HomeMy WebLinkAboutORD 1341 Relating to Rates to be Charged by HL&P
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ORDINANCE NUMBER 1341
AN ORDINANCE RELATING TO RATES TO BE CHARGED BY HOUSTON
LIGHTING & POWER COMPANY FOR ELECTRIC UTILITY SERVICE
WITHIN THE CORPORATE LIMITS OF THE CITY OF WEST UNIVERSITY
PLACE, TEXAS; CONTAINING FiNDINGS AND PROVISIONS RELATED TO
THE SUBJECT; PROVIDING FOR A REPEALER AND FOR SEVERABILITY;
AND DECLARING AN EMERGENCY.
* * * *
WHEREAS, on or about November 23, 1989, Houston Lighting & Power
Company (the "Company"), filed wit the City of West University Place a
Statement of Intent and Petition for Authority to Change Rates relating
to electric utility service, and proper notice thereof was duly given;
and
WHEREAS, by Ordinance Number 1331, the City Council suspended the
effective date of such proposed rate increase until March 28, 1989; and
WHEREAS, the City Council, having considered the Company's rate
request at a public hearing for which proper notice was duly given,
finds that such request is excessive; and
WHEREAS, the City Council having original jurisdiction over the
matter finds that no increase in rates should be prescribed for the
Company; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF WEST UNIVERSITY
PLACE, TEXAS:
Section 1. The City Council of the City of West University Place
hereby finds the requested rates of the Company to be excessive and
unreasonable.
Section 2. The City Council hereby approves the recommendations
set out in Exhibit "A", attached hereto.
Section 3. The City has original jurisdiction over this case
pursuant to Section 43 of the Public Utility Regulatory Act.
Section 4. The City hereby denies HL&P's Petition for
Authority to Change Rates.
Section 5. The City Council hereby authorizes and directs the
City Secretary to serve the Company with a certified copy of this
ordinance which is the final determination and order of the City.
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Ordinance Number 1341
011
Section 6. The Company shall, within ten days following the final
passage. and approv~};,?r::.:this.:o~dinance and ther~,after ""~:;~~E1.yer required
by appllcable statutes and ordlnances and whene~er requested by the
Director of Administration and Finance (Director), file a complete
schedule of rates and tariffs with the Director setting forth all of
the Company's rates and charges for utility service then in effect.
The Director is authorized to review, and approve and require revisions
to the tariff if she determines it not to be in accordance with this
ordinance.
Section 7. Nothing contained in this ordinance shall be construed
now or hereafter as limiting or modifying, in any manner, the right and
power of the City under the law to regulate the rates and charges of
the Company.
Section 8. All ordinance or parts of ordinances in conflict
herewith are hereby repealed to the extend of such conflict only.
Section 9. In the event that the Company appeals from this order
setting electric rates for the Company, the City hereby waives written
notice of the hearing before the Commission of such appeal.
With'respect to any such appeal, the City Council hereby
authorizes the City Attorney or his designees to vigorously represent
the City of West University Place and its citizens in all matters
relating to STNP and, in particular, directs the City Attorney or his
designees to continue developing the expert testimony and analyses
necessary to document and establish for the record any and all
imprudence by Houston Lighting & Power Company in its management of the
planning and construction of STNP, including, but not limited to the
following areas of imprudence which the City Council hereby finds,
determines, and declares to exist:
(a) .Houston Lighting & Power Company failed to prudently evaluate
and select Brown and Root as the Architect/Engineer for
STNP;
(b) Both Houston Lighting & Power Company and Brown and Root
lacked adequate nuclear background and experience, and they
failed to overcome this deficiency in a timely manner;
(c) The project had inadequate project controls during the Brown
and Root era which obscured actual project progress and
hindered the identification of problems and associated root
causes of such problems;
(d) There existed inadequate control of interdisciplinary
design interfaces by Brown and Root.
The City Council further directs that the City Attorney or his
designees represent the City in any and all other matters in connection
with the appeal and to take any and all actions necessary and
incidental thereto and to the resolution of the matters subject to such
appeal, all as may be in the best interests of the City.
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Ordinance Number 1341
,012
Section 10. If any word, phrase, clause, sentence, paragraph,
section or other part of this ordinance or the application thereof to
any person or circumstance, shall ever be held to be invalid or
unconstitutional by any court of competent jurisdiction, the remainder
of this ordinance and the application of such word, phrase, clause,
sentence, paragraph, section or other part of this ordinance to any
other persons or circumstances shall not be affected thereby.
Section 11. The City Council officially finds, determines and
declares that a sufficient written notice of the date, hour, place and
subject of each meeting at which this ordinance was discussed,
considered or acted upon was given in the manner required by the Open
Meetings Law, TEX. REV. CIV. STAT. ANN. art. 6252-17, as amended,
and that each such meeting has been open to the public as required by
law at all times during such discussion, consideration and action. The
City Council ratifies, approves and confirms such notices and the
contents and posting thereof.
Section 12. The public importance of this measure and the
requirements of the law create an emergency and an urgent public
necessity requiring that this Ordinance be passed and take effect as an
emergency measure, and a state of emergency is hereby declared, and
this Ordinance is accordingly passed as an emergency measure and shall
take effect and be in force immediately" from and after its passage and
signature.
PASSED AND APPROVED this 13th day of
March , 1989.
Voting Aye: Mayor Parks, Councilmembers Bryan, .Bell
Britton
Voting No: None
Absent: Councilmember Schwartzel
Signed:
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Michael L. Parks, Mayor .
ATTEST:
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Audrey N' 015 .
City Secretary
(SEAL)
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Exhibit "A"
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Revenue & Regulatory Affairs Division
Finance & Administrations
Recommendation Concerning
Houston Lighting & Power Company's
Request for Increased Rates
On November 23, 1988, Houston Lighting & Power Company
(HL&P) filed a Statement of Intent to Change Rates with the City
of Hous ton.
The Ci ty exercises or iginal jur isdl ction over the
rates and services of HL&P under the Public Utility Regulatory
Act (PURA).
Based on test year adjusted expenses and revenue
figures for the test year ending September 30, 19&8, BL&P
purports to have an annual revenue deficiency of $446,198,000 for
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the first year of .its proposed rate moderation plan. The
following report outlines the basis of Regulatory Affairs'
recommendations concerning HL&P's request for a rate increase.
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MALAKOFF ELECTRIC GENERATING STATION
HL&P is requesting that $93.2 million related to the
Halakoff Generating Electric Station (Ma1akoff) be included in
invested capi tal as "Plant Held For Future Use." The Company's
rationale for this classification is predicated on in-service
dates for Unit I of 1997 and Unit II of 1999. The need for power
produced by these' units is driven by the assumption that the
power presently provided by'firm cogeneration contracts will not
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be available in the years subsequent to 1993. This assumption is
not supported by evidence of any inquiries by HL&P concerning the
prospects of renegotiation of these contracts.
Regulatory
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Affairs does not a.gree with this assumption and is, therefore,
recommending that Malakoff not be included in invested capital.
HL&P is requesting current recovery of $61.3 million. over a
nine year period, of past expenditures related to Malakoff.
These expendi tures are. now deemed not to be useful when the
project is reactivated.
