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1981-03-17 CITY OF SOUTHLAKE 667 North Carroll Avenue Southlake, Texas REGULAR CITY COUNCIL MEETING March 17,1981 7:30 p.m. AGENDA 1. Mayors Report 2. Discussion: Texas Power and Light Company, request for Rate Increase. Mike McKinney. 3. Consider: Park Project and New Resolution No. 81-6 4. Discussion: Water Service. W.N. Ratcliff 5. Discussion: Problem with Southlake's Zip Code Eleanor Kasper 6. Department Reports: Fire: Approval to purchase fire extinguishers. Water: Police: Building: Court: 7. Bills for Approval I hereby certify that the above agenda was posted on the bulletin board and on the front door in city hall, 667 North Carroll Avenue, Southlake, Texas, on Friday, March 13,1981 at 1 p.m. City Secretary CITY OF SOUTHLAKE, TEXAS • arm no -3 to r`nn MINUTES OF THE REGULAR CITY COUNCIL z d d MEETING. d z 9 ITJ DATE: March 17,1981 to r~ rn c~ o TIME: 7:30 p.m. tz~ H PLACE: CITY OF SOUTHLAKE, COUNCIL CHAMBERS 3 0 667 NORTH CARROLL AVENUE, SOUTHLAKE NAME OF o o TEXAS. COUNCILPERSON z z PAGE: 1 INDEX COUNCILPERSONS PRESENT: Mayor; Pat Hawk, Mayor Pro Tem; Sam Sparger, Councilpersons: Modine Stricker, AC Urbanosky, Shari Massey. COUNCILPERSON ABSENT: Lloyd Latta CITY STAFF PRESENT: Police Chief; Daymond Gaddy, Fire Chief; Bob Steele, Water Superintendent; Wallace Cline. PARKS COMMISSIONERS: Robert Wood, Freddie Cate. INVOCATION: Sam Sparger The Minutes of the March 3,1981, meeting were approved as presented. MAYORS REt'ORT : Mayor Hawk read facts as presented LONE by Lone Star Gas Company in an effort STAR to inform Council of their request GAS CO. for a rate increase. Mayor set a public hearing date for April 7,1981. The adjusted rates mentioned were approved by both Grapevine and Westlake. Mike McKinney from Texas Power and TP & L Light Company made a presentation PRESENTA` requesting a 25.2% rate increase for TION. their electric service. He indicat- ed that the request is a system wide increase and that the last increase was granted in June 1980. Robert Wood, a member of the Southlak Parks Commission addressed the Council concerning the possible funding of a new ball field. He presented costs of materials which are apart of the minutes.(Attached hereto and made a part hereof). ~ o o CITY OF SOUTHLAKE, TEXAS o ~A MINUTES OF THE REGULAR CITY COUNCIL z 9 d d MEETING, z v ITI DATE: March 17,1981 d d ° TIME: 7:30 p.m. 0 o z PLACE: CITY OF SOUTHLAKE, COUNCIL CHAMBERS Cn 667 NORTH CARROLL AVENUE, SOUTHLAKE NAME OF o z TEXAS. COUNCILPERSON PAGE: 2 INDEX Sparger x x Mr. Wood indicated the ball field wil BALL FIELI Stricker x x also serve as a soccer and football #2 Urbanosky x field as well as baseball. The gradi gAPPROVED Massey x of the field was donated by James B. Arnold. After discussion, Mayor Hawk recommen - ed to Council that the expenditure be approved in the amount of $5,000. Completion date for field #2, is May 5,1981, as announced by Mr. Wood,.project manager. W.N. Ratcliff, whose place of busines WATER is located on Highway 114 in Southlak SERVICE addressed Council concerned about REQUEST his request for water service made to the City in January 1981, that had been denied. Mr. Ratcliff indicated the property in question is located on East Continental Blvd, in the City of Southlake's extraterritorial jurisdiction. He reminded Council that his findings were that the property-is in Southlake's water district, as described in our ' Certificate of Necessity and Conven- ience from the PUC #10101. Mayor Hawk indicated to Ratcliff that he would review the request and notify him in writing within one week, giving an answer. A Citizen, Eleanor Kasper, of 7S0 N. White Chapel Road, asked for Council support as she attempts to help solve Southlake's Zip Code problem. She strongly feels that if not addressed soon, Southlake will loose its identity. A strong indication was given that Council would work with Ms. Kasper on this. s CITY OF SOUTHLAKE, TEXAS d ~ REGULAR M 0 Iq MINUTES OF THE CITY COUNCIL z Y d d MEETING. x z DATE: March 17,1981 d rri n 0 7:30 p.m. TIME: H PLACE: CITY OF SOUTHLAKE, COUNCIL CHAMBERS 0 0 Cn 667 NORTH CARROLL AVENUE, SOUTHLAKE NAME OF 0 0 TEXAS, COUNCILPERSON z z PAGE: 3 INDEX Department Reports: Chief Steel reported that the annual fish fry held March 2, was a success. 750 persons were served and a profit of $3,400. was made. Sparger x x Approval was given on the recommenda- Stricker+ x x tion of Councilperson Stricker, for Urbanosky x the purchase of two fire extinguisher Massey x for a cost of $50. each or less. Sparger x x Authorization was given to the Water Stricker x Department for a school for the water Urbanosky x x worker, at a cost of $40. ssey x Sparger x Harold Knight, chairman of the Sewer Stricker x Committee requested Council purchase Urbanosky x x three (3) signs advertising the Nutt Massey x x Shell System that was installed in the Dove Estates Area. The cost is $287.50 for the signs. Approval was given. The bills presented, were approved for payment. (Attached hereto and mad a part hereof). The meeting wa journed by ay r Hawk. j Mayor ATTE T: City Secretary CITY OF SOUTHLAKE BILLS FOR APPROVAL CITY COUNCIL MEETING MARCH 17,1981 TO WHOM FOR AMOUNT Texas Power and Light Co. Water 1,801.21 Texas Power and Light Co. Municipal buildings 284.68 Pitney Bowes Maintenance agreement 301.25 IBM Lease on machine 126.00 The Banner Quick Print Ballots 51.82 Regional Office Supply 5.40 n E.L. White Office Supply 67.12 The Wicks Corp. Misc. 48.76 Fort Worth Star Telegram Legal notices 62.99 Gulf Oil Corp. 1,112.64 Smith, Smith and Rake Extra legal 707.00 Professional Appraisal Co. Title reports 90.00 Grapevine Auto Parts 7.43 Jordan Bell Co. Repairs to A/C Unit 69.40 Village Grocery Store 5.90 North Star Laboratories Samples 67.50 Burroughs Corp. Maintenance Agreement 11%107.00 Aqua Utiltiy,Inc. 672.14 TOTAL: $ 6,588.24 C' lest 'ire .r - e Ater;?ber 30, 1 ?78 -June 30 , 1")30 - 21 months rroposed date late 2.1102 -resent Gate wale 1.923 ca rroposecj Increase I eveirue >20, 3` 1 rercent -ncrc;ase '.ecuested x.73; ~f Lnir er gFPlwo:w W04 e- sinter 49 rresent hate 2.1!913 2.7448 rro_>osed 'gate 2.9176 a-81 ~p 3.1676 04 10 ncre~~se .I~227, ~ less Cate pate Correction -.1364 ,.31 -.1864 /8 •f3J4 .2(D4 .