0258ORDINANCE NO. 258
AN ORDINANCE APPROVING RATE SCNEDULES TO BE CIIARGED BY TEXAS POWER
& LIGHT COMPANY IN TNE CITY OF $OUTHL~ , TEXAS APPROVING
SERVICE REGULATIONS FILED BY TEXAS POWER & LIGNT COMPANY, PROVIDING
FOR AN EFFECTIVE DATE FOR SUCII RATE SCHEDULES, AND PROVIDING CONDITIONS
UNDER WHICH SUCH RATE SCNEDULES ~Y BE CHANGED, MODIFIED, ~lENDED OR
WITHDRAWN.
WHEREAS, on January 4, 1980, Texas Power & Light Company filed
with the City Secretary a request for an increase in rates to be
charged within the City and for approval of Service Regulations to
be observed in the City; and
WHEREAS, the City having suspended the effective date of such
proposed rate increase from February 8, 1980, and having considered
the s~e at a public hearing, is of the opinion and finds that an
increase in rates should be approved, being the same rates heretofore
approved by the Public Utility Commission of Texas, in Docket NO. 3006,
pursuant to a request filed with it by Texas Power & Light Company on
January 4, 1980; NOW, THEREFOPJ~,
BE IT ORDAINED BY TIlE CITY COUNCIL OF TNE CITY OF SOUTHLAKE
TEXAS:
SECTION 1: That an increase in the rates, tariffs and charges of
Texas Power & Light Company for electric power and energy sold within
the City be approved in an amount equal to that approved by the Public
Utility Commission of Texas in Docket No. 3006, and the rates, tariffs
and charges giving effect to such increase approved by the Public
Utility Commission in said Docket No. 3006 are hereby approved as the
SchDdule of Rates under which said Company is authorized to render
electric service and to collect charges from its customers for sale
of electric power and energy within the corporate limits of the City
until such time as said Rate Schedules and Service Regulations may be
changed, modified, amended or withdrawn, with the approval of the City
Council.
SECTION 2: That the Service Regulations of Texas Power & Light
Company filed with the City Secretary on January 4, 1980, be, and the
same are hereby approved.
SECTION 3: That such Schedule of Rates and Tariffs and Service
Regulations shall be effective for consumption from and after the
date on which the Schedule of Rates and Tariffs and Service Regulations
are approved and made effective by the Public Utility Commission of
Texas in Docket No. 3006.
SECTION 4: The filing of the Rate Schedules and Service Regulations
and the approval of same by the City Council, in the manner herein
provided, shall constitute notice to the consumers of electricity, within
the City, of the availability and application of such Rate Schedules
and Service Regulations.
PASSED AND APPROVED at a Regular meeting of the City Council of
SOUTHLAKE , Texas, this the 20~] day of May , 1980.
ATTEST:
Mayor & - ~
To §~ i~]to effcct ;4a) 27,1980
~'t~, 'Secret~ry
(Citv Seal)
DOCKET NO. 3006
APPLICATION OF TEXAS POWER &
LIGHT COHPANY FOR AUTHORITY
TO CHN4GE RATES
PUBLIC UTILITY COMMISSION
OF TEXAS
FINAL ORDER
Procedural Statement
On January 4, 1980, Texas Power & Light Company (hereinafter referred to as TP&L)
filed with this Commission its Petition for Authority to Change Rates in the areas in which
it serves and over which this Commission has jurisdiction. TP&L filed companion cases in
each municipality which it serves which has original jurisdiction. Based upon its
Petition, the renuested increase system-wide was $124,053,000 or 15.35 percent with a
proposed effective date of February 8, 1980.
A prehearing conference was held on January 22, 1980 at which t~e following parties
were granted intervenor status and grouped as follows for purposes of the hearing on the
merits.