The expenses are primarily for
engineering ~lans which are no longer viable, cancelled purchase
,
corroni tments and other expendi tures which have no future value.
The Company claims that it is enti tIed to current recovery of
these expenditures since they were prudently incurred.
Since there has not been a Commission finding to support
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this statement, nor has the Company provided any support fo~ this
statement in its rate filing, Regulatory Affairs^considers that
the request for current recovery of any of these amounts is
premature and, therefore, should be denied.
Based upon the foregoing, it is also recommended that the
unamortized balance related to these Malakoff expenditures which
HL&P has requested to be included in invested capital, be denied.
HL&P has also requested current recovery for a nine year
period of $123.5 million of expenditures for the Tr ini tyMine.
This asset was purchased by Utility Fuels, Inc. (UFI), the fuel
affiliate of HL& P ,. to supply lignite to Malakoff. At present: ~
HL&P does not the . but does have an agreement to ~
own mIne,
indemnify UFI for iLs costs. The Company indicated that the
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proposed" purchase "o~,~l,1~.s ."mine is contingi~t!;;u~?r:~.,}},he granting of
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recovery through"i~tes. The justification provided by the
Company for seeking recovery at this point in time was the
facilitation of future planning.
Since HL&P does not own the asset and there is no
justification for requesting current recovery at this point in
time, it is recommended that the recovery be denied.
As wit~. the expenditures related to Malakoff discussed
above, HL&P has also requested that the unamortized balance of
the Trinity Mine be included in invested capital. Since it is
recommended that recovery not be allowed, it is also recommended
that this inclusion in invested capital be disallowed.
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PROPOSED RATE MODERATION PLAN
A rate moderation plan is a deviation from traditional
ratemaking which is considered when the results of traditional
ratemaking would be detrimental to the ratepayers. Consideration
should be given to the economic impact of the rate. increase
requested and the impact to the utility of rate increase
denial.
within these conitraints, rates are established by
deferring revenues which would be generated by using traditional
ratemaking methodology to a future period.
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.:?: Th~ '~~~iHi ca ~i~:on~ fa nda r ~s f o~? phase~ in plans we~:e
:':.r eS tablishe~:, .by\:.th~:t~.nancial AccouI)ti t1g:~,1Standards" Boa rd ~ The~:e
. J>. standards ;must be,i~jorpor:pted into a rc(te order if the .deferr;~:d
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:;1 standapds :are$peciJ.}i~ i~: the requireJilents that..' the' defer rats
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':."..must be a~towed,'the' )~~%l:rryihg 'co.sts.:. . The:-~;~~J;'esults" of the treatme~:t
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, . '/lOUld increas~', the)(rulti~~te ::cos.t,s ta:Lthe. consumer for
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J. addi tio'n'al.<caplt'allz~'P c:os'ts. "!'i?'
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.:;:., HL:&P has.i~ropo'~~d '<1 .,rate., ,moci~r:at.iq~;'plan, which' ,consists '6f
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. :~f\' two., compone"nts..:''1.'J:(~~.f'J.r;$t~ompq[1ent''9~9flcer.ns t.he recovery :9:f
~t'am6~nts,~e~te~lo~:es~Pfle 'Unitu ~~;STl!Purilt I for Wh~
'A.;' the <company: h~~:requ.~sted:deferrattr~a,~}#ent: In D~cket No. 8fi~.O
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,>,. '.(deferral dock'et). . )~,ge, se.condcomponen~:::..,of q.osts are related't"p
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~'k STNi> 'UrdtsI and II;RJ~>' Asa. part: of th~f~ompant's. request, th1.~y
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'~r a,r~ . propo~rrig.' t'hat: :tlle Commission approiv.e a qualif led phase~;ln
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:-.;;...plan for bot~ units~~: STNP. .>r". .y;:;~
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It is4iff~.cUlt:T~t thIs time .to mak:e.~ a reconunendation onfqe
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:~tCompan~:~s .pro:~osedi~~(rate moderation :-j;plari because of t\!ie
.:~~ ,ass~mption~Cwhtch w'~~~ incorpo.rated to' .~~t~'ructure' that plan. Tiiie
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. :~;: :Comp'any' s propo'sal. .a~~~.umes', that: interim ;~~ferrals will be grane~d
:i-;: in Dock~t ~(). 8'~~o..~~~either the exarninJ[~,s report nor the firi:~l
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.~' order in the. docket.....~~as been.issued to,)date.Thefinal ord;er
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.ii.' .wi 1.1 deter~ine '":if. d~t,etrals are granted~{.lll w.hat amount and s~~t
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{;:. 'the . recovery peridd:~k:for the. deferrals ~;C The' Company has aI-so
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<{ assumed: that; all dolllKrs associated wi th~}STNP in excess of the :::~
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Brown and Root Settlement will be found prudent.
The proposed
plan also assumesi that' the level
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requested will be granted.
It is recommended that the issue of a rate moderatIon plan
of rat~~ which,,: .the Company has
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be analyzed and addressed when the final results of applying
traditional ratemaking are known.
Without the benefit of this
knowledge, it is impossible to determine if a rate moderation
plan is necessary and the ultimate costs to the consumer of
adopting such a plan.
REVENUE REQUIREMENT
Reconcilable Fuel ~~eense
'Regulatory Affairs is recommending a number of adjustments
concerning the reasonably predictable fuel expense for the year
in which rates are expected to go into effect (the forecasted
rate year). The ,first adjustment discussed below concerns the
reassessment of the assumed generation mix that HL&P will
employ during the forecasted test year. A substantial portion
of the adjustments recommended stem directly from the
recommendation that none of the expendi tures associated wi th
the construction and operation of STNP are considered at this
time.
Therefore, the generation mix to provide the required
demand has been adjusted. . The second set of adjustments
descr ibed below deals wi th the development of an al ternatl ve
set of natural gas prices from that given by HL&P.
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Since the preliminary recommendation by the Regulatory
Affairs staff assumes that the cost associated with STNP is
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zero, the same assumption must also be applied to the various
associated operating costs. A production simulation model was
employed to calcula te total fuel expense.
The megawa t ts of
generation from the nuclear units were replaced with capacity
from gas, ligni te and coal, as well as .purchased power. The
generation which has replaced output from STNP is the most
econoinical generation available given the constraints of the
operating system.
Regulatory Affairs has also recommended that a lower
natural gas price forecast be employed rather than the forecast
proposed by HL&P in the fuel filing.
HL&P has consistently
maintained that the current "soft" market for' natural gas is i
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about to end and that natural gas prices will soon begin to '-J
increase. While gas prices have begun to stabilize, there is
considerable uncertainty as to when gas pr ice increases will
occur on a' regular basis.
Much of the HL&P analysis is
predicated upon national and international events which,
heretofore, have b~en impossible to forecast with a reasonable
degree of certainty. This ranges from the amount of gas which
regional and national producers appear to be willing to shut-in
to the ability of OPEC and non-OPEC oil producing countries to
achieve an accord which will effectively limit production,
thereby establishing a floor for energy prices.
