HomeMy WebLinkAboutItem 06 - TXU Gas Steering CommitteeITEM 1
MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: ROGER NELSON, CITY MANAGER'.,
MEETING DATE: MAY 7, 2002
SUBJECT: RESOLUTION TO PARTICPATE IN STEERING COMMITTEE
OF CITIES SERVED BY TXU GAS
RECOMMENDATION:
City Council approve a resolution authorizing the City of Grapevine to participate in the
Steering Committee of Cities to intervene in TXU Lone Star Pipeline (TXU LSP) rate
filing at the Railroad Commission, Gas Utilities Docket (GUD) 9292.
FUNDING SOURCE:
The City of Grapevine will not incur any costs for participation in this process since TXU
Gas, according to state law, is required to reimburse the cities for any expenses related
to a rate review.
BACKGROUND:
On April 5, 2002, TXU Lone Star Pipeline (TXU LSP), a division of TXU Gas, filed a
statement of intent with the Railroad Commission (GUD 9292). The filing, if approved,
would enable TXU LSP to surcharge residential ratepayers 37¢ per month and
commercial ratepayers $2.10 per month to cover the costs associated with a new
pipeline to serve the DFW Metroplex. Despite the fact that the pipeline will be
constructed to meet needs in the DFW area, the company believes it will indirectly
provide benefits to the entire system and therefore should charge all users.
The surcharge, if approved, will impact more than 1.4 million residential and commercial
customers served by TXU Gas throughout the state. Additionally, TXU LSP will increase
revenues by approximately $9.8 million or 8% with the surcharge.
The Staff recommends participating in the Steering Committee in order to intervene in
this filing. Please read the attached letter from Geoffrey Gay, the consultant that has
worked for the Steering Committee in previous rate cases, who recommends the cities
oppose this form of ratemaking.
MYL
April 30, 2002 (1:4613M)
RightFAX 4/5/2002 12:54 PAGE 3/4 RightFAX
LLOYD, GOSSELINK, BLEVINS, ROCHELLE,
BALDWIN & TOWNSEND, P.C.
ATTORNEYS AT LAW
111 CONGRESS AVENUE, SUITE 1800
AUSTIN, TEXAS 78701
TO: TXU Client Cities
]FROM: Geoffrey M. Gay
DATE: April 5, 2002
Mr. Gay's Direct Line: (5 12) 322-5875
Email: ggay@lglawfirmcom
MEMORANDUM
RE: New TXU Pipeline Case
TELEPHONE (512) 322-5800
TELECOPIER (512) 472-0532
�Today TXU Lone Star Pipeline (LSP) filed a case at the Railroad Commission for a
statewide surcharge on residential and commercial customers to cover the investment in a new
76 -mile pipeline originating at Mitchell -Bridgeport processing plant in Wise County, crossing
Denton County and terminating in Collin County. Designated as the Northside Project, the
pipeline is intended for service in late 2004 to meet the growth needs in the North Texas
Metroplex Area (NTMA). TXU alleges that it has adequate pipeline capacity to serve the
Metroplex at the moment, but that system operations require that gas be routed from the `Vest
and South Regions into Dallas and that the system will be capacity constrained in 2005 if the
pipeline is not built. According to LSP, although the pipeline will only directly benefit the
Metroplex, it will indirectly benefit system operations and thus, all residential and commercial
customers should pay the surcharge.
The Company is requesting monthly surcharges for seven years of 37¢ for residential
customers and 52.10 for commercial customers.
LSP also plans to file a second surcharge case at the end of the month to recover ongoing
pipeline integrity costs.
It is possible that if these matters were litigated in the context of an overall rate case that
in 2003 or 2004 there would be no discernable impact upon rates because of declines in
depreciation expense, cost of capital, O&M or other items. The requested surcharges reflect
piecemeal ratemaking that should be rejected as contrary to public policy.
1(03 07'mrvto020405grrg
RightFAX 4/5/2002 12:54 PAGE 4/4 RightFAX
I will prepare a model intervention resolution for those Cities interested in forming a
coalition to review the filings and oppose the proposed method of cost recovery. I will discuss
the resolution with Jay Doegey, Chairman of the TXU Cities Steering Committee, when he
returns from vacation next Tuesday. I am sure that he will contact you in the near future.
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771L
RESOLUTION
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RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS AUTHORIZING INTERVENTION IN
GAS UTILITIES DOCKET 9292 AT THE RAILROAD
COMMISION; AUTHORIZING PARTICIPATION IN A
STEERING COMMITTEE WITH OTHER CITIES SERVED
BY TXU; REQUIRING REIMBURSEMENT FROM TXU
LONE STAR PIPELINE OF CITIES REASONABLE RATE
CASE EXPENSES AND PROVIDING AN EFFECTIVE
DATE
WHEREAS, TXU Lone Star Pipeline (LSP) filed a statement of Intent with the
Railroad Commission (designated as GUD 9292) on April 5, 2002, to surcharge
residential and commercial gas customers who are residents of the City of Grapevine to
cover costs associated with a new pipeline to serve the Metroplex; and
WHEREAS, the requested surcharges of .37 cents per month and $2.10 per
month on the residential and commercial customers, respectively, will adversely impact
the City of Grapevine and its residents; and
WHEREAS, cities served by TXU have a history of cooperation in gas rate
matters and such cooperation in GUD 9292 will be efficient and cost effective in
evaluation whether the proposed pipeline is reasonable and necessary and whether
associated costs should be recovered in piecemeal ratemaking through a surcharge;
and
WHEREAS, pursuant to Utilities Code § 103.023, municipalities have standing to
intervene in this case; and
WHEREAS, pursuant to Utilities Code § 103.022, municipalities are entitled to
reimbursement of their reasonable costs of participation.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF GRAPEVINE, TEXAS:
Section 1. That the City Council of the municipality of Grapevine, Texas
authorizes the City Manager or his designee to represent the City on the Steering
Committee of affected cities (hereinafter called "Steering Committee") and authorizes
the Steering Committee of which the City is a participating member, to retain legal
counsel and engage consultants, and to intervene on behalf of the City in related
dockets and appeals.
Section 2. That the Steering Committee formed to oversee this effort on behalf
of cities is authorized to take all reasonable steps before the Railroad Commission and
before the Courts as may be necessary in an appeal of a Commission Order.
Section 3. That LSP is hereby directed to promptly pay cities' rate case
expenses as they are incurred.
Section 4. That the City Secretary shall cause copies of this resolution to be
sent to the TXU representative:
Autry Warren, Rate Manager
TXU Gas Distribution
1601 Bryan Street
Dallas, TX 75201-3402
Jay B. Doegey
City Attorney
City of Arlington
PO Box 231
Arlington, TX 76004-0231
For forwarding to the Steering Committee.
Section 5. That this resolution shall become effective from and after the date
of its passage.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS on this the 7th day of May, 2002.
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