TeXas Municipal League (see Cities Exhibit No. 1 for list of cities)
represented by Don Butler; City,of Waco represented by Earl Bracken;
'City of Cleburne represented by Robert T. Miller, Jr.; City of
Sherman represented by Gregory Humbaoh; City of Brownwood represented
by Bryan Healer;
2. Southwestern Electric Service Company represented by Frank Cain;
3. Community Public Service Company (CPS) represented by Michael G.
Shirley;
Coalition for Fair Rates represented by J. Michael Ball; Dorothy
· Lyles, Elsie Cain and Matthew Webb individually and as
representatives of similarly situated low-income, elderly customers
of TP&L in the Cities of Brownwood, Mineral Wells and Cleburne
represented by Geoffrey M. Gay; Community Center of the Stafford-
Armstrong Addition of the City of Seagoville represented by Ms. Sheila
O'Connor;
8o
Texas Industrial Energy Consumers (TIEC) represented by Jonathan Day
and Jeffrey Jacobs, and St. Regis Paper Company represented by
Ms. Peggy Dobbins;
6. General Services Administration (GSA) represented by William H. Smith
and Ms. Mildred Pitts;
D~cket No. 3006
Page 2
Tex-La Electric Cooperative of Texas, Inc. represented by Fred Rltts
and Dick Terrel] Brown;
Rayburn Country Electric Cooperative, Inc. represented by Earnest
Casstevens;
9. Navarre College and Hill Junior College represented by Lawrence
Smith.
At the January 22 prehearing conference, the motion of the General Counsel to suspend
the effective date of the proposed rate increase for 120 days was granted pursuant to the
provisions of TEX.REV.CIV.STAT.ANN. art. 1446c (Supp. 1978) (the Act).
A second prehearing conference was held on February 12, 1980. In addition to rulings
on Objections to Requests for Information, the Commission considered and entered rulings
on the following motions:
1. Denied motion of Dorothy Lyles, et al. to require TP&L to amend its
cost of service study.
2. Denied motion of Dorothy Lyles, et al. to suspend the rule concerning
contributions.
Denied motion of Dorothy Lyles, et al. for sanctions against TP&L.
Denied motion of Dorothy Lyles, et al. to require TP&L to file
additional testimony.
Denied motion of Dorothy Lyles, et al. for an extension of time to
file rate design testimony.
Denied motions of Community Center of the Stafford-Armstrong Addition
of the City of Seagoville for an extension of time and for sanctions
against TP&L.
7. Denied motion of TIEC for the filing of rebuttal testimony.
8. Denied motion of Coalition for Fair Rates for an extension of time to
file Requests for Information.
On February 25, 1980, Geoffrey Gay on behalf of intervenor Dorothy Lyles, et al.
filed a Second Hotion for Extension of Time to File Rate Design Testimony. The Chairman
determined that no additional prebearing conference was necessary to consider such motion
and denied the motion without entry of a written Order. Mr. Phil Ricketts, Secretary of
the Commission, advised Mr. Gay of such denial.
~ cket No. 3006
. age 3
Brazes Electric Power Cooperative, Inc. filed a Protest to the Application of Texas
Power & Light Company to Change Rates.
lhe hearing on the merits was convened on March 17, 1980 at 9:00 a.m. and was
concluded on April 4, lgBO. TP&L, the Commission Staff through the General Counsel's
Office and all intervenors set forth above were represented by counsel. TP&L, the
Consnission Staff and all intervenor groups presented testimony and participated in cross-
examination. The hearing was bifurcated to the extent of considering testimony of all
witnesses related to revenue requirements and subsequently considering testimony of all
witnesses related to rate design matters. TP&L offered rebuttal testimony through two
witnesses.
At the beginning of the hearing, the Commission considered and denied a Motion to
Bifurcate the Proceeding ~iled by GSA on behalf of the Federal Executive Agencies.
After public hearing, the Commission, based upon evidence elicited at such hearing,
applicable law and matters officially noticed, makes the following Conclusion supported by
the Findings of Fact and Conclusions of Law set forth herein below:
Conclusion
Based upon the evidence in the hearing, TP&L has a test year revenue deficiency of
$83,371,920 and should be allowed to adjust its rates as provided for in this Final Order
in order to produce the required revenue to recover its cost of service and to eliminate
such deficiency. The underlying Findings of Fact and Conclusions of Law supporting this
Conclusion are as follows:
Findings of Fact
Investor Owned Utility. TP&L is an investor owned utility operating
pursuant to a Certificate of Convenience and Necessity issued by this
Commission and is subject to the jurisdiction of this Con~ission for
matters presented in this Docket.
Original Cost. The original cost of electric plant of TP&L, as of
September 30, 1979, is $2,007,887,307 as claimed by TP&L and as shown
on Staff Exhibit 6 (Ex. II, p. 2), which amount the Con~nission finds
to be reasonable. The corresponding provision for accumulated
depreciation, claimed by the Company to be $421,621,343, is reduced by
$105,797 (Staff Exhibit 6, IEx. III) for a net electric plant of
$1,586,374,761, which amount the Co~nission finds to be reasonable.