Instead,
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Regulatory Affairs has assumed that because these variables I
defy reasonably accurate prediction and there is nothing
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definitive to indicate that energy prices are about to
increase, the ." soft II gas and oi I market wi 11 be mal n talned over
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the near-term~ ";'t,i;;;i)hfif\"
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While both the "pure" cqst of lignite and coal appear to
be reasonable, certain adjustments are recommended to fuel
expense. HL&P has indicated that it plans to use the proceeds
from the lawsuit settlement with several railroad companies as
an offset. to the litigation costs that were incurred. It is
the opinion of Regulatory Affairs that this is not an
appropriat~ a~counting entry since the litigation costs should
not be considered as a reconcilable fuel expense. Rather, it
is recommended that the litigation expenses should be recovered
in base rates and amortized over the life of the coal
contract.
The entire settlement proceeds should flow back to
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the ratepayers as a reduction of reconcilable fuel expenses.
HL&P has also inappropriately included the .salary expenses
incurred by Utility Fuels, Inc. (UFI), their fuel affiliate, in
the cost of lignite.
This has been reallocated to non-
reconcilable fuel expense, ~hereby reducing the commodity cost
of lignite.
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Non-reconcilable Fuel
related to "pure fuel expenses".
These non-reconcilable fuel
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Non-reconcilable fuel represents expenditures for items not
expenses have been reduced by $2,951,000. The rate base of OFI
was reduced by $230,000 for items included twice in the invested
capital.
This reduction in the rate base and the lower return
accounted for a decrease in the non-fuel costs. The operating
expenses were increased by $593,000 for labor which was
classified as fuel expense and not as labor.
During the test
year, $472,0,00 of non-recurring expenses were billed to HL&P
..
which are riot anticipated to be recurring in nature.
Firm Purchased Power Expenses
In HL&P's request, $l2,006,boo was included
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for the
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Applied Energy Systems (AES) cogeneration contract.
contract has been assigned until mid-1990 to another electric
utility.
The status of this renewal is not known at the
current time. Therefore, these 1990 costs have not been
included in the recommended cost of service. If the contract
is renewed in 1990, HL&P will be able to recover these costs
through a purchased power clause in its tariff.
Operations and Maintenance Cost
Wage and Salary Expense
HL&P proposed an increase of $4 million to recognize the
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current cost of non-STNP labor adjusted for a 3\ contract
increase for union employees and an estimated 4% increase for
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non-union empl6"ye~s;' 'The 4% non-unIf6:n'" inci?E;ase which the
Company describes as "best estimate~ is not known and
measurable.
Therefore, Regulatory Affairs recommends a
disallowance of the requested 4% estimated increase in non-
union wages. The reconunended level of wages also includes a
minor adjustment to recognize a more normalized overtime rate.
Employee B~nefits
The major decreases to employee benef,i ts are recommended in
the following areas:
Medical and Dental Insurance - $5 million .
.of" .....
Life Insurance - $.5 million
Retirement - $1 million
HL&P's calculation of medical expense included a 16.87%
inflation factor, yet excluded $2 million of .addi tional savings
related to changes in the medical and dental plans. The
Company's application of an inflation factor does not reflect a
known and measurable event.
Therefore, the adjustment for
inflation has been eliminated from this recommendation.
HL&P requested life insurance expense at the test year
level.
The insurance plan requires HL&P to pay any lIfe
insurance costs which excee.d the amount provided. by employee
contributions. Analysis of this test year expense indicated that
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: :~~ . We' ~~C~ridi": ~. .d.e~~.~as~ .'to. r~'t.l(~~nt. exlieo..... 1. relaid
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"':i .;.' ,'~'cti'~~i."~~~'~~' 'ene~~t. "was: afro '. :.~ 6.";' a~. erto~ Ude'fD"
i:.... "...:. ~ . t... .,'. '0, I,. I, :'. ", '.: '. . :.:.. .
. '}f:' ai,.P'~:"d.,;~~:o~~.n~ ;.: .' '::~n. ~~xp~~se~.:~~ce, ;:ag~~' . ~o~r~C~l~~ o~ te
'..~~~ error "~e.u~~.~cl;'(n a'~ " d,!.~.~ea.~ t~, tbe'" n.e. pef.~en.tag". ":~
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. :Jr ~J:o"rt~~~b'~~p'q '~.~e~!..~peils. ...:~1::.. '. .' (::. '..: ".?t.:.
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:~)~ . . . '.:: I~~~de~,,: 11' ~. h.e. .~~ve:~~e ~. ~equ~'~~n'" Is.: a~ ~~pen.e ~\:to _'I
.-t,: .~t.te:. ;: -IIO!l"l~~.-j .~op.-~tJ:~. 1~+.. . ~~~.. reque.t t. ..J
1 ~_t~~D~. :~:. av1 ~ ,~fng:, tbe,: .e~.~ .~~ ~:. In wbfob ~: n.oD-lna'f4 .
:~~. loss.oc~ir,~.... '.,.:eW.'~n'A' e~ i~. .:~,e~agej: thl.s r'~qu~.td'
. j'.' . .' ..... : . '. ." '. :.' . . r.t
~.. aount .uat be r.: . ced ':b; $.'381 ~"OOO i. . "I:s ten' ;ear average:..
: :.f _ uaa4; to Afi~at.. tl. ~ii~~a.lciD .~f'-'~!(~.lD Wb:~~. D? noD-l~~~
=t: losses oQcurr~. .tes.: ten'.ye.~.. 111ci4e 'bOth yean before ~d
'f' ait~r' tbe.pef-i~ .. :iect~ ~':'BLi.P..'" '.~$' '.' g
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.1 ;. .~.'!f~t:.~.J.*-~~':~1~~.. ~~~~~il factora o~: .58SS' ~
:j . 2~' ~r. ...f.q.~Q~i~" :. .nd~:': un~l~_c:tJJ;li.I~; expens~i" respectlv~J;.
i Dd~9 .~.~~~\*~.~ '.~I~~e :~r'1e~~: the. R~l~.t~ry Aff.ir. i I
::f r.~.,~;~,.:of ..:~~~~.-O,,:.~",:,-..~ .t~.i;'~.~.~h.._r.d; ,
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interest cost results in a recommended decrease of
.14% to the
Company' s requesL:~> ' ' ,
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Advertising, Contributions and Dopations
The Company's requested advertising contributions and
donations have been reduced by $4.5 million in order to eliminate
$2.6 million related to the advertising program which was
determined to be promotional. Additionally $937,000 was removed
to eliminate all charitable contributions.
Non-Recurring Expenditures
In reviewing fluctuations in expenses, $2,435,000 of STNP
related expenses occurred during the test year. These expenses
occurred before the commercial operation of STNP. A major item
..... _JII'r
of these expenses was the overhead on litigation costs
associated wi th the Brown and Root lawsui t, w.hich the other
owners of STNP refused to pay. HL&P paid the entire amount.
The other item related to a re-allocation of operating expenses
at STNP. Both of these items are non-recurring and should not
be included in the determination of the revenue requirement.
DEPRECIATION & AMORTIZATION
The Company's request for depreciation and amoriization was
reduced
to eliminate depreciation associated
with STNP,
decommissioning and the amortization of Malakoff expenditures, as
previously discussed.
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021
FEDERAL INCOME TAXES
~
The Company requested that the excess deferred Federal
income tax reserve generated by the tax rate change of 1986 be
returned to the ratepayers over a nine year period. This excess
on the "unprotected piece" was $47,163,000.