~.Z9 Customer Chc rye 1-resent _ro;)oseci yes Ld.,n4„ i--u:_ 0j 3 . ?r , Commercial 6.00 7.u0 'resent _'-at^c o' E3tlrn 11dj'15tE3d 'Ta 1ue 5.`-7; rropose(i to o:C Ret.sn ".."justed Value .7? Last rate Cc.se 'Iles '-Y)ril 2", _l.'-)79 Date r~rovea .'.uC, st 21, l'>?? t0 the I1 1i8.rCi1 3r u:C'~e,4LnE; `.'assea a v.~ increase in reven;l.e a- ory_iOSeQ ~ 9.78;,' revue, tec.. Gistea plec:.sf3 L l ~'t"!l C ct it :.Tmld 'lavF O" -11 C _tiu&. ,evenue yncreased evemac Increase 'raposed ura ovine '_ate Grapevine 32,6'34 55,545 outhlaI e 20, u 31 ~1 G, 036 estla"He 11 F c 6 7 uZ,2 ,311 ,131 777 ,~GZI ~~-~GCJ CITY UP SOUTHLAKE STATUS OF BICENTENNIAL PARK- PROJECT NUMBER 48-00417 a The grant has been extended until December 1,1981. The grant is a SO% reimbursement grant, total amount of $ 103,996.00. Possible reimbursement to the City of Southlake is $51,998.00. So far, we have received $ 10,995.00. Items covered under the grant include: 1 lighted ballfield foot bridge picnic units tennis courts landscaping permanent sign for the park Items which are prepared to be submitted to the Department of Parks and Wildlife at this time are: Project: Lighted Ballfield Texas Power and Light Company 2,666.78 Wicks 84.63 Robert Woods (misc.expenses) 64.07 Watson Electric 7,393.75 Hurricane Fence Company 3,438.00 Total 13,647.23 Other: James Skinner (percolation test) 100.00 Chem Can Company (rental) 592.19 Total 692.19 TOTAL,...... 14,289.42 nra h.eta L,eGrand CitydSec ry March 17,1981 March 13, 1981 To: The Honorable Mayor & Council - City of Southlake Re: Estimated Cost for Completion of Second Baseball Field at Park Site and Completion of Bathroom Facilities. I. New Baseball Field A. Grading of Land - -0- B. Backstop $ Dugout Area - $1700. C. Lighting of Field - $2100. II. Completion of Restrooms and Concession area of Existing Baseball Field A. Bathroom Facilities - $500. B. Septic Tank System - $700. Total Estimated Cost: $5000. Note: The above estimates are based on volunteer labor. III. Estimated Revenue (reimbursement) from State of Texas Parks and Wildlife Department A. Total amount of expenditures to be submitted to State of Texas (Based on 100% Reimbursement): $14,500. B. Realistic return that should be received from State: $6,000. - $9,000. 1 2 Comments: The first baseball field and concession area were constructed in 1980 at an estimated cost of approximately $12,500. The City had received approximately $11,000. from the State for improvements to our Park. A conservative estimate of replacing the baseball field and concession area at current replacement costs today would be in excess of $125,000. Res ectfullyy~Su/b-mitted, Robert A. Wood Park Board City of Southlake, Texas WATER DEPARTMENT REPORT MONTH OF FEBRUARY 1981 Gallons Pumped Previous Month 7,505.2 Gallons Sold Previous Month 6,14 1.0 New Water Taps Installed 5-3/4" - 1.1" - 1.2" Fire Hydrants Installed 1 Meter Change Out 5 Machine Rental $710.00 Other Repairs Repaired Elvated Tank t ~ i Water Superintendant 00 a. cr x Q w ZD F - LY 00 ^ w W J O z CD z cn O c U- O W W Ll = > --C f - z t. O U-1 u_ C> 7 '-i Z ~ O F- L~ Y_ U cDt' ? LLI F- J F- t) ~ F- rJ ~ cr_ v W- O J 00 CD c_~ ~L rn a r Q J Iii Z J = z 00 C) Z C~ Q O 7- c Z F- O U z w 7 LU CD co F- p Cr ::D Q F LL Ul G] TO: HONORABLE MAYOR AND CITY COUNCIL PERSONS SUBJECT: Southlake Fire Department Monthly Report for the Month of F~bruary, A. Responses: Number of calls 1. Structure Fires 2. Grass Fires_____ 2 3. Auto & Truck Fires 4. Auto or Truck Accident - Stand-by (Fire & Rescue Unit) 3 0 5. Mutual-Aid for City of Grapevine------------------------------------- 6. Mutual Aid for City of Colleyville----------------------------------- 0 l 7. Mutual-Aid for City of Keller---------------------------------------- 0 8. Mutual-Aid to other Cities 0 9. Calls in Tarrant County (outside city limits) 2 10. Calls in Denton County (outside city limits)_________________________ 0 11. False Alarms in City------------------------------------------------- 0 12. Rescue Unit Calls---------------------------------------------------- 5 A. Patient low B/P Faintinq Spell - 307 Southlake Rlvd. B. Possible hip fracture 1029 E Continental (Barlett Residence) C. Roberts Residence, Patient sick - 2400 Crooked Lane D. Subject fell from horse - 100 Blk S. Carroll Ave. E. Possible Head injury - 2525 Lonesome Dove Rd. 13. Miscellaneous -------------------------------------------------------1 A. Water Vac call - N. White Chapel Road, Wooden Residence 1.4. Trophy Club Calls --------------------------0 B. Total Emergency Calls for the Month of 15 C. Man Hours Expended: Number of Hours _ 84 1. On Emergency Calls - - - - - - - - - Y - _ - _15 men 120 2. Meetings (4 for Month) Average Men Per Meeting C A clads 320 3. Special Training Sessions or Drills E-f•-- F Maint. time 0 4. Any Extra Man Hrs. on Maintenance (other than normal February_1L81 524 D. Total Man {lours Expended for Month E. Firefighters Responding and Number of Times Responding for Month----- Chief Steele 12 Asst. Chief Bradley 5 Capt. Brown 10 Lt. Fuller 10 Lt. Jones 6 J. Joyce 5 R. Stacey 9 D. Brown 6 D. Barnes 5 J. Walsh 7 R McCoy 2 B. Dinsmore 3 J. Sullivan 2 L. Russell 6 B. Tanner 8 J. Vann 2 N. Wooden 2 Bobby Jones 2 B. Roper 1 R. Martin 2 Res 1) S.f4e6 bmi ted, P ,~S t, ~ Fire Chief SOUTIiLAKE FIRE DEPARTMENT wr rr AV0 "m SUMMARY OF RATE INCREASE PROPOSAL Am m Im TEXAS POWER & LIGHT COMPANY I. 1981 ~r do Id Is INTRODUCTION The major reasons Texas Power & Light Company must seek rate relief at this time include: the spiraling cost of fuel; a construction program based on providing for growing peak demand requirements and to reduce dependence on expensive natural gas; increased government regulation, continued dou- ble-digit inflation, and the importance of attracting investment to a capital-intensive company. In the following pages, these reasons are more thoroughly explained and additional information is provided. The data for this request is based on a test year ending December 31, 1980. Accordingly, Texas Power & Light is requesting $198 mil- lion in additional revenue, a 20.3% overall increase in total revenue dollars. For the average residential customer using 1012 kilowatt hours per month, this amounts to an increase of approximately $12.35 to the monthly bill. Approval of this request will help insure that TP&L can continue to provide quality service to its customers. x N CONTENTS REASONS FOR RATE RELIEF REQUEST Quality of Service 3 Financial Strength 4 Construction Program 6 Inflation 10 Government Regulation 11 *k w .F .p aw aw w QUALITY OF SERVICE TP&L has a commitment to serve its customers with reliable, abundant TOTAL EMPLOYEES COMPARED electric power at a reasonable cost. TO TOTAL CUSTOMERS Reflecting that commitment, the 1980 company reliability index was 700,000 .999928 which means each of our customers were without power on an 600,000 average of less than 3 minutes per month. When ice, wind, rain or extreme CUSTOMERS 500,000 heat interrupts service, TP&L em- ployees work until service is restored, regardless of the time or the weather. 