2:cket No. 3005
Page 4
Invested Capital.
which is calculated in the following manner:
Net Electric Plant in Service (FOF
Construction Work in Progress (FOF
The invested capital of TP&L is $1,735,537,0§9
Nuclear Fuel In Process
Plant Neld for Future Use
Working Capital
Accumulated Deferred Federal Income Tax
Reserve for Insurance and Casualties
Customer Deposits and Advances
Other Cost Free Capital
#2) $1,586,374,761
#4) 187,251,585
(FOF ~5) 23,896,607
(FOF ~6) 3,309,707
(FOF ~7) 52,103,323
(FOF #8) (101,409,798)
(FOF #8) (1,315,161)
(FOF #8) (7,545,860)
(FOF #8) (7,128,105)
Construction Work in Progress (CWIP). The amount of $187,251,585
allowed for CWIP consists~of approximately 41.5 percent of the cost of
all projects set forth in Schedule C-4 (as adjusted) of TP&L's rate
filing package. The Commission finds that such amount should be
allowed in the invested capital of T?&L to assure that the financial
integrity of TP&L will be maintained due to the capital intensive
nature of the electric industry and to assure its ability to attract
the necessary capital to maintain its program of construction of new
generating facilities to meet its customers' demands and to convert to
fuels which are more abundant than natural gas and fuel oil.
Nuclear Fuel In Process. The amoun~ of $23,896,607 of nuclear fuel
in process as claimed by TP&L is allowed for the reasons that nuclear
fuel must be obtained well in advance of use, and the use of such fuel
will inure to'the benefit of ratepayers in a significant way.
(Schedule C, Rate Filing Package)
Plant Held for Future Use. The amount of $3,309,707 of plant held
for future use is allowed for the reasons that such property will be
utilized for the benefit of future ratepayers and that such property
is of such a nature that it is reasonable for it to be acquired well in
advance of its use. The cost of Titus County Water Rights ($180,610)
is being excluded because there is no probative evidence that such
rights will, in fact, be used. (Staff Exhibit 6, [Ex. II, p. 3])
Working Capital. The amount of $52,103,323 is allowed for reasons
that it is the reasonable amount necessary for TP&L to meet its
ordinary and usual business needs. (Staff Exhibit 6, I Ex. II,
p. 2, 3 ]) This amount is derived by using the amount requested by
TP&L (Schedule G, Rate Filing Package) exclusive of working cash
allowance. The working cash allowance, as shown on Staff Exhibit 6
(Ex. II, p. 3 of 3), has been recomputed by reason of adjustments in
other operation and maintenance expenses. (FOF #22)
O~zket No. 3006
Page 5
Items Exc]uded From Rate Base. Items excluded from TP&L's invested
capital are: Accumulated Deferred Federal Income Taxes
($101,409,798), Reserve for Insurance and Casualties ($1,315,161),
Customer Deposits and Advances ($7,545,860), and Other Cost Free
Capital ($7,128,105). Each of these items are either provided by
customers or for which there are no related capital costs to TP&L
except for Other Cost Free Capital. The exclusion of Other Cost Free
Capital is for the reasons set forth in Staff Exhibit 6, p. 18.
Stock Ownership. TP&L is a wholly owned subsidiary of Texas
Utilities Company. Other subsidiaries of Texas Utilities Company are
Texas Electric Service Company, Dallas Power & Light Company, Texas
Utilities Fuel Company, Texas Utilities Generating Company, Texas
Utilities Services Inc., Basic Resources, Inc. and Chaco Energy
Company. Texas Utilities Company files a consolidated tax return.
10. Net Current Cost. The current cost of plant of TP&L is
$3,718,571,358 as claimed by TP&L. (Schedule E, Rate Filing Package)
Such amount is adjusted for age and condition by $1,152,855,967 for a
' ' ne~ current cost of $2,565,715,391. (Staff Exhibit 3, lex. II, p. 3])
This determination is obtained by use of the methodology outlined in
- Staff Witness Saathoff Testimony (Staff Exhibit 3) on pages 7-10.
ll.
