.0631
www.cityofhouston.gov
April 27, 2004
TO:
Cities Served by CenterPoint Energy
FROM:
Tina Paez, Assistant Director, Regulatory Services Division
City ofHousto~ Finance & Administration Deparbnent
RE:
Potential Impact of Center Point Energy's True-Up Case on
Residential Customers
Attached is a response to Wayne Roesler with CenterPoint Energy. In his letter to the City, he indicates that he
received a copy of the City of Houston's April 7, 2004 letter to the potential coalition participants.
Be advised that there will be numerous letters and summaries that will be sent to those cities that ultimately
choose to become members of the Coalition. Included may be specific comments from our legal counsel that
may be confidential and privileged. Accordingly, we must be very careful with the dissemination of these
letters and information so we do not disclose the contents of any future correspondence that may bear on the
case. In fact, no communications about the case should be shared with anyone outside of the Coalition member
cities.
Thank you for your participation in the Coalition, and your cooperation in maintaining the confidentiality and
privileged nature of our communications.
Sincerely,
a~~
Tina Paez '
Assistant Director, Regulatory Services Division
City of Houston Finance & Administration Deparbnent
Attachment
cc:
Judy Gray Jolmson
Melba Pourteau
Alton Hall
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Council Members: Toni Lawrence Carol Mlms Galloway Mark Goldberg Ada Edwards Addie Wiseman M,J. Kahn Pam Holm Adrian Garcia Carol Alvarado
Mark Ellis Gordon Quan Shelley Sekula-Gibbs, M.D. Ronald C. Green Michael Berry Controller: Annise D. Parker
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Houston Coalition of Cities as of 4/29/04:
City of Baytown
City of Beach City
Brookside Village
Bunker Hill Village
City of Deer Park
City of Dickinson
City, of Freeport
City of Galena Park
City of Houston
City of Nassau Bay
City of Oak Ridge North
City of Oyster Creek
City of Pearland
City of Rosenberg
City of Santa Fe
City of Stafford
Taylor Lake Village
Village of Bonney
City of Webster
City of West Columbia
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CITY OF HOUSTON
Finance and Administration
Department
Bill White
Mayor
Jud Gra Johnson
. Director
Finance and Administration
Department
P.O. Box 1562
Houston, Texas 77251-1562
April 27, 2004
T.713.837.9630
F.713.837.0631
www.cityofhouston.gov
Wayne Roesler
CenterPoint Energy
Regulatory Operations
P.o. Box 4567
Houston, Texas 77210-4567
Re: Potential Impact of Center Point Energy's True-Up Case on Residential Customers
Dear Mr. Roesler,
This is in r~sponse to your letter dated April 16, 2004, regarding the calculation of the increase in residential
rates as a result of the pending true-up.
In reading your letter, it appears you misunderstood the statement about the increase in rates. The letter states,
"If Center Point is awarded stranded costs in the amount requested ($4.4
billion), the impact to the average residential customer's bill will amount to
an estimated additional $12.92 per month. "
Our calculations indicate that the requested $4.4 billion true-up amount would result in an increase to an
average residential customer of between 12% and 13%. The 43% you are referring to appears in the following
sentence,
"The cumulative rate impact since the onset of deregulation is a staggering
43% increase in residential electric rates. ..
It is evident that the 43% is our calculation of the total increase in residential electric rates since the onset of
deregulation, including fuel factor increases, and is not intended to be understood as the projected increase in
rates that will result solely from the true-up, but instead represents the cumulative effect of the increases that
have taken place since deregulation, including the true-up. We realize CenterPoint is not an REP and does not
sell electricity to retail end-users.
Please feel free to call me if you have any other questions.
Sincerely, _, () .
~~A___ [{~
Tina aez, Assistant Director
City of Houston
Finance & Administration Department
cc: Houston Coalition of Cities
Council Members: Toni Lawrence Carol Mims Galloway Mark Goldberg Ada Edwards Addie Wiseman M.J. Kahn Pam Holm Adrian Garcia Carol Alvarado
Mark Ellis Gordon Quan Shelley Sekula-Gibbs, M.D. Ronald C. Green Michael Berry Controller: Annise D. Parker
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REQUEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requested: May 10, 2004
ApproDriatioD
Requested By:
Susan Kelley
Source of Funds:
N/A
Department: Administration/Purchasing ,j~J.L.,
Account Number: N/A
Report:
Resolution: X Ordinance:
Amount Budgeted: N/A
Amount Requested: N/A
Exhibits: Resolution
Budgeted Item: YES NO
Exhibits: Correspondence from City of Houston
Exhibits:
SUMMARY & RECOMMENDATION
The attached resolution authorizes the City of La Porte to participate in the Coalition of Cities in the
CenterPoint Energy 2004 True-Up of Stranded Costs proceeding at the Public Utility Commission of
Texas (PUC). Stranded costs are those costs incurred to increase or diversify a utility's power generation
capacity that are in excess of what the competitive market will pay - i.e. the difference between the book
value of the utility's generation plants and the market value of those assets. To the extent stranded costs
are positive, the T&D (CenterPoint Energy) will be permitted to adjust T&D rates to recover the stranded
costs. CenterPoint Energy submitted its true-up application to the PUC on March 31, 2004. If CenterPoint
is awarded stranded costs in the amount requested ($4.4 bi,lIion), the i!11pact to the average residential
customer's bill would amount to an estimated additional $12.92 per month.
The City of Houston organized the Coalition of Cities and will,fund outside counsel and consultants. and
will make all necessary filings for recovery of expenses. Municipalities in the CenterPoint's service area
are asked to join and be represented by the Coalition, adding weight to the arguments of the Coalition
before the PUC.
Staff Recommendation:
Staff recommends approval of resolution to participate with the Coalition of Cities.
Action Reauired by Council:
Approve resolution authorizing the City of La Porte to participate with the City of Houston and other
municipalities in the Coalition of Cities.
Approved for City Council Agenda
dD.JiJUJ,Mta-~
Debra B. Feazelle, City Ma ger
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Date