1400,000 Service and maintenance programs are reviewed constantly to determine EMPLOYEES 4,000 areas that can be improved, and TP&L is proud that its own standards 2,000 are generally much more stringent I all 0 than the requirements of governmen- 1971 '72 '73 '74 '75 '76 '77 '78 '79 1980 tal authorities. The Company's continuing inspec- tion and preventive maintenance siastic about the availability of in- Therefore, TP&L has minimized programs help minimize interruptions formation on conservation and the the price of electricity to its custom- of electrical service. Company's emphasis on its own effi- ers, and since 1975, the estimated Inspections are made on distribu- cient management. savings to customers from burning tion and transmission lines and poles lignite instead of natural gas is $375 on a regular basis. Load and voltage Savings to Customers million. checks are made constantly through- During the 1980's, TP&L will con- out the system on all types of equip- During the 1970's, the Company tinue to build to meet load growth of ment to avoid potential trouble spots built lignite power plants to take over the system. This growth will be with overloads or low voltage condi- the base load being served with natu- served with coal and nuclear power, a tions. ral gas. These new plants also served continuation of the commitment to- Five dispatching centers are new load as it developed in the TP&L ward becoming less dependent on manned 24 hours a day to monitor and service area. natural gas. control the operation of generating plants, transmission, switching sta- tions and distribution substations. ESTIMATED NET SAVINGS . Practically all major substations are Lignite Coal vs. Natural Gas equipped with remote control equip- ment in order to gather information (Since 1975) vital to the control of the system net- 400 ` work. The remote control equipment '4$375.2 also aids operators in quickly restor- Million ing service in the event of an interrup- 300 TOTAL tion. ,.o..:•.; NET TP&L is serving more customers SAVINGS today with fewer employees per cus- tomer than the Company did ten years rY:>:>.::::•<•.<•>.:•'.. 200 is ratio to employee ago; the customer •:i~:i:.{ .:..v::::: is still among one of the best in the elec- tric Lit:::'ri;v::: utility industry. A survey conducted among 100 the indicated that in 1980 customers with com- vast pleased pany performance are majority and the value of . service. Customers find the consumer services very helpful and are enthu- 75 76 77 78 79 80 3 FINANCIAL STRENGTH TP&Us ability to provide the cus- have confidence in the Company's Return on Common Equity tomer with reliable service at a ability to earn a satisfactory return on reasonable cost is directly dependent investment. A financially healthy Return on common equity is an ex- upon the Company's financial health. Company can borrow at lower interest tremely important indicator used by It is extremely important for TP&L rates and more easily attract capital. an investor to measure financial to maintain its good credit rating. The Present rates are inadequate to meet strength. It is the amount earned on an high credit rating has afforded the these costs of providing service. investor's common stock ownership Company's flexibility in its planning And, projections based on the best in a Company. A stock must compete P. for the future. available data, indicate that without a for investor dollars with stocks of The Company's financial flexibility rate adjustment TP&Us revenues will thousands of other industries. The and strength played a significant role fall below the necessary level to main- stock of Texas Utilities does not com- in its ability to utilize lignite fueled tain the reasonable financial strength pare favorably according to current generation in place of high-cost natu- of the Company. standards used by investors. As a re- • ral gas fueled generation saving cus- sult, the last two issues of Texas Utili- tomers $375.2 million since 1975 ties stock sold for a price lower than through 1980. Financial Condition actual book value. When this happens At times, the market has shown re- of the Company it dilutes the value of the holdings of luctance to absorb utility offerings but thousands of investors. TP&Us excellent credit rating gave As a result of the Company's fuel When stock continues to sell for the Company unrestricted access to conversion program, a highly suc- less than book value, it obviously be- the markets at lower costs and under cessful plan to utilize lignite fuel and comes less attractive as an invest- reasonable terms. reduce dependence on high-cost natu- ment. Then the Company must sell TP&L is a capital-intensive indus- ral gas, plant investment has more more stock to get the required dollars. try. It is necessary for the Company to than doubled in 10 years. This has ex- Dividends must be paid on these addi- attract enormous amounts of money erted a great degree of pressure upon tional shares. It is a vicious circle from outside sources to meet con- the Company's financial position. steadily undermining the financial struction needs. These funds are TP&Us total electric plant has in- health of the Company and resulting obtained by selling bonds and pre- creased from $760 million to over $3 in higher costs in attracting necessary ferred stock to outside investors and billion at the end of 1980. Since the capital. These higher costs to the AW common stock to Texas Utilities, the majority of these dollars were spent Company eventually create higher ' parent company of TP&L. Those who for conversion, the Company was not costs to the customer. provide money by buying TP&L able to generate enough funds For this reason, TP&L is asking for bonds and Texas Utilities stock must internally. 