Adjusted Value of Invested Capital.
capital of TP&L is $2,090,548,037,
manner:
The adjusted value of invested
determined in the following
Net Plant - Original Cost
(FOF # 2)
Percentage Mix
$1,566,374,761
63.75%
Net Plant - Current Cost
(FOF # 10)
Percentage Mix
$2,565,715,39l
36.25%
CWIP
Nuclear Fuel in Process
Plant Held for Future Use
Working Capital
Accumulated Deferred Federal
Reserve for Insurance and Casualties
Other Cost Free Capital
$ 1,011,313,910
930,071,829
(FOF ~4) ]87,251,585
(FOF #5) 23,896,607
(FOF #6) 3,309,707
(FOF ~7) 52,103,323
(FOF #8) (10],409,798)
(FOF #8) (],315,16l)
(FOF #8) (7,545,860)
(FOF ~8) (7,128,105)
$ 2,090,548,037
D,sket No. 3006
Page 6
12.
The percentage mixes applied to original and current cost of plant are
as shown in Staff Exhibit 5 at pages 3-5. These percentages, which
the Comnission finds to be reasonable, appropriately reflect
consideration of inflation, quality of service being provided, the
growth rate of the service area, and the need of TP&L to attract new
capital pursuant to Sec. 41(al of the Act.
Capitalization. The capitalization of TP&L at the end of the test
year, adjusted to reflect all known and measurable changes, is as
follows:
13.
14.
bo
Long term capital debt of $903,461,881 representing 44.04
percent of total capital with an embedded cost of 7.79 percent;
Preferred stock of $237,759,654 representing 11.59 percent of
total capital with an embedded cost of 7.51 percent;
Common equity of $792,074,899 representing 38.61 percent of
total capital, upon which a reasonable rate of return is 15.5
percent;
Supplemental available capital in the form of unamortized
investment tax credits of $118,041,518, representing 5.76
percent of total capital funds available, upon which a
reasonable rate of return of lO.gl percent is allowed.
Cost of Capital.
capital to TP&L is:
The adjusted capitalization and weighted cost of
Component Weighted
Percent Percentage Average
Source Amount of Total Cost Cost
Long Term Debt $ 903,461,881 44.04% 7.79% 3.43%
Preferred Stock 237,759,654 11.59% 7.51% .87%
Common Equity 792,074,899 38.61% 15.50% 5.98%
Supplemental Available
Capital-Unamortized
Investment
Tax Credits ]18,041,518 5.76% ]0.91% .63%
Total $ 2,05],33~952 ]00.00% '10.91%
Debt. The annual interest requirement on long term debt capital is
$70,351,318 representing a cost of 7.79 percent on 44.04 percent of
TP&L's capital structure resulting in a weighted average cost of 3.43
percent.
b cket No. 3006
~age ?
Preferred Stock. The annual dividend requirement on preferred stock
is $)7,852,990 representing a cost of 7.51 percent on 11.59 percent of
TP&L's capital structure resulting )n a weighted average cost of .87
percent.
16.
l?.
19.
20.
Return on Equity Capital. The annual return on equity capital of
15.5 percent on 38.61 percent of TP&L's capital structure is fair and
reasonable and is sufficient to assure confidence in the financial
integrity of TP&L so as to maintain its credit and to attract
additional cap)tal and )s comparable to returns of similar companies
having comparable risks and results in a weighted average cost of 5.98
percent.
Unamortized Investment Tax Credit. TP&L is allowed the opportunity
to earn the composite cost of capital of lO.gl percent on the
unamortized investment tax credit in the amount of $118~041,518 with a
weighted average cost of .63 percent. No reduction in rate base has
been made by this amount or for any portion of said unamortized
investment ~ax credit.
Bond Rating. The return on common equity permitted herein should
result in a pre-tax times interest coverage which will support a bond
rating for TP&L which will allow it to continue in its ability to
attract capital at the lowest ultimate cost to the ratepayer. The
amount of allowance for funds under construction as a percentage of
earnings for common equity is 18.2 percent, which the Commission finds
to be reasonable under the circumstances of this Docket.
Return on Adjusted Value of Invested Capital. A reasonable return
on the adjusted value of invested capital ts 9.06 percent. Such a
rate will not yield more than a fair return on the adjusted value of
invested capital, as required by Sec. 45(a) of the Act.
Cost of Service. The adjusted cost of service and revenue
requirement of TP&L for the test period is $896,390,039 and is
composed of tho following elements:
Fuel (FOF ~21)
Operation and Maintenance Expense (FOF 322)
Deprec)ation (FOF 323)
Federal Income Taxes (FOF #24)
Taxes other than Federal Income Taxes (FOF 325)
Interest on Customer Deposits (FOF 326)
Return on Invested Capital (FOF 327)
336,590,957
147,248,012
67,818,482
106,265,893
48,745,181
37),550
189,346,964
O-cket No. 3006
P~ge 8
21.
