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Item 4JCITY OF SOUTHLAKE MEMORANDUM January 19, 2011 To: Shana Yelverton, City Manager From: Sharen Jackson, Finance Director Subject: RESOLUTION NO. 11 -006, SUSPENDING THE FEBRUARY 14, 2011, EFFECTIVE DATE OF ONCOR ELECTRIC DELIVERY COMPANY REQUESTED RATE CHANGE TO PERMIT THE CITY TIME TO STUDY THE REQUEST AND TO ESTABLISH REASONABLE RATES Action Requested: Approval of Resolution 11 -006, Suspending the February 14, 2011, effective date of Oncor Electric Delivery Company requested rate change. Background Information: Oncor Electric Delivery Company ( "Oncor" or "the Company ") filed an application on January 7, 2011 with cities retaining original jurisdiction seeking to increase system- wide transmission and distribution rates by $353 million. The Company asks the City to approve a 14.6% increase in residential rates, a 15.5% increases in commercial rates, and a 25.9% increase in street lighting rates. According to Oncor, annual rates would increase by approximately $60 for an average residential customer. The resolution suspends the effective date of the Company's rate increase for the maximum period permitted by law to allow the City, working in conjunction with the Steering Committee of Cities Served by Oncor, to evaluate the filing, determine whether the filing complies with law, and if lawful, to determine what further strategy, including settlement, to pursue. The law provides that a rate request made by an electric utility cannot become effective until at least 35 days following the filing of the application to change rates. The law permits the City to suspend the rate change for 90 days after the date the rate change would otherwise be effective. If the City fails to take some action regarding the filing before the effective date, Oncor's rate request is deemed administratively approved. Financial Considerations: Oncor will reimburse the Steering Committee for its reasonable rate case expenses. Legal counsel and consultants approved by the Executive Committee of the Steering Committee will submit monthly invoices that will be forwarded to Oncor for reimbursement. No individual city incurs liability for payment of rate case expenses by adopting a suspension resolution. 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. 11 -006 Staff Recommendation: Approve Resolution No. 11 -006 RESOLUTION NO. 11 -006 RESOLUTION OF THE CITY OF SOUTHLAKE, SUSPENDING THE FEBRUARY 14, 2011, EFFECTIVE DATE OF ONCOR ELECTRIC DELIVERY COMPANY'S REQUESTED RATE CHANGE TO PERMIT THE CITY TIME TO STUDY THE REQUEST AND TO ESTABLISH REASONABLE RATES; APPROVING COOPERATION WITH THE STEERING COMMITTEE OF CITIES SERVED BY ONCOR TO HIRE LEGAL AND CONSULTING SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT ANY NECESSARY LITIGATION AND APPEALS; 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 FOR THE STEERING COMMITTEE WHEREAS, on or about January 7, 2011, Oncor Electric Delivery Company ( Oncor), pursuant to PURA §§ 33.001 and 36.001 filed with the City of Southlake a Statement of Intent to increase electric transmission and distribution rates in all municipalities exercising original jurisdiction within its service area effective February 14, 2011; and WHEREAS, the City of Southlake is a member of the Steering Committee of Cities Served by Oncor ( "Steering Committee ") and will cooperate with the 146 similarly situated city members and other city participants in conducting a review of the Company's application and to hire and direct legal counsel and consultants and to prepare a common response and to negotiate with the Company prior to setting reasonable rates and direct any necessary litigation; and WHEREAS, PURA § 36.108 grants local regulatory authorities the right to suspend the effective date of proposed rate changes for ninety (90) days after the date the rate change would otherwise be effective; and WHEREAS, PURA § 33.023 provides that costs incurred by Cities in ratemaking activities are to be reimbursed by the regulated utility. THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: 1. That the February 14, 2011 effective date of the rate request submitted by Oncor on or about January 7, 2011, be suspended for the maximum period allowed by law to permit adequate time to review the proposed changes and to establish reasonable rates. 1240172 1 2. As indicated in the City's resolution approving membership in the Steering Committee, the Executive Committee of the Steering Committee is authorized to hire and direct legal counsel and consultants, negotiate with the Company, make recommendations regarding reasonable rates, and to intervene and direct any necessary administrative proceedings or court litigation associated with an appeal of a rate ordinance and the rate case filed with the City or Public Utility Commission. 3. That the City's reasonable rate case expenses shall be reimbursed by Oncor on a monthly basis. 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. 5. A copy of this Resolution shall be sent to Oncor, care of Autry Warren, Oncor Electric Delivery Company, LLC, 1601 Bryan St., 23 Floor, Dallas, Texas 75201 and to Geoffrey Gay, General Counsel to the Steering Committee, at Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767 -1725. Mayor, City of Southlake ATTEST: 12}0172 2