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Item 4HM E M O R A N D U M April 24, 2018 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Resolution No. 18-018, Denying Oncor Electric Delivery Company LLC requested rate change Action Requested: Approval of Resolution No. 18-018, 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 (“OCSC”). OCSC 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, OCSC 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 April 5, 2018, Oncor filed with the City an application seeking to increase distribution rates by over $19 million. The resolution authorizes:  City to participate with the Steering Committee of Cities Served by Oncor (OCSC) as a party in Oncor’s Distribution Cost Recover Factor filing;  the hiring of legal counsel and consultants to review the rate filing;  Oncor to reimburse Cities for reasonable rate case expenses. Financial Considerations: Legal counsel and consultants approved by OCSC will submit monthly invoices that will be forwarded to Oncor for reimbursement. Page 2 of 2 Strategic Link: B2: 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. 18-018 Staff Recommendation: Approval of Resolution No. 18-018 7630501 1 RESOLUTION NO. 18-018 A RESOLUTION OF THE CITY OF SOUTHLAKE, TEXAS FINDING THAT ONCOR ELECTRIC DELIVERY COMPANY LLC’S APPLICATION FOR APPROVAL OF A DISTRIBUTION COST RECOVERY FACTOR PURSUANT TO 16 TEX. ADMIN. CODE § 25..243 TO INCREASE DISTRIBUTION 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 (“OCSC”), a membership 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 April 5, 2018 Oncor filed with the City an Application for Approval of a Distribution Cost Recovery Factor (“DCRF”), PUC Docket No. 48231, seeking to increase electric distribution rates by approximately $19,002,177; and WHEREAS, all electric utility customers residing in the City will be impacted by this ratemaking proceeding if it is granted; and WHEREAS, Cities are coordinating its review of Oncor’s DCRF filing with designated attorneys and consultants to resolve issues in the Company’s application; and WHEREAS, Cities members and attorneys recommend that members deny the DCRF. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE C ITY OF SOUTHLAKE, TEXAS: Section 1. That the City is authorized to participate with Cities in PUC Docket No. 48231. Section 2. That subject to the right to terminate employment at any time, the City of hereby authorizes the hiring of the law firm of Lloyd Gosselink and consultants to negotiate with the Company, make recommendations to the City regarding reasonable rates, and to direct any 7630501 2 necessary administrative proceedings or court litigation associated with an appeal of this application filed with the PUC. Section 3. That the rates proposed by Oncor to be recovered through its DCRF charged to customers located within the City limits, are hereby found to be unreasonable and shall be denied. Section 4. That the Company shall continue to charge its existing rates to customers within the City. Section 5. That the City’s reasonable rate case expenses shall be reimbursed in full by Oncor within 30 days of presentation of an invoice to Oncor. Section 6. 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 7. That a copy of this Resolution shall be sent to Stephen N. Ragland, 1616 Woodall Rodgers Freeway, Dallas, Texas 75202 and to Thomas Brocato, General Counsel to the Cities, at Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767 - 1725. PASSED AND APPROVED this __________ day of ___________________, 2018. _________________________________ Mayor ATTEST: __________________________________ City Secretary APPROVED AS TO FORM: ___________________________________ City Attorney