173/a% as the minimum return neces- sary on common stock equity. TEXAS UTILITIES Overall Cost of Capital MARKET AND BOOK PRICES ON LAST THREE ISSUES OF COMMON STOCK Cost of capital is a major consid- eration that effects the authorized re- turn and the Company's ability to actually earn that return. Being $20.00 $20.17 $20.45 granted a rate of return by the Public $19.18 $19.50 Utility Commission does not guaran- tee that the Company will earn that $15.50 return. s When a Company is faced with a $400 million per year construction program, it is going to have to raise Market Book Market Book Market Book significant amounts of capital from " external sources. It,. Construction funds come from two general sources: money available w. from Company operations (internal funds) and money raised outside the Company (external funds). MARCH JANUARY MARCH Internally generated funds cannot 1978 1979 1980 provide all the money necessary to 4 w carry out expensive power plant con- pense attrition. These types of attri- year levels during the period rates are struction. So the rest of the funds tion practically assure that the Com- in effect. Inflation increases the needed for construction must be pany will be unable to earn the autho- Company's operating expenses over raised from outside the Company rized return. the average level of operating ex- through the sale of bonds and stocks. In the inflationary period of the last penses allowed in the Company's cost 15 years, new debt capital has more of service and TP&L also experiences Attrition often than not carried an interest rate cost increases attributable to the in excess of the embedded or average changing nature of the Company's Attrition is literally defined as "the cost of debt. An example of this is business such as the increased cost of act of wearing down." In the context TP&L's May, 1980 offering of $50 operating new lignite generating units of rate proceeding, it is the erosion of million of First Mortgage Bonds at an versus gas fueled units. The result is earnings with the passage of time due annual coupon rate of 11-3/8%. The expense attrition. to unit cost increases in all areas of 11-3/8% rate was near the market the Company activities. This, of minimum rate for electric utilities for Work In Progress course, would include increases in the the year. The TP&L embedded cost of Construction Allowance For Funds unit cost of plant investment, operat- debt included in the rates in effect at CWI); Allowance ing expenses and capital costs. If the the time was 7.79%. This is the phe- Used P P During revenue/cost relationships of each of nomenon we refer to as capital attri- (AFUDC) these areas are not properly main- tion. There are many benefits derived tained, earnings will deteriorate. Unit Another consideration is invest- from including CWIP in the rate base. cost increases in our Company are ment attrition. Even if inflation is Most important are: 1) Improvements being experienced in all areas and completely eliminated, because the in cash flow; 2) Improvement in qual- customer growth and usage are not Company is building plants at a high- ity of earnings; 3) Improvement in in- adequately offsetting the adverse er cost per kilowatt than the embed- terest coverage; and 4) Helping to effect on earnings. The ultimate result ded cost, investment attrition would keep future rates lower. of attrition is reduced residual earn- still be a factor contributing to the in- The customer does not pay for con- W ings available for the common share- ability of the Company to earn autho- struction if CWIP is included in the holder. rized returns that are based on embed- rate base. The investor pays for the In financial terms, there are several ded cost of plant. construction while the customer is forms of attrition: capital attrition, in- Also, the Company's other costs of only paying the interest, or carrying s vestment attrition and operating ex- doing business do not remain at test costs, on the money used to pay for construction. INTEREST RATES ON NEW ISSUES OF LONG TERM DEBT If CWIP is not included in the rate base, this interest on construction paid PERCENT INTEREST by the customers is instead added to 113 / the cost of the plant and is known as /8 % an Allowance for Funds Used During Construction (AFUDC). Under this 90 accounting procedure, AFUDC is re- '/8 corded ~0 corded on the books of the utility. This results in deferring costs which the utility must pay for currently-for future recovery. Therefore, inclusion of CWIP in 8 p ~0 the rate base is in the best interests of the utility, its customers and its stock- holders. With CWIP in the rate base, the utility collects the financing costs as they occur which improves its cash flow. CWIP keeps the ultimate cost to the customer at the lowest possible cost. Also, when CWIP is included in the rate base, the utility regains its financing costs as they occur. TP&L is requesting 100% of CWIP in the rate base, for a total $637 million. JANUARY FEBRUARY MAY 1968 1979 1980 5 Recovery of Fuel Costs Through the Fuel Adjustment Clause benefits the customer with lower fuel costs immediately and the Company It is very important to continue to is protected when fuel costs increase. utilize the Fuel Cost Factor tariff Under this FCF tariff schedule, (FCF) schedule (fuel adjustment only fuel costs incurred to produce the clause) to recover the Company's cur- electricity consumed by TP&L cus- rent cost of fuel used in generating tomers are used in computing the fuel electricity. The fuel adjustment clause cost factors. CONSTRUCTION PROGRAM TP&L's construction program is There are many factors which and changes during the construction r° based on providing for the growing affect the planning of facilities to period in demand and energy fore- peak demand requirements of our ser- meet the