0857O.,,NANCENO. OFFICIAL RECORD
AN ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS, DENYING TXU GAS COMPANY'S
REQUEST TO CHANGE RATES IN THIS MUNICIPALITY, AS A PART OF THE COMPANY'S
STATEWIDE GAS UTILITY SYSTEM; PROVIDING A REQUIREMENT FOR A PROMPT
REIMBURSEMENT OF COSTS INCURRED BY THE CITY; FINDING THAT THE MEETING AT
WHICIt THIS ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW;
AND PROVIDING FOR NOTICE OF THIS ORDINANCE TO TXU GAS COMPANY
WHEREAS, on or about May 23, 2003, TXU Gas Company (the "Company") filed with the City of Southlake
("Cily'), a Statement of Intent to change gas rates in ail municipalities within the Company's statewide gas utility system
el'fective June 27, 2003;
WHEREAS, the City has previoosly extended the effective date of the Company's rate filing;
WHEREAS, the City has exclusive original jurisdiction to evaluate the Company's Statement of Intent as it pertains to
the distribution fi~cilities located within the City, pursuant to Texas Utilities Code §§ 102.001 (b) and 103.001;
WHEREAS, the Texas Utilities Code § 103.022 provides that costs incurred by the City in ratemaking activities are to
be reimbursed by the regulated otility;
WHEREAS, the City is participating with a coalition of over 120 other Cities in opposition to the Company's filing at
the Railroad Commission, said coalition being known as Allied Coalition of Cities ("ACC"), in GUD No. 9400 pending at the
Commission;
W:IEREAS, ACC and the Company have reached a procedural agreement regarding the schedule for processing GUD
No. 9400 that includes TXU's concession to allow one hundred fifteen (115) additional days to process the rate case and ACC's
commitment that member Cities expedite the process of getting city action appealed to the Commission;
WHEREAS, ACC and TXU jointly endorse the City's denial of the Company's rate application pending before the
City;
WHEREAS, counsel for ACC, upon review of the Company's filing and upon consultation with various consultants,
recommends findings that the Company's proposal is unjustified and unreasonable; and
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS:
SECTION 1. The Company's Statement of Intent to change gas rates within the City, as part of the Company's
statewide gas utility system, is found to be nnreasonable because: (a) TXU's requested return on equity is excessive, generating
more than 86% of the requested increase in rates; (b) the basis for TXU's proposed consolidations (of regional distribution
systems and of pipeline costs with distribution costs) has not been established; (c) the City's jurisdiction to increase pipeline
rates has not been established and, therefore, the proposed pipeline cost increases should be disallowed; (d) revenue
requirements should be reduced rather than increased; and (e) the TXU filing should be denied pursuant to agreement with the
Company; and is therefore denied in all respects.
SECTION 2. The costs incurred by the City in reviewing the Company's application be promptly reimbursed by the
Company.
SECTION 3. This Ordinance shall become effective immediately from and after its passage, as the law and charter in
such cascs provide.
SECTION 4. That it is hereby officially found and determined that the meeting at which this Ordinance is passed is
open to the public as required by law and that public notice of the time, place and purpose of said meeting was given as
requircd.
SECTION 5. A copy of this ordinance, constituting final action on the Company's application, be forwarded to the
appropriate designated representative of the Company within 10 days as follows: Autry L. Warren, Director Gas Regulatory,
TXU Bnsiness Services, 1601 Bryan Street, Dallas, Texas 75201-3402.
DULY PASSED and approved on first reading by the City Council of the City of Southlake, Texas, on this the
day offs, ~hp£, 2003.
APPROVED:
Andy Wambsganss, Mayor
,,'~
%. ........
ATTEST:
Lori Farwell, City Secretary
DULY PASSED and approved on second reading by the City Council of the City of Southlake, Texas, on this the
_ '/+lq clay of ~JEIqgC_, 2003.
APPROVED:
City Attorney
Andy Wambsganss, Mayor
ATTEST:
. . % ...... ,,,.