The Company chose
nine years to be consistent with the proposed phase-in plan.
Regulatory Affairs recommends a three year period to return the
excess to the ratepayers.
In the Company's original filing, an annual amount of
$2,001,000 related to the excess deferred taxes on the "protected
piece" was omitted. Regulatory Affairs is recommending that this
amount be Incorpor~ted in the tax calculation.
... -
~
RETORN
The return component of revenue requirements is the product
of multiplying the invested cap! tal (rate base) by the overall
rate of return.
The following adjustments are reconunended to
reduce HL&P's proposed invested capital.
Accumulated Depreciation
As discussed earlier, the plant investment related to STNP
has been removed pending the determination of the prudence of
this project. Accordingly, the recorded accumulated depreciation
for STNP must be removed from the rate base.
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025
Retirement Plan
.""Y ~,~~ ~~.}t
: ;~i~~.:~1 &~. < .<. .~.
In addi tionto HL&P I s reduction fo'i;' retirement plan costs,
$15,453,000 should also be removed from invested cap! tal. This
reduction relates to additional costs which were expensed and not
expected to be paid in the current year. These amounts.should be
removed from the rate base until the funding is made.
Prudence Review of STNP
HL&P requested $28,366,000 for the expenses. rela ted to the
prudence audit of the STNP project. This amount ~as been removed
in this presentation. The costs associated with ~he prudence of
STNP is similar to an engineering study to investigate an aspect
of the construction of the project or an environmental study
performed.
These prudence costs should be capi talized to the
project and depreciated over the useful life of the unit.
'Other Cost Free Capital
The Company should not be allowed a return on cost free
capital.
At September, 30, 1988, the Company has withheld
$10,648,000
from the
contractors building
the
Limestone
generating units. This amount of money has been included in the
rate base but has yet to be paid to,~he contractors building the
units. This amount of money is cost free to HL&P until they pay
the contractors and should be removed from the rate base.
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Cash Working Capital
The $104,975,000 negative cash 'working capital results from
changes in the fuel mix, elimination of items recognized in pre- ~
payments, and changes in the lead days associated with Federal
income tax, preferred dividends, interest on long term debt and
the overall reduction of the Regulatory Affairs' revenue re-
quirement.
Nuclear Fuel
Since STNP has been removed, the related nuclear fuel in-
vestment should also be removed.
Deferred Federal Income Tax
The Company' has removed $16,829,000 million of accumulated
deferred Federal income tax from invested capital because the
deferred expenses giving rise to the deferred tax were not
~
included in invested capital. Regulatory Affairs .recommends that
the Company's proposed treatment be rejected. While it is true
that the unamortized balances of these expense deferrals has not
been included in invested capital, recovery of these expenses has
been included in the cost of service. The Company was entitled
to a .tax deduction during the year in which the expenses
occurred, thereby rece.iving cost free capital from the Federal
Government. Further, the ratepayer is providing recovery of this
expense through rates.
This treatment is also consistent wi th
the treatment adopted by the Commission in Docket No. 6765.
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027
Rate of Return
An electric 'utility is allowed the opportunity to earn a
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reasonable rate o:t:~";;r'e'"tili-~r'n on its investment"iac'tat~ding to PURA.
This rate of return is expressed as a percentage and multiplied
by the rate base to calculate the return dollars included in the
cost of service. Specifically, the' cost of each component of the
capital structure (generally pebt, preferred stock, and cornmon
equity) is multiplied by its percentage of the total capital
structure. The cost of debt and preferred stock generally can be
determined d~rectly since there are stated interest rates and
dividend rates associated with each issue. However, there is no
stated interest or dividend rate associated with the cost of
equity.
Therefore, the cost of equ)ty must be estimated.
Finally, a representative capital structure must be chosen in
'.1;'-0 . "="
order to determine each component I s percentage, of the capi tal
structure. '
In October 1988 HL&P issued $68.7 million in collateralized
revenue refunding bonds. Therefore, the September 1988 capital
structure was 'updated to October, 1988, to take this known and
measurable change into account. Using the October 1988 capital
structure of HL&P resulted in a 26 basis point decrease in the
p~rcentage of long-~erm ,debt, a 4 basis point, decrease in ttle
percentage of preferred stock and a 30 basis. point increase to
the percentage of common equity. This capital stJ,"ucture consists
of 47.48 perce~t long-term debt, 6.52 percent preferred stock and
46.00 percent common equi ty. '
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HL&P has seven adjustable rate bond issues and two
adjustable rate preferred stock issues wi th new interest rates
set on a periodic basis. Average interest and dividend rates in ~
effect for the twelve month period ending October 31, 1988, have
been used as representative interest rates for the per iod this
rate recommendation is expected to be in effect.
HL&P's
resulting cost of long-term debt and' preferred stock are
estimated to be 8.61 percent and B.19 percent, respectively.
Since the cost of 'equi ty cannot be measured di rectly, the
cost of equity has been estimated using a risk premium analysis,
a discounted cash flow analysis (DCF) and a comparable DCF
analysis. In a risk premium analysis the cost .of equi ty is
estimated by determining the additional return required by
investors for holding .P.- company I s s,tock instead of its debt. A
risk premium
of
.200-400 basis points has been added to the
, I
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December average single A utili ty bond yield of 10.06 percent
from Moody's Bond Survey, resulting in a range of 12.06 to 14.06
percent.
The discounted cash flow analysis is based upon the Gordon
dividend growth model which recognizes that the return to the
stockholder consists of dividend yield and growth. Since BL&P is
a wholly owned subsidiary of HI! and investors purchase shares of
IIII, the model has been applied to HII. The resulting cost of
equity range ii 15.26 to 15.76 percent. The proposed acquisition
of Rogers Cable, Inc., may be affecting how investors view HII.
Therefore, the discounted ~ash flow analysis also has been
ap?lied to electric utilities of similar risk to HL&P.
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029
The selection criteria for comparable companies of similar
risk are:
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1. Electric utilities rated single A by Moody's and
Standard & Poor's
2. Investment in operating nuclear 'plants
3. No troubled operating nuclear plants
4. A minimum of 80\ of revenues from electric service
5. Electric utilities which purchase less than 50\ of their
electricity
Using these criteria four electric utilIties were selected:
Carolina Power' & Light, Dominion Resources, Pennsylvania Power &
Light and Union Electric. The resulting ~verage cost of equity
..., -~.
for the four companies was 12.73 percent.
The recommended cost of equity is 12.73 percent, which is
supported by the results of the risk premium and comparable DCF
analyses.
The results of the DCFanalysis applied to HIl have
not been used because it appears the acquisition of Rogers Cable,
Inc., may be affecting how investors view HII .and
ratepayers
should not subsidize non-utility businesses owned by HII.
Weighting HL&P's cost of debt, preferred stock and common
equity by their relative percentages of the capital structure
produces a recommended rate of return of 10.48 percent. This is
i:l reduction of .75 basis points to HL&P's requested rate of
return of 11.23 percent.