Fuel. An adjustment to TP&L's proposed fuel expense of $331,758,697
in the amount of 24,832,260 is found to be reasonable for the reasons
set forth in Staff Witness Blumentha]'s Testimony. (Staff Ex. 6, p.
4, 5)
22.
23.
24.
Operation and Maintenance Expense. TP&L claimed operation and
maintenance expenses in the amount of $152,074,530 (excluding fuel).
A reduction of 24,826,526 in the claimed amount is reasonable, as set
forth below, and results in an allowable total amount for operation
and maintenance expense of $147,248,012.
The adjustments required are shown on Staff Exhibit 6 (Ex. l,
page 2 of 6) except that: (a) the provision for insurance reserve
allowed shall be $528,000 rather than $264,000 as shown, and (b) the
provision for uncollectibles allowed shall be $3,002,010 rather than
$2,986,142 as shown.
Depreciation. TP&L's current composite depreciation rate is 3.50
percent and is composed of the following elements:
Gas/Oil Production Plant 3.92%
Lignite Production Plant 3.38%
Other - Production Plant 3.32%
Transmission Plant 2.43%
Distribution Plant 3.61%
General Plant 7.42%
The Company has proposed a composite depreciation rate of 3.53 percent
made up of the following elements:
Gas/Oil Production Plant 4.20%
Lignite Production Plant 3.48%
Other - Production Plant 3.32%
Transmission Plant 2.52%
Distribution Plant 3.61%
General Plant 6.69%
Staff Witness Saathoff concurred in TP&L's proposed rates except for
the rate on Distribution Plant, his recommendation being 3.60 percent
for Distribution Plant. The Commission finds an appropriate and
reasonable composite depreciation rate to be 3.52 percent using the
allocations proposed by TP&L except for the rate for Distribution
Plant being changed to 3.60 percent. (Staff Witness Saathoff
Testimony p. 3-7; TP&L Witness Cole Testimony p. 5-10)
Federal Income Taxes. The Company claimed federal income tax of
$120,339,810 is adjusted by an amount of $14,073,917 which is found to
be proper and which reflects tax effects in the cost of service of
TP&L as set forth herein.
D'~cket No. 3006
age g
25.
26.
27.
28.
30.
Taxes other than Federal Income Taxes. The Con~nission finds that an
adjustment in the amount of $302,379 should be made to TP&L's
requested amount of $49,050,560 for taxes other than federal inoome
taxes for a net amount of $40,748,181. The adjustment is proper and
results in adjustments, using methodology as shown on Staff Exhibit 6
(Ex. 1, p. 4), except for ad valorem taxes which are calculated by
using ~P&L's requested amount.
Interest on Customer Deposits. Interest on customer deposits in the
amount of $371,550 as claimed by TP&L is found to be proper.
Return on Invested Capital. A reasonable return on invested capital
of $189,346,964 is allowed TP&L in its cost of service which the
Commission finds to be fair and reasonable.
Weather Normalization. The Con~nission finds the proposed weather
normalization as proposed by TP&L is unsupportable. Sufficient doubt
was cast upon the proposal by various witnesses that the Con~nission
determines such adjustment to be unreasonable, and the TP&L proposed
a~justment for weather is denied.
· Revenue Deficiency. The revenue deficiency of TP&L for the test
year peri od is $83,371,920. The Commission finds TP&L's cost of
service (revenue requirement) of $896,390,039 will permit TP&L to
recover all of its operating expenses together with a reasonable
return on its invested capital as required by Sec. 39 of the Act.
TP&L's recovery of revenues from the fuel adjustment clause and
sources other than base rates is $335,458,950, the base rate revenue
requirement is $560,931,089, the adjusted test period base rate
revenues are $477,559,169, resulting in the revenue deficiency set
forth above.
Cost of Service Allocation. The Commission finds the cost
allocation methodology recommended by Seniors' Witness Coyle (Senior
Ex. 9, p. 25-43) to be reasonable and that the Company shall rerun its
cost of service study using such methodology except as set forth
herein. All meters and services shall be allocated as customer costs
rather than demand costs. Revenues from interchange shall be spread
among customers on the same basis that cost responsibility of those
facilities was allocated in accordance with the testimony of Staff
Witness Goble. (Staff Ex. 13, p. 10, ll).