Lon Farwe]l, Cl~ Secretary
PROPOSED FINDINGS SUPPORTING DENIAL OF TXU'S
REQUEST TO INCREASE RATES FOIl NATURAL GAS
I. TXU's requested return on equity is unreasonable. By far, thc largest cost component of the Company's
rcqnest £or a rate increase is associated with rate of return on equity. At a time when interest rates are at the lowest point in
decades and investors' expectations for return oo investment are the lowest in many years, TXU proposes to increase its return
dollars fi'om gas operations by $60,255,075 (86.7 percent of the total rate increase). Such request is irrational in light of
national economic conditions and outrageous in light of the fact that TXU Corporation recently wrote offmore than $4 billion
in shareholder equity related to poor or imprudent management of European Operations. Any increase in current return dollars
is unjustified.
2. The basis for proposed consolidation has not been established. The Company's filing fails to prove that it
is reasonable and necessary to incorporate the pipeline cost of service into the distribution cost of service and to consolidate
various regional distribution systems into a single statewide system.
3. The City's jurisdiction to increase pipeline rates has not been established and, therefore, the proposed
pipeline cost increase should be disallowed. The Railroad Commission has always exercised exclusive original jurisdiction
over pipeline costs, while municipalities have exclusive original jurisdiction over gas distribution rates. With this filing, TXU
has incorporated pipeline costs in excess of those previously approved by the Commission into the proposed distribution rate to
be considered by the City, and all such pipeline costs should be disallowed.
4. Revenue requirements should be reduced rather than increased. Cities have provided consistent and
more than fair rate relief to TXU over the past five years. This case should be thoroughly reviewed at the Railroad Commission
fi'om the perspective that current revenue requirements are excessive and that revenues should be reduced rather than increased
by $70 million as proposed by TXU. The proposed consolidations should result in cost savings, not cost increases.
5. The TXU filing should be denied pursoant to agreement with the Company. Cities and TXU have
reached a procedural agreement for development of a thorough rate hearing and consideration by the Railroad Commission.
That agreement calls for TXU to extend Commission jurisdiction from 185 days to 300 days in exchange for Cities taking
prompt action at the local level to allow perfection of all appeals before development of the case commences at the
Commission.
INVOICE
Star-Telegram Customer ID: CIT57
400 W.7th Street Invoice Number: 233190271
FORT WORTH,TX 76102
(817)390-7761 Invoice Date: 10/10/03
Federal Tax ID 22-3148254 Terms: Net due in 21 days
Due Date: 10/31/03
Bill To: PO Number:
CITY OF SOUTHLAKE
1400 MAIN ST Order Number: 23319027
STE 440 Sales Rep: 073
SOUTHLAKE, TX 76092-7604 Description: CITY OF SOUTHLA
Publication Date: 10/10/03
ow
CITY OF SOUTHLAKE ORDINANCF NO CR0 1 43 43 LINE $6.77 S291.10
CITI
SOU HLOAKE
ORDINANCE NO.
Sales Discount AN ORDINANCE OF ($256.27)
THE CITY OF
SOUTHLAKE, TEX-
AS, DENYING TXU
REQGAS UEST T COMPANY'OS
CHANGE RATES IN THIS MUNICIPALI-
Net Amount: $34.83
A PART OF
THE COMPANY'S
STATEWIDE GAS
UTILITY SYSTEM;
PROVIDING A RE-
QUIREMENT FOR A
PROMPT REIM-
BURSEMENT OF
COSTS INCURRED,
FY INDING THATCTHE
MEETING AT WHICH
THIS ORDINANCE IS
PASSED IS OPEN TO
THE PUBLIC AS
REANDU�R PROVID BY DING
FOR NOTICE OF
THIS ORDINANCE
TO TXU GAS COM-
PANY.
PASSED AND AP-
FROVED THIS THE
7th DAY OF OCTO-
THE STATE OF TEXAS gER,REG 2003ULAR C DURING
THE ITY
County of Tarrant COUNCIL MEETING.