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General' ovetview:(j;f' ;HL&P.Cost' of':Seivi'qeSt~dy
:' : :'.'~"" .:' :.~.... .". .,))U~'. ",' ;....' . ',', ~ ,"" I . ::~~l" ~ . '
.,'.1.;: ...... T!,~ prima;~ ~f~ose.?~ aCOS.~Ofs~j"icestudY
a rea$onable fost,a1;~ocat:ion methodolo<i~?: to assign
. ,~> '. . . I .' .:'~. . '>~:':'~;;f ~. .. . . , .' ~.~~~~~",:.' '1'
:':' revenue;,., t;'e9utleme.~t'~~:i to:i ts' 'var'1pus.'QM,stomerclasses and' 'n:o .
:~1~~' ,\. : ,I.! ',':..:'~ ........ ':.{:~.i'.~ ....~... :. ....~., ,.:~s.;'.,:' ,'. "
';:/' , d e'tie lop' ra~es .~hich}!.t~:ck",the:., cost of ,s~;~Yin9, ~ach class.. ';
,r, Ht.~P'~Cq~t ofii'.service 18. ~asical.~-presented in the s~;~e
:~ ,'....~: ;. .:. . ':. '.'~i~:". . . : ........ '. I~CC ': ) ,.' '.
:;<" format as' .the":.pne ,:~'.~bmit.ted ,before 'th~i'~'Commissibn in the mqst
>! , ," .::X<~'. . ' " .~f\'. ,'. -:""J~,:'.;.
',~f: 'rec;ient' HL&:~' ra.f:e'c~f$e;' f)Qck~t No.676;~'~ ,The' o'verall cost jb'f
:~; s e rv i c<i p~6c~d~.r e ,t~.'aci:;ePtab ~e'. Th~~li is, h!>weve r , a ma ~~r
'~i . change int:t>e ~evel~~entof .ca.p~city ~~~t' allocation factort,';'t
-, . ':"'. "'~~', ~ '.,'. '. ". , '-i~.' ' .
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'~;' production ,~plant an~~1Jits t,elated expens~~.
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:;(.;:.' l'rodlictiop-capaci*~Lcost Allocation F~B.tor
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~~t HL&P' s. ,na.~or ~~!:lnge', in ',1 ts cost. :'~,f. ,service study is
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:'\ ' manner, in" which th~f "allocation
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, factoit}: for production-capaciiy
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.;::; related c()st"is d~,JylOped. In .the t.w~~tmost recent rate cas~'f'
. {: 'Dockets Nos~'5779a~a 6765, the product;!~f>n-capaci ty related c~:$ t
.<~ . ..:,~f" . ".:..,,<: . ~: .
;~:.. : wasf alloca(ted:ontlt~: .basis of a' methqf;' calied the' Erobabi"llty ,
.J;::.,.. peait Method. ,', also' '~~ferredt;o as thp'~~~'~rnh~hi l' toy nf >>~'Jati:~rQ
':~-'.' ., ". . ~~~;>. . - J. .~'~J'I' . H.
} Ma rain' (PONH) ..." 'In:~!i~ener:alterms, PO~:~" is the probabi Ii tY;::?f
];be ingunable tosu~fl'Y a p,; r 0 cu ~a r maW9 ii. between capaci"ty )1 ~
, f: service' and system:[\:, load. This met~od is' accomplished):iy
.-' ',. . ",j~...... . .'i . T
), calculating the proJ:t~bility of be:~l1g una.:ple to serve the load In
.j,' each hour. ~he;PONl{~~alue is summed for{~allhours of the year :,';1:0
~~ . .~~.~
~.:, determine the lotal:1poNM.
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the total PONM to yield a weighted hourly value. These weighted
~'~.i~;~~~: t,~ .Y.;./'~ . ~ ,; k ~~~. ,~ .~ / .~
hourly values are~i~~l~lplied by the class"es', load; for each hour
relative to total system load for that hour.
The resulting
factors are summed over all hours by rate class to yield
Probability Peak allocation factors. The probability function is
inversely related to reserve margin~
The method proposed by HL&P is Average and Excess with 4 Non
Coincidental Peak (A&E-4 NCP).
According to the Company's
testimony, theA&E-4 NCP is chosen because it tends, indirectly,
to result il1 satisfying the various criteria set forth in the
selection of the cost allocation methodology. These criteria are
established in order that allocation be apportioned accurately:
track cost
- recognize off-peak usage
w. _~.
- recognize demand diversity
- provide stable results over time
- allocate cost to time periods
'.
The same cr iter ia were also suggested by the same company
witness in Docket No. 6765, in which he advocated the application
of PONM as the basis for developing allocation factors for
production plant and its various related costs.
It appears that the main reason HL&P rejected this capacity
cost allocation basis in this rate request is that HL&P has a
reserve margin,of approximately 36\.
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The reserve margin calculation provided by HL&P for 1989 is
37.80\, and includes STNP Unit II capacity addition of 385 MW.
If this capacity is eliminated from the total system capability,
the expected reserve would be only 34.15\ instead of 37.80\.
Within this range of reserve margin, there is no absolute
certainty that the utility system will not experience forced
outages.
In the last docket, HL&P recommended the PONM
methodology when the reserve margin for 1988 was calculated to be
31.8\.
The changing of cost allocation methodology would have a
substantial impact on the revenue associated with each individual
customer class.
As depicted in Schedule-Special/RCS, the low
load factor classes such as Residential, Miscellaneous General
Services and Street & Protective Lighting classes will experience
.... ---
a significant difference in their allocation factors in
comparison to the HL&P's proposed A&E-4 NCP.
PONH is a reasonable method of allocation because it relies
on both "on-peak" and "off-peak" demands, and for the reasons
given above the PONH model as previously adopted by the
commission is recommended.
Transmission-Capacity Allocation Factor
HL&P applied the A&E-4 CP to develop the allocation of
transmission-capacity related cost.
This method was also
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approved by th~ PUC in the last HL&P rate case. The City does ~J
not object to the application of this method, 'because it
recognizes both the on-peak and the Off-peak capacity users.
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033
Development, of ~,9~BJ.l~ftJb1e Account Al!()cati~~,",,;~factor
HL&P has allocated the Uncollectible Account (Account 904)
on the basis of delinquency records which are maintained by its
credit department~ This method of allocation was rejected by ~he
pue in Docket No. 6765 on the basis that bad debt expense is not
.
caused by_ the cur rent customers. Those who caused this expense
to be incurred are no longer connected to the system. The pue
order recognizes that a customer who remains on the system should
not be pena~ized by somebody else who left, the system just.
because they all belong to the same rate class. Since the source
of this expense is from previous time periods, it is reasonable
to characterize an uncollectible expense as cost which is
external to the system. It should be treated ,as cost to be
..... -,.,...
. '
shared by all customers currently connected to the system.
Therefore, revenue from each customer class should be used as the
allocation factor for this cost component.
Class Revenue Increase Recommendation
HL&P has proposed a total system revenue increase of
15.5\. Base revenues by class vary from 6.60\ to 83.4~%.
The proposed revenue increase is mainly based on the cost of
service result and revenue impact consideration of the cur rent
relative rate of return index. It appears that HL&P has limited
th~ revenue increase recommendation to the pue's policy guideline
",hlch fixes a cap equal to 1.,50 times the system average increase
for any class.
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Special note should, be taken of the application of the
I
relative rate of return index as one of the criteria in the
revenue increase recommendation.
