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Item 4J CITY OF SOUTHLAKE MEMORANDUM Item 4J July 25, 2017 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Resolution No. 17-033, denying Oncor Electric Delivery Company LLC requested rate change Action Requested: Approval of Resolution No. 17-033, denying Oncor Electric Delivery Company LLC ("Oncor") requested rate change. Background Information: The City, along with over 158 other cities served by Oncor is a member of the Steering Committee of Cities Served by Oncor ("Steering Committee"). The Steering Committee has been in existence since the late 1980s. It took on a formal structure in the early 1990s when cities served by the former TXU gave up their statutory right to rate case expense reimbursement in exchange for higher franchise fee payments. Empowered by city resolutions and funded by per capita assessments, the Steering Committee has been the primary public interest advocate before the Public Utility Commission, the Courts, and the Legislature on electric utility regulation matters for the last 30 years. On March 17, 2017, Oncor filed with the City an application seeking to increase system-wide transmission and distribution rates by $317 million or approximately 7.5% over present revenues. The rate request included the following: • 0.5% increase in street lighting rates; • 11 .8% increase in residential rates. If approved, a residential customer using 1000 kWh per month would have seen a bill increase of about $6.68 per month. On April 18, 2017, City Council approved Resolution 17-021 to suspend the effective date of the rate increase to allow staff working in conjunction with the Steering Committee to evaluate the filing, determine whether the filing complies with Page 2 of 2 law and if lawful, to determine what further strategy, including settlement, to pursue. The Steering Committee engaged the services of three consultants to review Oncor's filing. The consultants identified numerous unreasonable expenses and propose significant reductions to Oncor's request. Accordingly, the Steering Committee's attorneys recommend that all members adopt the Resolution denying the rate change. Once the Resolution is adopted, Oncor will have 30 days to appeal the decision to the Public Utility Commission of Texas where the appeal will be consolidated with Oncor's filing (i.e. PUC Docket No. 46957) currently pending at the Commission. Financial Considerations: Oncor will reimburse the cities for their reasonable rate case expenses within 30 days of the adoption of this Resolution. No individual city incurs liability for payment of rate case expenses by adopting a denial resolution. Strategic Link: 132: Collaborate with select partners to implement service solutions Citizen Input/ Board Review: None required Legal Review: Lloyd Gosselink Rochelle & Townsend, P.C. prepared the resolution. Alternatives: Approve or deny resolution Supporting Documents: Resolution No. 17-033 Staff Recommendation: Approval of Resolution No. 17-033 RESOLUTION NO. 17-033 A RESOLUTION OF THE CITY OF SOUTHLAKE, TEXAS FINDING THAT ONCOR ELECTRIC DELIVERY COMPANY LLC'S ("ONCOR" OR "COMPANY") APPLICATION TO CHANGE RATES WITHIN THE CITY SHOULD BE DENIED; FINDING THAT THE CITY'S REASONABLE RATE CASE EXPENSES SHALL BE REIMBURSED BY THE COMPANY; FINDING THAT THE MEETING AT WHICH THIS RESOLUTION IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; REQUIRING NOTICE OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL. WHEREAS, the City of Southlake, Texas ("City") is an electric utility customer of Oncor Electric Delivery Company LLC ("Oncor" or "Company"), and a regulatory authority with an interest in the rates and charges of Oncor; and WHEREAS, the City is a member of the Steering Committee of Cities Served by Oncor ("Steering Committee"), a coalition of similarly situated cities served by Oncor that have joined together to efficiently and cost effectively review and respond to electric issues affecting rates charged in Oncor's service area; and WHEREAS, on or about March 17, 2017, Oncor filed with the City an application to increase system-wide transmission and distribution rates by $317 million or approximately 7.5% over present revenues. The Company asks the City to approve an 11.8% increase in residential rates and a 0.5% increase in street lighting rates; and WHEREAS, the Steering Committee is coordinating its review of Oncor's application and working with the designated attorneys and consultants to resolve issues in the Company's filing; and WHEREAS, through review of the application, the Steering Committee's consultants determined that Oncor's proposed rates are excessive; and WHEREAS, the Steering Committee's members and attorneys recommend that members deny the Application; and NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: Section 1. That the rates proposed by Oncor to be recovered through its electric rates charged to customers located within the City limits, are hereby found to be unreasonable and shall be denied. Error!Unknown document property name. 1 Section 2. That the Company shall continue to charge its existing rates to customers within the City. Section 3. That the City's reasonable rate case expenses shall be reimbursed in full by Oncor within 30 days of the adoption of this Resolution. Section 4. That it is hereby officially found and determined that the meeting at which this Resolution is passed is open to the public as required by law and the public notice of the time,place, and purpose of said meeting was given as required. Section 5. That a copy of this Resolution shall be sent to Oncor, Care of Howard Fisher, Oncor Electric Delivery Company, LLC, 1616 Woodall Rodgers Freeway, Dallas, Texas 75202 and to Thomas Brocato, Counsel to the Steering Committee, at Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725,Austin, Texas 78767-1725. PASSED AND APPROVED this day of ) 2017. Mayor ATTEST: City Secretary APPROVED AS TO FORM: City Attorney Error!Unknown document property name. 2