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Item 4C - Memo M E M O R A N D U M August 15th, 2023 To: Shana Yelverton, City Manager From: Nick Cornelius, Management Assistant, Finance Subject: Resolution No. 23-016, denying Oncor Electric Delivery Company’s application to amend its Distribution Cost Recovery Factor and update its Mobile Generation Riders Action Requested: Approval of Resolution No. 23-016, denying Oncor Electric Delivery Company’s application to amend its Distribution Cost Recovery Factor and update its Mobile Generation Riders. Background Information: Cities have been advocating on behalf of 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”), an organization of more than 156 cities in north and central Texas with residents served by the Oncor transmission and distribution utility. The City of Southlake, along with those other 156 cities, is part 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. On June 29th, 2023, Oncor filed an application with cities retaining original jurisdiction seeking to increase the company’s Distribution Cost Recovery Factor (DCRF) and update its Mobile Generation Riders by $152.78 million and $1.07 million, respectively. In accordance with the Public Utility Commission’s 60-day timeline, the OCSC is asking all cities to respond by Monday, August 28th. The OCSC and its legal counsel recommend that all cities adopt this resolution denying Oncor’s application for approval to increase the DCRF and Mobile Generation Rider rates. The OCSC will then engage the services of a utilities consultant, who will conduct discovery and review Oncor’s application for potential cost saving adjustments. Financial Considerations: None Strategic Link: This item is specifically linked to the City’s Strategy Map through B2: Collaborate with select partners to implement service solutions Legal Review: Lloyd Gosselink Rochelle & Townsend, P.C. has reviewed this resolution and recommends the City Council approve Resolution No. 23-016. Alternatives: Deny Resolution No. 23-016, denying Oncor Electric Delivery Company’s application to amend its Distribution Cost Recovery Factor and update its Mobile Generation Riders Staff Recommendation: Approve Resolution No. 23-016, denying Oncor Electric Delivery Company’s application to amend its Distribution Cost Recovery Factor and update its Mobile Generation Riders. Attachments: Resolution 23-016 Staff Contacts: Nick Cornelius (817) 748-8286 3 RESOLUTION NO. 23-016 A RESOLUTION OF THE CITY OF SOUTHLAKE, TEXAS FINDING THAT ONCOR ELECTRIC DELIVERY COMPANY LLC’S APPLICATION TO AMEND ITS DISTRIBUTION COST RECOVERY FACTOR AND UPDATE GENERATION RIDERS TO INCREASE DISTRIBUTION RATES WITHIN THE CITY SHOULD BE DENIED; AUTHORIZING PARTICIPATION WITH THE STEERING COMMITTEE OF CITIES SERVED BY ONCOR; AUTHORIZING HIRING OF LEGAL COUNSEL; 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 June 29, 2023, Oncor filed with the City an Application to Amend its Distribution Cost Recovery Factor and Update Mobile Generation Riders, PUC Docket No. 55190, seeking to increase electric distribution rates by approximately $152.78 million and update Oncor’s Rider Mobile Generation and Rider Wholesale Mobile Generation to recover $1.07 million related to mobile generation facilities; and WHEREAS, all electric utility customers residing in the City will be impacted by this ratemaking proceeding if it is granted; and WHEREAS, OCSC is coordinating its review of Oncor’s DCRF filing with designated attorneys and consultants to resolve issues in the Company’s application; and WHEREAS, OCSC members and attorneys recommend that members deny the DCRF. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: 4 Section 1. That the City is authorized to participate with Cities in PUC Docket No. 55190. Section 2. That subject to the right to terminate employment at any time, the City 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 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 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 75202; and to Thomas L. Brocato, General Counsel to OCSC, at Lloyd Gosselink Rochelle & Townsend, 816 Congress Ave., Suite 1900, Austin, Texas 78701. PASSED AND APPROVED this 15th day of August, 2023. _________________________________ John Huffman, Mayor ATTEST: __________________________________ Amy Shelley, TRMC City Secretary APPROVED AS TO FORM: ___________________________________ City Attorney