HL&P has used the present ~
revenue as the basis for the recommendation for the proposed
increase. Present revenue results from the revenue collection
made according to the rates developed by PONM method. Thus, it
is inappropriate to use the current rate of return derived from
the allocated rate base developed under A&E-4 NCP; as proposed by
HL&P, as a criterion in the class increase recommendation. The
comparison i~ valid only if the same costing methodology is used
to determine the proposed rate base.
Customer Service Charge
The customer service charge ~or each' customer class should
.~ .",.
I
J
reflect only the minimum charge associated with the facili ty
plant, i.e. service drops and meter, and other operations which
directly support the customer service.
Customer Billing'
It is proposed that, at least for Residential and
Miscellaneous General Services billing, HL&P incorporate all rate
component units somewhere on the customer's bill so as to enable
the verification of the amount due.
lI.aUS/fOX
-1
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Houston Lighting & Power
Docket 8425 'I;;', i,:.",
Base Rate Deficiency Calcufailm"
Revenue Requl rement.
wIth Itaff recommendatIons:
less:
Other Revenues
fuel Revenues
franchises Revenues
Base Rate Requirements
Less:
Adjusted test year
base revenues
Deficiency, base rat.
... ".
Percent Increase to bas. rat..
Revenue Requirements with fuel
Adjusted Reveooe.
excluding franchise revenues
Deficiency, excluding franchls. & other
Percent Increas.
to adjusted, revenues, excluding
franchls. and other revenues
Deficiency, total revenues
Adjusted revenues, IncludIng
franchise and other reveooes
Percent Increase
to adjusted revenues,
Including fnnchJse
and other revenues
, . j
'""_:.,'
035'
Exhibit I
"~!' .
'~H'
c~ny Request
65 percent STNP
.Staff RecCllllllendat Ion
o STNP
$3,321,192
$2,908,498
$32,244
$32,244
S952,634
$1,013,810
S83,730
$68,553 ,
$2,252,584
$1,793,891
S1,820,112 $1,820,112
S432,4n, ($26,221)
23.76% .1.<<%
S3,205,218 $2,801,701
S2, m, 74& S2,m,74&
s.432,4n $34,955
15.60%
1.26%
s.446,191
$33,503
S2,874,995
12,874,995
15.52%
1.17%
· Recognizes that insufficient Information is available to make a responsible recommendation regarding ST~
. IL
. r.r=:J :.....~....!........- ~1I..
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036
I,
\.,
CITY Of H~STOH
SCHEDULE I
.............**.....**.....**.....
REVENUE REOUIREHENT
l
,
i
I
~
HOOSTOH LIGHTING & PalER . DOCXET 8425
...................
(COLUMN 1) (COLUHN 2) (COLUHN 3) (COLUMN 4) (COLUfUf 5 )
TEST YEAR CQ4PANY CCI1PANY STAFF STAFF
PER BOOKS ADJUSTHEHTS RECUESTED AOJUSTI4EMTS REC1:JV4EMt)E1)
.DESCRIPTlON TO TEST YEAR TEST YEAR TO REQUEST TEST YEAR
.............................. ............... ............... ............... ............... ...............
PURCHASED P0'4R S 371.732 S 40.557 S 412.289 S (3.028) S 409.261
FUEL 991.763 (154.190) 837,573 57.427 895,000
OPERATIONS ANO MAINTENANCE 629.502 47,615 677.117 (82,260) 594,857
DEPRECIATION 227,690 36.88& 26t..576 (31.990) 232.586
AMORTIZATION 8.982 18,763 21.745 (20.533) 1,212
INTEREST ON CUSTOMERS DEPOSITS 0 0 0 2.328 2,328
TAXES OTHER THAN UICatE TAXES 152,078 22,449 174.527 (11.352) 163.175
FEDERAL INCatE TAXES 143,885 68.393 212,278 (91.495) 120.783
RETURN 479.766 235,321 715.081 (231.791) 483,296
............... ............... ................ ............... ...............
REVE~~E REOUIREHENT
s
3.005.398 S
315.794 S
3.321,192 1
(412,694) S
2.908,498
.....~s.~~=s... ..2z~=.a=..==.~ ..:2.......z... .......c....... ...............
OTHER REVENUES
FUEL REVENUES
s
29 .168 S
952.634
2.1,76 S
o
32.244 S
952.634
o S
61.167
32,2~4
1,01 1)1
i
STAFF'S ADJUSTMENT TO TEST TEAR PER SOOKS ~ DERIVED BY ADDING
TNE AMOUNT IN COLUMN 2 TO THE AMOUNT IN 'COLUHN 4
I
'---.---i
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~..~/
037
CITY OF HOOSTON
SCHEDULE 11
....**........****.....*.**.......
u
HOUSTON lIGHTING & ~R . DOCKET 8425
. '
"(, A ~ 'f;': F" ;: -.",Oi;;1 :~ #~4 . {;.', -. .' _'. .:.- {" ;:;':~/
OPERATIONS AND 'MAINTENANCE (EXCLt.nING FUEL AND PURCHASEDPMR)
*****************************************..***********..*.*...*
(COLUMN 1) (COLlJ4N 2) (COLLt4M 3) (COL\J4N 4) (COlUMN 5)
TEST YEAR CCMPANY CQ4PANY STAFF STAFF
PER BOOJC:S ADJUSTMENTS REOUESTED ADJUSTMENTS RECCHiENDED
DESCRIPTION TO TEST YEAR,. TEST TEAR TO REClUEST TEST YEAR
................................... ............... ... .......... .-...... ............... ............... ...............
o&H Nor ADJUSTED S 191,203 S 0 S 191,203 S (2,435) S 188,768
UACE AND SALARY EXPENSES 259.299 ~.O10 263.309 (5,385) 257.92'
EMPLOYEE BENEFITS 53,514 (10,326) 43,188 (6,504) 36,684
SIP ANNUALIZED o&H 2.~~7 27,190 29.637 (29,637) 0
PROPERTY INSURANCE RESERVE 0 1,269 1,269 (381) 88a
FACTORING COSTS 17,630 1,852 19,482 (5,.743) 13,739
fRANCHISE REOUIREMENTS 70,181 11,760 81,941 (13,388) 68,553
RATE CASE EXPENSES 1,205 3,216 4,421 (3,152) 1,269
EE I DUES 477 (81) 396 0 396
LEGISLATIVE ADVOCACY 9 (9) 0 0, 0
SOCIAL DUES 35 (35) 0 0 0
RESEARCH AND DEVELOPMENT 11,753 (25) 11,n8 0 11,m
lEASE AND RENTAL CHARGES 7,467 (192) 7,275 0 7,275
CREST"" CUST""E. .EPOSITS 0 2,200 2,200 (2,200) Q
.. I., CONTRIBUTIONS & DONATIONS 3,820 937 4~757 (4,467) 290
*R ~HEELING COSTS W' 131 (733) 0 0 0
I
ES TAX INCREASE 0 362 362 0 362
MAlAKOf' lIGNITE COSTS 0 6,823 6,823 (6,823) 0
~CNRECURRING EXPENDITURES 1,531 (1;533) 0 0 0
UNCOLLECTIBLE EXPENSE 8,196 930 9,12& (2,146) 6,980
............... ............... ............... ............... ...............
lOTAL OPERATIONS AND MAINTENANCE S 629,502 S 47,615 S 677,117 S (82,260) S 594,851
..=:........... .1I2.:l2:..::&:I;..a. .....s.a....... ..:II22.:la2:1..a~ z=s.:........s:I
STAfF'S ADJUSTMENT TO TEST YEAR PER BOOKS IS DERIVED BY ADDING
THE ~~T IN COLUMN 2 TO THE AMOUNT IN COlUMN 4
[
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c=----=--- ~I' .