ever-increasing needs of casts could affect the time when com- vice area with plants capable of utiliz- TP&Us customers under today's eco- pletion is necessary. Government reg- ing more abundant, lower cost lignite nomic conditions. The availability ulation must also be considered, since and nuclear fuels. and cost of capital is a major consid- previously enacted and possible future ' The Power Plant and Industrial eration as is the cost and availability legislative action regarding plant con- Fuel Use Act of 1978 mandates the of fuel. Anticipated growth in system struction and/or fuel use could limit or shift from natural gas to alternative peak load and energy requirements alter the options available or change fuels. As of the end of the test year, must be considered. System reliability the time needed for construction. December 31, 1980, the Company is of extreme importance and must be In view of the uncertainties associ- owned an interest in eight lignite units continually evaluated. ated with each of these factors, it is now in service, of which TP&L's The long lead-time necessary for imperative that the planning process share is 2,458 megawatts. plant construction directly affects remain flexible. Viable options must Construction costs of electrical planning flexibility. Design and con- be maintained to ensure that changing generating plants are increasing pri- struction of a generating plant must be conditions do not prevent TP&L from manly because of the combined fac- started eight to ten years in advance of meeting the needs of its customers. tors of inflation, the fuel crisis, the the time when it is actually needed, W •A change from natural gas to solid fuels, the cost of capital, and compliance with government regulations. Even with these increased con- struction costs, TP&L's fuel conver- sion construction program has been of great benefit to its customers. The AVERAGE COST OF NEW GENERATION PLANT FACILITIES conversion from natural gas to coal generating units has allowed the Com- $959/KW pany to produce electricity at a price below that generated with natural gas. $798/KW TP&L's Planning Process TP&L's planning process involves continual examination and evaluation of alternative methods of supplying the future electricity needs of its cus- tomers by the most cost-beneficial means. This planning ensures that the $286 /KW Company's decisions and commit- ments meet lead-time requirements for the construction of new facilities. The planning process involves a con- $60/KW° stant re-evaluation of changing factors so planning can change as factors G A,$ LIGNITE LIGNITE-` NUGLE change. 1965-1970 1975-1980 1985-1990 1982-1984 .w 6 Plant Costs 1968, the year TP&L began building Comanche Peak over that originally Big Brown. TP&L's construction anticipated, the estimated Comanche Prior to 1970, TP&L could build a costs in 1971 were about $100 mil- Peak completion cost of $959 per kw gas plant for about $60 per kw. lion, and they were over $420 million compares favorably with other nu- During the mid to late 1970's, lig- in 1980. The projected construction clear plants coming on line in the nite units were built for about $286 expenditures for 1981 will be the same 1982 to 1984 timeframe. The per kw. The cost of lignite plants is second largest in the history of the national average of all nuclear units to much higher because of their relative Company, second only to the test become operational between 1981 and complexity and because of such fac- year. The construction costs for 1982 1985 will be about $1,500 per kw. ' tors as inflation, higher capital costs, and 1983 are estimated to be about TP&L projects that the total cost of longer lead times, and required air $434 million and $496 million, electricity generated at Comanche pollution facilities. respectively. Peak in 1986 will be about 25% less The Big Brown plant went into ser- than the fuel portion of the cost of vice in 1972 at a cost of $130 per kw. Comanche Peak electricity produced by natural gas. The average cost of lignite plants coming into service in the mid to late The construction of Comanche 1980's is about $798 per kw - more Peak alone has had a large impact on Future Construction than six times as much as the Big the Company's construction expendi- Brown plant cost. It is estimated that tures. For the test year ended Decem- TP&L's future generation construc- the average cost of lignite plants be- ber 31, 1980, of the $290 million tion plans through 1988, in addition to gun today will be more than $1,000 spent on generation facilities, $168 the 545 mw lignite unit at Sandow per kw - more than seven times the million was spent on the construction #4, due for commercial operation in cost of the Big Brown plant. The of Comanche Peak. Even though 58% early 1981, will be the Company's Comanche Peak nuclear plant is esti- of the construction expenditures for share of ownership in two 1,150 mw mated to cost approximately $959 per generating facilities in 1980 were nuclear units at Comanche Peak. The kw - 16 times as much as the gas spent on Comanche Peak, TP&Us de- Company also shares ownership in plants of earlier years. cision to build this plant is and was two 750 mw lignite units, Twin Oak With the exception of a slight de- economically sound. Unit #1 and #2, scheduled to come w crease in 1976, construction expendi- While changes in regulatory re- on line in 1986 and 1988, tures have increased each year since quirements have increased the cost of respectively. 