Further, TP&L is ordered, subsequent to the effective date of the
Final Order, to make available to the Commission Staff all data and
information requested or inquired into by the Staff relative to its
cost of service and shall provide the Commission with Staff requested
cost of service studies. ,,
~ :ket No. 3006
Page 10
31.
Revenue Requirement by Customer Class. Rates of return and relative
rates of return by class shall be determined by using the methodology
outlined in Finding of Fact No. 30. It is the intent of the
£ommission that the relative rate of return of each class of customers
shall be moved one-third of the way toward unity (system rate of
return) provided, however, that no class shall receive a percentage
increase in total revenues greater than one and one-half times the
overall system percentage increase nor less than one-half times the
overall system percentage increase except as provided for herein. It
is further provided, in the case of REA, WSP, MS and MW, because by
oomparison the relative rate of return of these four classes of
customers are found to be substantially lower than other classes, that
the limitation of one and one-half times the overall system percentage
increase shall not apply and a limitation of two times the overall
system percentage increase shall apply.
Any revenue excesses or deficiencies resulting from the
limitations provided for herein shall be distributed proportionately
among the remaining classes of customers based upon revenues
authorized herein.
· Fuel Adjustment Clause. The'Con~lission finds the continuing
volatility of fuel prices requires t~at a cost of fuel adjustment be
allowed in order to protect the financial integrity of TP&L. The fuel
adjustment clause as filed in the tariff shall provide for a fuel
adjustment for the actual fuel consumed in generating each kilowatt
hour of electricity sold and for the fuel component of each kilowatt
hour of purchased power bought and resold. The Commission finds that
the fuel adjustment clause shall recognize the line loss
differentials between transmission, primary distribution and
secondary distribution groups of customers. The line loss
multipliers to be used for each group are:
Transmission 0.958
Primary 0.980
Secondary l.O17
The test year fuel adjustment revenues of each class currently
reflect the use of the system average line loss factor for all
classes. Because the application of the specifically approved line
loss differentials cited above would have resulted in different fuel
clause revenues by class in the adjusted test year, it is necessary to
adjust the fuel clause revenues by class to reflect the application of
these specific line loss factors in the fuel adjustment clause. The
clause shall include neither revenue related taxes nor gains or losses
on the sale of fuel and must otherwise comply with the Cor~nission's
Substantive Rules.
D :ket No. 3006
Page 11
33.
34.
PURPA Standards. The Commission finds that though some evidence was
presented relative to the standards set forth in Sections lll(d) and
ll4 of the Public Utility Regulatory Policies Act of 1978 (PURPA),
such evidence was insufficient upon which to make a determination
relative to such matters as anticipated by PURPA. The Corrrnission does
find, however, that the experimental Time-of-Day proposal as
submitted by the Company is acceptable and is hereby approved.
Reclassification of Customer Classes. The Staff and CPS proposed
the consolidation of REA and WP-500, and Navarro College and Hill
Junior College requested that junior colleges be "returned" to the
public school rate class. The Commission finds that neither of these
proposals are justified on the record and neither are approved. (On
REA - ~P-500: See Tex-La Brief at pages 63-66 and Rayburn Country
Brief at pages 4-1l; On junior colleges: See Staff Brief at pages 58-
35.
Rate Structure. ]n general, the rate structures proposed by TP&L
a? based on sound rate making principles and are compatible with the
rate design philosophy adopted by the Commission in earlier cases, and
such rate structures are sufficient, equitable, consistent in
application to each class of customers, are not unreasonably
preferential, prejudicial or discriminatory, and will produce the
proportionate part of the required revenues to eliminate TP&L's
revenue deficit. As a result, the final rates filed in compliance
with this Order shall be structured as originally proposed with the
~ollowing exceptions.
(al The residential rate shall contain a minimum charge of $5.00
for the first 30 kilowatt hours and a level charge per kilowatt hour
thereafter.
(b) The charge per kilowatt hour as shown in Rider RSH shall be
2¢ per kwh as calculated by Staff Witness Goble rather than 1.35¢ per
kwh as proposed by T?&L.
(c) The proposed summer-winter differential is unreasonabl~ and
is eliminated from all residential rates except that all riders as
proposed by TB&L relative to RS service are specifically approved with
the change in Rider RSH set forth in 35(b) above.