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~..--".
038
I .
CI TY OF HOOSTOM
SCHEDULE III
.......*..*...**.**.*...*.*.......
.'
HOUSTON LIGHTING & POVER . DOCKET 8425
SUHHARY OF OTHER TAXES AND FEES
...*...........*............*...........
~
(COLUMN 1) (COLUMN 2) (COLUMN 3) (COlUI4H 4) , (COLUMIf 5)
TEST YEAR Ca1PANY Ca1PANY STAF' STAFF
PER 8001CS ADJUSTMENTS REQUESTED ADJUSTMENTS RECa4HEI/DED
DESCRIPTION TO TEST YEAR TEST YEAR TO REQUEST TEST YEAR
................................ ............... ............... ............... ............... ...............
TEXAS AD VALOREM TAXES S 14,113 S 14,281 S 88,394 S (6,061) S 82,327
PA.YROll TAXES 16.588 (549) 16,039 0 16,039
OTHER liON REVENUE RELATED TAXES 22.892 4,611 27,563 0 21; 563
............... ............... ............... ............... ...............
NON REVENUE RELATED TAXES S 113,593 S 18.403 S 131,996 S (6,067) S 125,929
......a......a. ..:n:a:lr2=:z.a.... .a..z......s:... ...Z:l.lIa2.:II..... ...............
TEXAS PUC ASSESSMENT S 4,835 S 509 S 5.344 S (ilM) S 4,680
TEXAS STATE GROSS RECEIPTS 33,650 3,537 37,187 (~,621) 32,566
............... ............... -............-. ....-.-...-.... ...............
~EVENUZ RELATED TAXES OTHER
THAN INCCHE TAXES S 38,485 S 4,046 S 42,531 S (5,285) S 31,246
.....s:s....:a..x .s.........s.... ..a..s......... ...:21.=-......... ...==~....a...---!
SUKHARY OF OTHER TAXES , ,
OTHER THAN INC01E TAXES .~ - I
'-.-J
...zs~...==:I..=.:a=.....
NON REVENUE RELATED TAXES S 113,593 S 18,403 S 131,996 S (6,061) t 125,929
REVEN~E RELATED TAXES 38,485 4,046 42,531 (5,285) 37,246
............... ............... ............... ............... ...............
iOTAl TAXES OTHER
THAM INCa-lE TAXES S 152,078 S 22,449 S 174,527 S (11,352) S 163,'15
.........~...... .......:11....... ............... ......S1lss...... .........21:'....
sr~;FIS ADJUSTMENT TO TEST YEAR PER BOOKS IS DERIVED BY ADDING
~HE ~HT IN COLUMN 2 TO THE AMOUNT IN COLUMN 4
~
, .
'.
.
'.
[
DESCIUPTlOH
PLANT IN SERVICE
ACCUMULATED DEPRECIATION
!
.~\:~.
CITY OF HOOSTON
}
**................................
trY
HOUSTON LIGHTING & POUER . DOC~ET 8425
:J,i'. .
(COLUHN 1)
TEST YEAR
PER BOOICS
s
8,889,257 S
(1,610,139)
-...
INVESTED CAPITAL
*.**..****......
".,
(COLUMN 2)
CctlPANY
ADJUSTMENTS
TO TEST YEAR
(1,760,860) S
(157)
(COlUMN 3)
CaiPANY
REQUESTED
TEST YEAR
1,128,391 S
(1,610,296)
03~9
(COlUtN 4)
STAFF
ADJUSTMENTS
TO REQUEST
o S
4,713
SCHEOULE IV
(COlUMN 5)
STAFF
RECOMMENOED
TEST YEM
...............
1,128,391
(1,605,583)
............... ............... ............... ............... ...............
NET PLANT IN SERVICE
NUCLEAR FUEL
PRoPERTY HELD FOR fUTURE USE
~RKING CASH ALlOUANC!
MATERIALS AND SUPPLIES
PREPAYMENTS
FUEL INVENTORY
STP PHASE'IN
U'rt~TlZED B'-.lANCE OF HAlAKOFF INY
UNAMORTIZED BALANCE OF TRINITY HINE
Dc PRUCENCE REVIEW OF STP ,
EFERRED FEDERAL IHCOHE TAXES
raE 197' INVESTMENT TAX CREDITS
CU~TOHERS DEPOSITS
INJURIES AND DAMAGES RESERVE
RETIREMENT PLAN
OJSTCHER ADVANCES FOR COHTRUCTlON
OTHen COST FREE CAPITAL
7,279,'18
141,882
180,416
9,484
96,700
18,939
17,886
1,149,101
61,280
123,514
28,366
(831,688)
(4,~0)
(37,803)
(1,m)
(35,443)
(2,054)
o
(1,761,017>
o
(87,190)
o
o
o
o
o
o
o
o
16,829
o
o
'0
o
o
o
5,518,101
147,882
93,226
9,484
96,700
18,939
17,886
1,149,101
61,280
123,514
28,366
(81',859)
(4,900)
(37,803)
(1,m)
(35,443)
(2,054)
o
4,713
(141,882)
(93,226)
(114,458)
o
o
o
<1,149,101)
(61,280)
(123,514)
(28,366)
(16,829)
o
o
o
(15,453)
o
(10,648)
5,522,814
o
o
(104,974)
96,700
18,939
17,886
o
o
o
o
(831,688)
(4,900)
(37,803)
(1,m)
(50,896)
(2,054)
(10,648)
TOTAL INVESTED CAPITAL
.....--........ ............... ............... ............... ...............
4,61',603
s
8,199,025 S
(1,831,378) S
6,367,647 S
(1,756,044) $
s.............. ...aa:m=s:..... :s....se:...... s:..c.........a .m.s:..........
kAlE OF RETURN
l\'::TUR:f
0.112300
-0.007500
0.104800
.==.~s:s....... ....swsa2...... .s:as:.........
S
715,087 S
(231,791) S
483 ,296
as.s:......,... Ra...a..=...... ~.=s....s......
SThFF'S .~JUSTMENTS TO TEST YEAR PER BOOKS IS DERIVED BY ADDING
TitE I.HOOHT IN COLUMN 2 TO THE AMOUNT IN COlUHH 4
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11 !~ll'lfllt 111111-
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--... " .! !]D1JJm!L[]I.J~, ..._:Ul. , .J1"1.1U,lUlllm~ ,< ' . ' ,lllJ(TTT1r I --'--1- 41" Ii , J;p:I~-~lI~,
. .' ' :.'. CITY Of HOOSTON EXH I BIT"
I HOUSTON LIGHTIHG Mlt DOCKET 8425
. .:-- VORKING CASH ALl~ANCE
040
(COL. 1) (COL. 2) (COl. 3) (COL. 4) (COL. 5), J
DESCRIPTION STAFF ADJUSTMENTS \JORKING (LEAD) \JORICINGI
LAG i
REta4HENOEO CASH CASH 'I
REVENUE CALCULATION DAYS AMaJlCT
REQUIREMENT AHOONT ((COl. 3 ·
cot.. 4)1365)
................................... ............... ............... ............... ........ ...............