500 500 TP&L ANNUAL CONSTRUCTION EXPENDITURES" 450 450 41111 Generating Plants 400 400 All Other 350 350 ED _77- 0 300 300 ° 250 0 250 All f 200 200 150 150 100 100 50 50 0 0 1971 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81* '82* 1983* *Estimated Includes Nuclear Fuel ail «ie 7 Changes In Construction margins are sufficiently in the future Plant Held For Future Use and changes can be made if the de- TP&L entered into an agreement veloping data warrants a change. The Plant is defined as the total facilities during the test year with DP&L to Company's construction plan is under available for the production of service. purchase 2'h% of Comanche Peak constant re-evaluation. If financial and Poles, hardhats and transmission lines No. 1 and No. 2 and 2'h% of Martin engineering circumstances warrant, are among the many examples. , . Lake No. 4. This transaction was the construction plan can be acceler- The portion of plant held for future approved by the Public Utility Com- ated to have additional generation use that the Company is requesting to mission. plant into operation by the peak of be included in the rate base represents Also during the test year, the Com- 1987. the cost of water rights and lignite pany executed an agreement to sell a leases that the Company has acquired 41/3% share of Comanche Peak plant, for its customers' benefit. Water and fuel, and associated transmission fa- lignite rights are potentially irreplace-° cilities to Tex-La Electric Cooperative Benefit To Customer able resources that the Company can- of Texas, Inc. This agreement, not purchase at any time it chooses. approved by the Commission, was These reserve margins have been a It is very important to the Company completed in January 1981; however, benefit to the rate payer. and its customers that plant held for this transaction still has to be approved TP&L customers have realized sub- future use be included in rate base. by the Nuclear Regulatory Commis- stantial savings as a direct result of the For example, the fuel shortages of sion (NRC). construction of lignite generating recent years have focused much in- units. The decision to change from terest in Texas lignite. The price of fuels historically used by the Company lignite has increased greatly as a result was made to utilize fuel sources that of this new demand. The Company has Reserve Capability were cheaper and more abundant than been buying lignite for many years. If natural gas and oil. TP&L had waited until it was needed If fewer lignite units had been built, to buy it, the price would be much Reserve capability is the Com- the reserve margin would have been higher. In fact, it probably would not pany's installed generating and purch- lower; however, more generation from even be available in the vast quantities ase capability in excess of the peak gas-fired plants with higher fuel costs now needed. demand on the Company's system. It would have been required. Producing Purchases of generating plant sites, is an accepted utility practice to main- electricity with natural gas would have water rights, and sites for facilities tain a reserve to offset the unforeseen ' resulted in higher priced electricity for such as switching stations, sub- loss of generating capability and addi- our customers. stations and transmission lines are also tional load beyond that which was forecasted. The reserve is usually ex- pressed as a percentage of peak de- mand. „w In recent years the Company's re- serve margins have increased because TEXAS POWER & LIGHT COMPANY of the construction of generating FUTURE GENERATION FACILITIES .w plants using fuel other than gas and oil. Even with the relatively high reserve margins, TP&L's construction of lig- Generating Capability nite-fueled generating plants has saved MW °w its customers millions of dollars by Location In-Service TP&L Type of reducing the Company's dependence Plant County Date Net Share Fuel on high-cost natural gas and increasing Sandow #4 Mllam 1981 545 95 Lignite its dependence on low-cost lignite. Comanche Peak #1 Somervell 1982 1,150 362* Nuclear In any construction plan as large as Comanche Peak #2 Somervell 1984 1,150 362* Nuclear Nil the Company's, the financial consid- Twin Oak #1 Robertson 1986 750 563 Lignite .w erations of the plan are just as impor- Twin Oak #2 Robertson 1988 750 562 Lignite tant as engineering considerations. r~. The construction plan allows the *The TP&L share of Comanche Peak reflects the Company's agreement to greatest engineering flexibility within sell 41/3 percent interest in the project to Tex-La Electric Cooperative of the financial constraints under which Texas Inc., subject to NRC approval. the Company's currently working. It is also important to realize that engineer- aw ing flexibility is inherent in the con- struction plan and that lower reserve-65 8 very important to TP&L. Customers Alternate Energy Sources study residential usage of solar receive a very substantial benefit from energy. Additionally, the use of waste the flexibility of the planning practice TP&L is very concerned with alter- heat from air conditioning systems for which allows such properties to be nate fuel generation and research and water heating is being studied in five purchased, and unquestionably that development. Although generation residences and two commercial build- planning process is essential to TP&L With alternate fuels cannot be accom- ings in the TP&L service area. The in meeting its service obligations. plished in a short time, TP&L is pur- Company contributes to the research r suing its development in a systematic and development work of the Electric manner consistent with the best in- Power Research Institute (EPRI) and terests of its customers. the Texas Atomic Energy Research Fuel Program The Company monitors several ex- Foundation (TAERF). TAERF sup- perimental homes it helped develop to ports nuclear fusion work at the Uni- In the electric utility industry, fuel versity of Texas at Austin. is the largest single item of expense. It costs almost as much as all other oper- ating expenses combined including labor, taxes, and depreciation. Fuel cost is so significant that minor fluc- tuations in the unit cost of gas, oil or lignite multiply to a great deal of money when considering the extreme- 50 ly large quantities TP&L burns. An TOTAL ENERGY BY FUEL TYPE effective fuel program is the backbone of an electric utility. For many years, the management 40 of TP&L has been, quite concerned at with the short and long range future = Nude availability of the fuels for electric Y 30 generation. As far back as the later 1940's and early 1950's, the Company o began acquiring lignite leases z ' throughout east and central Texas. By o 20 Lignite Coal the mid-to-late 1960's, the Company m foresaw the probability of future fuel shortages and increasing prices. TP&L cooperated with DP&L and 10 TESCO in the construction of the first modern lignite plant. The first gener-P11 !1466 ating unit of the Big Brown plant 0 M came on line in 1971 and the second 1972 '74 '76 '78 '80 '82 '84 '86 1988 unit in 1972. TP&L has since added ESTIMATED three Monticello units and three units at the Martin Lake plant. Lignite, in addition to being more abundant, is now much cheaper than natural gas. TP&L owns or has min- ing rights to lignite deposits and is ac- quiring additional rights so as to ade- quately fuel the existing lignite plants. Since the Company owned or con- trolled the mining rights to the lignite, its cost is low compared to natural gas. TP&L, however, is still dependent to some degree on natural gas. Also, many of the Company's gas plants can burn fuel oil under certain limited conditions. Oil is kept in storage at ' these plants to assure continued op- eration in the event of gas curtailment or shortages. 