Item 4E - MemoCITY OF
SOUTHLAKE
MEMORANDUM
May 18, 2021
To: Shana Yelverton, City Manager
From: Daniel Cortez, Director of Economic Development & Tourism
Subject: Resolution No. 21-019 — Denying Oncor Electric Delivery Company's
application for approval to amend its distribution cost recovery factor to
increase distribution rates within the City of Southlake
Action
Requested: Approval of Resolution No. 21-019, denying Oncor Electric Delivery Company's
application for approval to amend its distribution cost recovery factor to
increase distribution rates within the City of Southlake.
Background
Information: Cities have been advocating on behalf of their electricity consumers for many
years, especially at the Public Utility Commission of Texas. One of the most
important municipal coalitions currently active in electric utility cases is the
Steering Committee of Cities Served by Oncor ("OCSC"). The OCSC is an
organization of more than 156 cities in north and central Texas with residents
served by the Oncor transmission and distribution utility. These cities have
joined together to efficiently and cost effectively review and respond to electric
issues affecting rates charged in Oncor's service area in matters before the
Public Utility Commission and the courts.
The City of Southlake, with those other 156 cities, is a member of the OCSC.
The OCSC undertakes activities on behalf of its city members and their citizens
such as participation in rate cases, rulemakings, advocacy and legislative
efforts that impact utility rates and costs such as this application being filed by
Oncor.
On April 8, 2021, Oncor filed an application for approval to amend its
Distribution Cost Recovery Factor ("DCRF") to increase distribution rates with
each of the cities in their service area. In the filing, Oncor is seeking an
increase in its total distribution revenue requirement by approximately
$97,826,277. The Public Utility Commission of Texas's rules on these types of
application filings allow for cities to act on these applications within 60 days of
the filing.
The OCSC legal counsel, Lloyd Gosselink Rochelle & Townsend, P.C., has
recommended for member cities to deny this application so the OCSC can
evaluate the filing, determine whether the filing complies with the law, and if
lawful, to determine what further strategy, including settlement, to pursue.
The OCSC and its legal counsel recommend that all cities adopt a resolution
denying Oncor's application for approval to amend its DCRF to increase
distribution rates. Once a negotiated settlement agreement is reached,
resolving the 2021 application filing, a separate agreement will be drafted and
implemented.
Financial
Considerations: None
Strategic Link: This item is specifically linked to the City's Strategy Map through 132:
Collaborate with select partners to implement service solutions
Legal Review: Lloyd Gosselink Rochelle & Townsend, P.C. has reviewed this resolution
Alternatives: Deny Resolution 21-019, approving Oncor Electric Delivery Company's
application to amend its distribution cost recovery factor to increase distribution
rates within the City of Southlake without legal review or a negotiated
settlement.
Staff
Recommendation: Approval of Resolution 21-019, denying Oncor Electric Delivery Company's
application for approval to amend its distribution cost recovery factor to
increase distribution rates within the City of Southlake
Attachments: Resolution 21-019
Staff Contacts: Daniel Cortez (817) 748-8039
RESOLUTION NO. 21-019
A RESOLUTION OF THE CITY OF SOUTHLAKE, TEXAS FINDING
THAT ONCOR ELECTRIC DELIVERY COMPANY LLC'S
APPLICATION FOR APPROVAL TO AMEND ITS DISTRIBUTION
COST RECOVERY FACTOR TO INCREASE DISTRIBUTION RATES
WITHIN THE CITY SHOULD BE DENIED; AUTHORIZING
PARTICIPATION WITH THE STEERING COMMITTEE OF CITIES
SERVED BY ONCOR ("OCSC"); AUTHORIZING THE HIRING OF
LEGAL COUNSEL AND CONSULTING SERVICES; 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") with an interest in the rates and
charges of Oncor; and
WHEREAS, the Steering Committee of Cities Served by Oncor ("OCSC") is 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 in matters before the Public Utility Commission ("Commission") and the courts; and
WHEREAS, on or about April 8, 2021, Oncor filed with the Commission an Application
for Approval to Amend its Distribution Cost Recovery Factor ("DCRF"), Commission Docket
No. 51996, seeking to increase its total distribution revenue requirement by approximately
$97,826,277; and
WHEREAS, the City of Southlake will cooperate with OCSC in coordinating their
review of Oncor's DCRF filing with designated attorneys and consultants, prepare a common
response, negotiate with the Company, and direct any necessary litigation, to resolve issues
in the Company's filing; and
WHEREAS, all electric utility customers residing in the City will be impacted by this
ratemaking proceeding if Oncor's Application is granted; and
WHEREAS, working with the OCSC to review the rates charged by Oncor allows
members to accomplish more collectively than each city could do acting alone; and
WHEREAS, OCSC's members and attorneys recommend that members who have
retained original jurisdiction over electric utility rates deny Oncor's DCRF.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
SOUTHLAKE, TEXAS:
SECTION 1. That the City is authorized to participate with OCSC in Commission Docket
No. 51996.
SECTION 2. That, subject to the right to terminate employment at any time, the City of
Southlake hereby authorizes the hiring of the law firm of Lloyd Gosselink
Rochelle & Townsend, P.C. and consultants to negotiate with the Company,
make recommendations to the City regarding reasonable rates, and to direct
any necessary administrative proceedings or court litigation associated with
an appeal Oncor's DCRF application.
SECTION 3. That the rates proposed by Oncor to be recovered through its DCRF
charged to customers located within the City limits should be denied.
SECTION 4. That the Company should 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 the adoption of this Resolution, and within 30 days
of presenting monthly bills to Oncor thereafter.
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 J. Michael Sherburne, Vice
President — Regulatory, Oncor Electric Delivery Company LLC, 1616
Woodall Rodgers Freeway, Dallas, Texas 75202; to Tab R. Urbantke,
Hunton Andrews Kurth LLP, 1445 Ross Avenue, Suite 3700, Dallas, Texas
7520; and to Thomas Brocato, General Counsel to OCSC, at Lloyd
Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, TX 78767-
1725, or tbrocato@lglawfirm.com.
PASSED, APPROVED AND ADOPTED THIS 18TH DAY OF MAY, 2021.
ATTEST:
Amy Shelley, TRMC
City Secretary
John Huffman, Mayor
APPROVED AS TO FORM:
City Attorney