MAYOR: Andy
Wambsganss
ATTEST: Lori Farwell,
Before me,a Notary Public in and I city Secretary.___ this day personally appeared KAREN WILLIAMS, Bid and Legal Coordinator
for the Star-Telegram, published by the Star-Telegram, Inc. at Fort Worth, in Tarrant County, Texas;and who,after being duly sworn, did depose and say
that the attached clipping of an advertisement was published in the above named paper/internet on the listed dates: BIDS 8L LEGALS DEPT. STAR
TELEGRAM
(817) 390-7182. Signed K Laka . U
SUBSCRIBED AND SWORN TO BEFORE ME, THIS Friday,Octob 1 , 2 3.
Notary Public t49Y121141a4e--1-,
Thank You For Your Payment CHRISTY L.HOLLAND
'*1 MY COMMISSION EXPIRES
''1 rr�'` JULY 31,2004
Remit To: Star-Telegram Customer ID: CIT57
P.O. Box 901051 Customer Name: CITY OF SOUTHLAKE
FORT WORTH, TX 76101-2051 Invoice Number: 233190271
Invoice Amount: $34.83
PO Number:
Amount Enclosed: $
INVOICE
Star-Telegram Customer ID: CIT57
400 W.7th Street Invoice Number: 232417181
FORT WORTH,TX 76102
(817)390-7761 Invoice Date: 9/21/03
Federal Tax ID 22-3148254 Terms: Net due in 21 days
Due Date: 9/30/03
Bill To: PO Number:
CITY OF SOUTHLAKE
1400 MAIN ST Order Number: 23241718
STE 440 Sales Rep: 073
SOUTHLAKE, TX 76092-7604 Description: CITY OF SOUTHLA
Publication Date: 9/21/03
Description f ''f" °cation, Col :. Depth Linage MU Rate amount
CITY OF SOUTHLAKE Noti CITY OF OUTHLAKE 80 1 56 56 LINE $0.00
Notice Is hereby given
by the C CityCouncil of
Misc Fee the City o Southlake, $75.04
Texas, that a public
ho nOncgo bwar'
b 2003
at 6:00 p.m. or im-
mediately following
the. Work Session,
during the Regular
City b
Council Meeting
tNet Amount: $75.04
to e held in the City
Council Chambers of
Town Hall,1400 Main
Street, Southlake,
Texas.,Purpose of the
public hearing is to
considerng ofethecfoll--
lowingg ordinance:
ORDINA857E NO.
qT E RDICITYCE OOF
F
SOUTHLAKE, TEX-
ASDENYING TXU
G 'S COMPANY'S
r g III]
REQUEST �� �� LC V CHANG RATES IN li�
1E, B
THIS MUNICIPALI-
TY{ AS APART OF
STATEWIDE PA GAS !�
UTILITY SYSTEM. U J 2 7 2003
PROVIDING A RE-•
OCTl�
THE STATE OF TEXAS QUIREMENT FOR A
PRO PT REIM-
BURSEMENT OF
County of Tarrant COSTS INCURRED
BY THE CITY
FINDING THAT THE OFFICE OF CITY SECRETARY
Before me,a Notary Public in and r-r-3TORDINANCE its te,this day
PASSEDISOPENTO personally appeared KAREN WILLIAMS; Bid air '
for the Star-Telegram, published b! THE PUBLIC As .at Fort Worth, in Tarrant County,Texas; and who,after being duly sworn, did depose and say
that the attached clipping of an ad' ANOUIREPRovibDlANd d in the above named paper/Internet on the listed dates: BIDS 8z LEGALS DEPT. STAR
TELEGRAM FOR NOTICE OF
THIS ORDINANCE
(817) 390-7182. TO TXU GAS COM-
PANY. /1 1 \) j. \
City of Southlake \LCKA_I
J V �vLon Farwell
nit,/ Secretary JI e `
SUBSCRIBED AND SWORN TO BEFORE ME, THIS Tuesday,October 4 2003. /
i L '
Notary Public i A,_ „/ /'
, , dix j
b� - CHRISTY L.HOLLAND
Thank You For Your Payment 1*, MY COMMISSION EXPIRES
Remit To: Star-Telegram Customer ID: CIT57
P.O. Box 901051 Customer Name: CITY OF SOUTHLAKE
FORT WORTH, TX 76101-2051 Invoice Number: 232417181
Invoice Amount: $75.04
PO Number:
Amount Enclosed: $