9 INFLATION Ilia, INCREASING COST OF TRUCK EQUIPPED WITH HOLEDIGGER Unlike many other businesses, TP&L does not have the option of foregoing a share of the market if eco- nomic conditions are not favorable. $105,120 Utilities are obligated to secure equip- 5, ~ ment, materials and capital necessary $81500' > to meet the publics requirements, re- ' • ~~t>v::..:s:.~..~,.: $75,430 ardless of the cost of money or the g p current rate of inflation now standing n:iriii•:^i is ti 2 c:'•'i'. i 2N: : ~ is In excess of 12%. One example of inflations effect On COStS is a ho1e digger truck which has more than quadrupled in price $25,000 since 1968. TP&L s lignite power plants 1968 1979::::.:. 1980::::.: 1981 brought into service as of 1980 were ~ built for an average cost of $243 per kw. This cost will double for plants completed after 1981 and quadruple AVERAGE COST OF NEW LIGNITE POWER PLANT FACILITIES by the end of the decade. Another example of inflation's $1,000+/KW effect is the interest TP&L must pay ><.<«:> bonds. In 1968, the interest on new bond issues was 65/8% a cost that to-r''`<> da has almost doubled. Capital costs on outstanding debt are a significant expense in TP&L s operation; • e and Akaw when this is accelerated by inflation the effect on the cost of service to the 448KW company's customers is substantial. Still electricity remain s one of the best bargains in a market where other 243KW .::.:.~x ;:.::ii:::}iii:'6j:'t'tiii::.%ki;:;<{:::::<:;;i::;:::L+: .::n::':.:'n::::\ ~i::n.,:':.:':.:.~....::.:.:. .r:.:::h::• :::>::>:iii:::»:::>::i;•:>j>:>ii::::>:f::'i:x;ii ;i'{.k: n:V'+•;;.. 'i ~:iv..:::: ni:'.:':.. :1nvn::• vn4:v. ucts and services continue Prod •i':nv:::iv:. v: i:.y:::...: ii:: n....: n::n: v:: x:v: vrF~ nom v.• x:•,++' ;.iititii ii it .::!::.:.i::?::::v:::;::n.•; ii;.:::...: .:ii':::::i~.~n:~:iv:;: Y.;ii:;;...•; :i:.i •.i•.n: i•: \r ii. vi spiral in price. In - 1940, the average TP&L res ;::ii:i:.ii;:i:.;:.:.ii:i:::i::<.i. idential customer consumed 676 kwh LIGNITE PLANTS AS OF COMPLETED 1981 NEW PLANT per year and paid approximately 5.3¢ DEC. 1980 BEGUN TODAY per kwh (fuel included). In 1960, an average customer consumed 3,200 kwh and paid approximately 3.1 ¢ per COST COMPARISON kwh (fuel included). And in 1980, the $85,000 average residential customer con- sumed over 12,000 kwh per year and paid approximately 4.5¢ per kwh (fuel included). $5,585 $1.20 $25,000 $2,600 150 300 ~ $4,500 $450 ~ 5.30 3.10 4.50 1940 1960 1980 1940 1960 1980 1940 1960 1980 1940 1960 1980 1 Gallon of Gas 2,000 Sq. Ft. Home 1 Year College Kwh-Electricity (Residential Annual Average) 10 GOVERNMENT REGULATION The cost of complying with gov- to pour a foundation today than it did 3) The Nuclear Regulatory ernment regulation continues to im- ten years ago. It doesn't take a weld- Commission (NRC) regulates pose heavy financial burdens on er, pipe fitter or any other worker any TP&L with regard to the con- Texas Power & Light. Some regula- longer to do his job than it did then. struction and operation of tion is necessary. As a monopoly, The difference between four years of nuclear reactors, such as the TP&L must be regulated by fair and construction and eight to ten years is ones that will be used at reasonable commissions. Common the difference between six permits the Comanche Peak plant. sense regulation is necessary for clean and 24. Although the NRC does not 4W air and water and for environmentally exercise jurisdiction over acceptable strip mining. The problem Regulations are decreed by numer- rates, it does exercise exten- is over-regulation, which costs more ous agencies and commissions. Some sive jurisdiction over all than the benefits it provides in health of the government bodies which aspects of a nuclear plant be- and safety. Many regulatory agencies exercise control over TP&L are as fore, during and after con- have gone far beyond what Congress follows: struction, particularly with intended in the first place. (Such reg- 1) Under the provisions of the regard to certain public ulation creates uncertainty in planning Public Utility Regulatory Act health, safety and antitrust for the future, because regulations (PURA), the Public Utility matters. keep changing.) Commission (PUC) has exten- 4) The Texas Air Control Board ~r In 1972 the total cost of air pollu- sive jurisdiction, both original (TACB) has jurisdiction con- tion control equipment at the Big and appellate, over rates and cerning the permissible level Brown lignite coal-fired generating services. PUC jurisdiction de- of air contaminant emissions plant was $4.6 million or $4.01 per termines the facilities which from power generating sta- kilowatt (kw). At the Monticello lig- can be constructed and the tions. nite plant, the total cost of air pollu- territories in which the Com- 5) The Texas Department of tion control equipment was $93.3 pany can operate by way of Water Resources (TDWR) " million or $49.12 per kw. The current the certification process. exercises jurisdiction over the cost of pollution equipment at the 2) The Securities and Exchange Company's water discharges. Martin Lake lignite plant is $214.4 Commission (SEC) regulates The diversion of water by million, or $95.29 per kw. the reporting, filing, and reg- the Company for cooling and While costing millions of dollars, istration requirements per- other purposes is also subject a* pollution equipment produces no