(d) The proposed increase in the demand ratchet, where
applicable, from the present level of 70 percent to 75 percent is
denied as being unreasonable and unsupportable.
Locket NO. 3006
Page 12
Conclusions of Law
Jurisdiction. The Con~ission has jurisdiction over this rate change
application pursuant to Sections 17(d), 17(el and 43 of the Public
Utility Regulatory Act, TEX.REV.CIV.STAT.ANR. art. 1446c (Supp.
1978) (the Act). The rates set herein will be applicable only to
those customers in the unincorporate~ ar~as, in tt~ose cities which
have ceded jurisdiction to the Commission, and in the cities from
which appeals have been taken and which have been consolidated within
this Pocket.
Burden of Proof. TP&L has the burden of proof to establish its
revenue deficiency under its present rates and to establish the amount
of such deficiency that will be collected under its proposed rates
pursuant to Sec. 40(b) of the Act.
Additional Revenues. TP&L proved that it is entitled to additional
annual revenues of $83,371,920.
Affected Areas. The present rates for service in the areas served
by TP&L over which this Commission has jurisdiction are insufficient
to provide TP&L with the revenues approved in this Order and should be
adjusted to conform to the rates established herein for each class of
customers.
5o
Recovery. The rates prescribed herein will allow TP&L to recover
its operating expenses together with a reasonable return on its
invested capital, pursuant to provisions of Sec. 39 of the Act.
Return. The rates prescribed herein will yield no more than a fair
.return upon the adjusted value of the invested capital used and useful
by TP&L in rendering service to the public, as provided by Sec. 40(a)
of the Act.
Pinancial Integrity. The rate of return granted herein is
sufficient to assure confidence in the financial soundness of TP&L and
is adequate, under efficient and economical management, to maintain
and support its credit and enable it to raise the money necessary for
the proper discharge of its public duties; is comparable to those
returns of other similar companies having comparable risk; and is
sufficient to assure confidence in the financial integrity of TP&[ so
as to maintain its credit and to attract capital. (Federal Power
Comnission v. Hop~ Natural Gas £ompanv, 320 U.S. 591, 88 L. Ed. 333;
and Bluefield ~ater ~orks and Improvement Co. v. Public Comnisslon of
West Virninia, 262 U.S. 679, 67 L. Ed. 1176)
Po.tket No. 3005
Y~ge 13
Rates. The £omnission has the authority and duty to set proper
rates in all instances whether such action requires increasing,
decreasing or changing the rate pattern with respect to any or all
rates contained in the proposed tariff regardless of whether the rates
in the proposed tariff are different frc~n old rates or not, and no
prior notice by the Commission to the applicant is required for such
action.
9. Rate Design. Tile rate design as set out in the Findings of Fact is
reasonable and nondiscriminatory and shall be adopted in this Order.
NOW THEREFORE, it is hereby ORDERED that TP&L shall file a revised tariff in
accordance with this opinion, the Findings of Fact and Conclusions of Law herein
sufficient to generate revenues not greater than those prescribed in this Order. The
Commission Staff shall have twenty (20) days from the date of such filing of the revised
tariff to review it for approval or rejection. The tariff shall be deemed to be approved
and shall become effective upon the expiration of twenty (20) days after filing or sooner
upon notification by the Cormnissioo Secretary. In the event of rejection, TP&L shall be
notified and a copy sent to the intervening parties herein by the Commission Secretary,
and TP&~ sha'll have fifteen (15) additional days to file an amended tariff and the same
procedure shall be repeated herein. The revised and approved rates shall be charged by
TP&L for electricity consumed after the tariff approval date and may not be charged for
electricit~ consumed prior to such date. This Order is deemed to be final on the date of
rendition. Approval of the tariff, for all purposes, shall be deemed to be final on the
date of its effectiveness either by operation of this Order or by notification by the
Corr~nission Secretary, whichever occurs first.
All motions, requests, applications and requests for Findings of Fact and Conclusions
of Law not expressly granted herein are denied for want of merit.
RENDERED AND SIGNED AT AUSTIN, TEXAS, on this the_~,~-~'_l~.day of ~ , 1980.
PUBLIC UTILITY COMMISSION OF TEXAS
SIGNED:
SIGNED:
arrett Mo~ is
ATTEST:
CO~iIqISSION SE[RETARY
AND DIREGTO~OF NEARINGS