elec- taining to the sale of the to the jurisdiction and regula- tricity and, in fact, consumes a sub- Company's securities. tion of the TDWR. stantial amount of a power plant's total energy. For example, Units 1, 2 and 3 at Martin Lake use approx- imately 2% of the plant's gross gen- eration, an equivalent demand of over 22,000 residential customers. To illustrate the impact of increased AIR POLLUTION CONTROL COSTS government regulation on TP&L's Construction program, the Big Brown unit, which began operation in late $95.29/KW 1971, was built with six permits and in less than 4 years at a cost of $130 per kw. Since that time, there has been a proliferation of government regula- tions. This has dramatically increased the time, the resources and the invest- $49.12/KW ment required to build such a plant. $21a.a MILLION TP&L must now get some 24 differ- ent permits and approvals for a new coal-fired plant. $93.3 MILLION Construction time is now eight to ten years. Coal units started today $4.01/KW N cost in excess of $1,000 per kw to %4.61 Id 0[ complete. It doesn't take any longer BIG BROWN 1&2 MONTICELLO 1,2&3 MARTIN LAKE 1,2&3 40 11 1W 6) The Environmental Protec- 8) Under the provisions of the 9) The Company is subject to the m. tion Agency (EPA) decrees Surface Mining Control and requirements of the Depart- regulations concerning both Reclamation Act (SMCRA) of ment of Energy (DOE) and w~ air and water quality stan- 1977, the Department of the the Federal Energy Regula-- dards which are implemented Interior controls and regu- tory Commission (FERC) as by the TACB and the TDWR. lates surface mining at the provided for in the constituent Company's lignite power bills of the National Energy 7) The Railroad Commission of plants. The Departments Act of 1978 (NEA). Texas is authorized state jurisdictional concerns in- The NEA requires the law to control and regulate clude surface mining stan- Company to conduct exten- surface mining la TP&L's dards, land reclamation prac- sive energy audits of its lignite power plants. The tices, and associated air and customers homes and build- Railroad Commission also water control requirements. ings. The act will also limit regulates the production of Among other things, SMCRA our use of oil and natural gas. natural gas by Texas Utilities requires payment to the feder- as boiler fuels. It, also, has Fuel Company ) and al government of a maximum greatly increased the report- TP&Us sale of natural ural gas by of 10¢ for each ton of lignite ing burden to governmental for use as boiler commercial fuel. suppliers mined. The assessment in authorities. for use turn is used for such things as the reclamation of previously mined land throughout the United States. COST OF 1000 KWH OF ELECTRICITY FOR RESIDENTIAL USE IN MAJOR CITIES COMPARED TO TP&L SEPTEMBER, 1980 NEW YORK $117.06 PHILADELPHIA 581.66 CHICAGO $72.82 CLEVELAND $69.39 EL PASO $66.59 WASHINGTON, D. C. $64.63 BALTIMORE $63.08 LOS ANGELES $62.21 AUSTIN $61.22 AMARILLO $57.70 r-. DETROIT $56.75 CORPUS CHRISTI $55.40 NEW ORLEANS 554.60- HOUSTON $54.38 DALLAS $52.03 SAN ANTONIO $51.35 a 9:21.1 $49.71 BEAUMUNT $49.65 ° ow 12 L' i'1'Y lal' S(31.r1'l U AKE Mt;IEl11LLY lulOM' '10 '111R CITY couNCIL DURDING DEPARIMEM I. NMAKR CIP INS1'117VIONS MKxM OF Februar ,,1981 ('U tt1ZE~t 1' LAST MAM E:1.iX`1`luc 28 20 Y111ML~ 1 N(; 21 15 1'liACL1NG 5 3 1(X1NItA'1'1(kd 5 6 MNV1 ; & AIR 16 13 SITIV1C SYS'1'1r1 14 10 011 IER 29 16 118 '!r1''AL 1NS1'El rIONS 2. N1~ftMI'1'S LAST KW11i FEE 1sU111ANG 6 906.00 10 978,00 1::1.11"1'It1CA1. 11 192.50 9 157.00 t'1 131-1131NG 4 83.00 4 120.00 HENFING & Alt 4 84.00 6 139.00 11 275.00 5 125.00 cl1rrlF1c:ArE: OF (x:Ch. 6 55.00 11 87.00 OTHER VAAL ILL: d-WI'S 43 1595.50 45 1606.50 3. [itii Idiny VA111,1t i()i► _ `[1 i I S M1-l[11! 1 111: 1' Nl >fJ i'I I YEAR I U LlNrE 265,000.00 422,663.00 5,381,810.25 4. 1'l ANNING & GIIN 1N(; 1'EE.S `1t1 _ __IS MI)141'l_i _ I ,f1`I' WY. W1'I 1 YFAR '10 DATE 162.00 500.00 18,260.00 5. 'INA'AL 1)LRXSF11-3 IN BIJIII ING 1UNO `I7 t IS NiiNm 1 YRAR 'A) DATE 1595.50 20,092.00 RE:S1'EX..'111113M SU11MI`1' LI), UttIiDING PEWIT BREAKDOM BUI4wc I ' 4-Re sidence 233,000.00 1-Warehouse 30,000.00 1-Storage 2,000.00 LpItJG EPAR~?-M- r C*TIC:AL "February 1980 5-Rec,iBence '-Add, !-Commercial 1-Garage s-Storage C I T Y OF S O U T H L A K E POLICE DEPARTMENT REPORT February, 1981 HONORABLE MAYOR AND CITY COUNCIL: Police Department Report for the month of February, 1981. Tickets issued in January, 1981 265 Tickets issued in February, 1981 168 Persons in jail in January, 1981 26 Persons in jail in February, 1981 16 Traffic Accidents in January, 1981 10 Traffic Accidents in February, 1981 10 Burglaries reported in January, 1981 6 Burglaries reported in February, 1981 2 Approximate value taken in burglaries in January $25,567.20 Approximate value taken in burglaries in February $140.00 Approximate value recovered in burglaries in January 0 Approximate value recovered in burglaries in February 0 Thefts reported in January, 1981 4 Thefts reported in February, 1981 3 Approximate value taken in theft in January $10,047.21 Approximate value taken in theft in February $5,515.00 Approximate value recovered in theft in January $8,257.21 Approximate value recovered in theft in February 0 Total offenses to date for 1981, reported and activily investigating 15 Number of calls in January, 1981 1,218 Number of calls in February, 1981 884 Speedometer reading on Unit 11 (_78 Ford) 117,608 Speedometer reading on Unit 12 (78 Ford) 108,933 Speedometer reading on Unit 14 (80 Plymouth) 74,129 Speedometer reading on Unit 15 (80 Plymouth) 48,970 Miles driven in January, 1981 10,835 Miles driven i,n February, 1981 9,971 Respectfully submitted, C' C. 4ay nd G addy Chief of Police SOUTHLAKE POLICE DEPARTMENT CDG/mrb zN 1-+ W ►L-. O 4 J W a h- c/l W W C.~ 5 5 0 35 50 55 168 TICKETS 234 213 884 # OF CALLS 42 76 50 153 # ARRESTS 6 2 1 10 ACCIDENTS 0 2 0 0 2 0 0 T BURGLARY 0 THEFT - MILES 1208 829 1308 1174 1959 2834 9,971 DRIVEN HOURS ASSIST MILES TICKETS ACCIDENTS ARRESTS WORKE D CALLS RESERVES 1 ---,0 ANDERSON 0 8 2 SCROGGIN 0 0 p 6 1/2 O 4 0 _ T 2 p 3 p TAYLOR 0 1 0. ""--T 13 0 0 28 1/4 47 2 335 _ SPENCER 0 0 0 62 . 16 6 16_ a SHOEMAKER 0 2 16 1/2 26 1 160 HUGHES 3