WORKING CAPITAL USESz
REVENUE REQUIREMENT S 2,903,493 S 0 S 2,908,498 23.59 S 181,961
................ .......s....x... .a....s........ ........,.......
~KING, CAPITAL SOURCESz
PURCHASED PQJER S 409,261 S 0 S 409,261 .29.62 (33,212)
FUEL:
GAS 345,026 0 345,026 .39.68 (37,509)
COAL & LIGNITE 549,974 0 549,974 .11.46 (26,308)
o AHD M EXCLUDING UNCOlLECTIBLES:
, PAYROlL 263,309 0 263,3~ .13.45 (9,703)
CITY FRANCHISE FE! 68,553 0 68,553 .221.50 (41,602)
FACTORING 13,739 0 13,739 0.00 0
REMAINING 0 AND M 242,275 0 242.275 .11.35 (11,516)
UNCOLLECTIBLE ACCOUNTS EXPENSE 6,980 0 6.980 0.00 0
OEPRECIATlOH 232,586 0 232,586 0.00 0
AMORTIZATION EXPENSE 7,212 0 7,212 0.00 0
NON REVENUE RELATED TAXES:
PAYROLL TAXES 16,039 0 16.039 .20.36 C"~)
, I
AD VALOREM TAXES 88,394 0 88,394 .199.57 (4a~ I)
OTHER NON tEVENUE RELATED TAXES '#-' .....,. 21,496 0 21.496 0.00 ' I
U
REVENUE RELATED TAXES OTHER
TH.lJl INC04E TAXES:
TEXAS GROSS RECEIPTS 32,566 0 32,566 0.00 0
TEXAS PUt ASSESSMENT 4,680 . 0 4,680 .230.00 (2,949)
OTHeR RE~NUE RELATED TAXES'
OTHER THAN INCOME TAXES (0) 0 (0) .221.50 0
INTEREST eN CUSTOMER DEPOSITS 2,328 0 2,328 0.00 0
FEDERAL INCOME TAXES 120,783 0 120,783 .105.65 (34,961)
~ETURN:
INTEREsr ON LT DEIT 188,615 0 188.615 .84.76 (43,800)
PREFERRED DIVIDENDS 24,441 0 24,441 .46.13 (3,089)
COHMON DIVI~ENDS 270,21,0 0 270,240 0.00 0
............... ............... ............... ...............
TOTAL ~URKING CAPITAL SOURCES S 2,903,498 S 0 S 2,903.498 (293,874)
...:lS8::a.sa.a:ra .:I...:S=:l2ZZ::rw. .c....:&.s...... ...............
NET (LEAD) LAG IN RECOVERY
0; COST OF SERVICE ITE"S (105,912)
...............
NON COST OF SERVICE ITEHS: .
AVERAGE BAL OF CASH + UORKING FUNDS S
938 S
o s
938
365.00
~~r
i .
..........1 I.
I I
..........U.
tOTAL NON COST OF SERVICE ITEMS S
938 S
o s
938
...===:=:1=====-
_===.a:a==a::==:rs
..:a====....:..
UORKING CASH ALL~ANCE
s
(104,974)
. l .....:.:.a..:..
~
~
o
ALLOCATION FACTORs COMPARISON
CITY OF HOUSTCN
H...'""(JSTON UGHnNG & POHER
COST OFSERV!CE SlUOV
DOCKET 00.8425
................
A&E..c NCP Sing/o NCP .c.NCP PCNM PalM PCH.C Single CP 4CP j
Class:; (PrpOMd (HLIP) (Test Year) (Tost Year) (OU 6765) (Ok' S77D) (T..e Year) (THe Year) (
~ ,,;;;".' bY HL~P\
(%) (%) , (%) (%) (%) (%) (%) (%)
Residential 3SU 1-40 42.6770 40,4755 34.8"53 37.0756 34.4788 "2.8506 38.;'804
Mise. Gene..J Service 26.8480 2&.114" 2&.;371 28,2716 2&~5888 2.,7100 25.3900 26.7148
Large General Service 18.3785 17.2331 18.00U 20.8683 " 16,0931 13.9207 18.2751 10.2104
,
LOS.'" 5,5731 5.0890 5,3448 6.443; . 5.4856 7.5332 5,"'41 5,6522
Los-a 6.;992 6.3701 6,6851 7,8968 ~ 11.0365 13,9815 6,0783 6,5833
Public Utility 2.0188 2.1085 2.0981 1.5422 2.8151 5.3571 1,8919 1.8710
Slreel I Ptolective Ughtin, 0.3201 0.3025 ' 0.3173 0.0275 0.0048 0,008 0,0000 0
Guard Ughting 0.0477 0.0445 0,0474 0.0044 0.0005 0,0008 0.0000 0
'. Total 100.0000 100.0000 100.0000 100.0000 100.0000 100.0000 100.0000 100.0000
.:~~~-,j,\..
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r-----
l J
UDl!.J!:aDJ:q.~ ' ,:l.L.
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~;;' . \J
~-'
042
CITY OF HOOSTON
SCHEDULE Y
......................*..*........ .
HOOSTON LICHTING & POUER . DOCKET 8425
FEDERAL INCOME TAXES
I
I
I
----.!
*.............*....-
DEtCRIPTJON
STAFF
.~ECOHHENDED
TEST YEAR
....................
S 483 ,296
(188,615)
(11,975)
(12,481)
21,603
1,800
(46)
....................
293,582
0.515151515
....................
151,239 I
I
I
I
~
(11,915)
(12,481)
....................
S 120,m
.zs.a.s.............
RETURN
PLUS (MINUS)
INTEREST EXPENSE
AMORTIZATION OF lTC
DEFERRED TAX AMORTIZATION IN EXCESS OF 341
ADDITIONAL D~PRECIATIOH
HET ADDITIONS TO RESERVES
SPECIAL DIVIDEND DEDUCTION
iAXABLE COMPONENT OF RETURN
TAX FACTOR
TOT~l FEDERAL INCOME TAXES BEFORE ADJUSTMENTS
PLUS (MINUS): ..... _.....
JJlOR 11 ZA 11 011 OF IfC
DF.FERRED TAX AMORTIZATION IN EXCESS OF 341
TOTAL fEDERAL INCOME TAXES
u
n
'--'
o
[
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.' .'
Secti on 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
Section 11.
Section 12.
Section 13.
Section 14.
Section 15.
Section 16.
Section 17.
Section 18.
Section 19.
Section 20.
Section 21.
Section 22.
Section 23.
Section 24.
Section 25.
~
, ,)
. .
~-
043
ORDINANCE NO. 1342
'f' .;: ~:f ~
TABLE OF CONTENTS
Short Title
Definitions
Grant of Authority
Costs to Grantee
Term of Franchise
Franchise Territory
Use, Rental or Lease of Utility
Poles and Facilities
Compliance with Applicable Laws
Subject to Police Powers of City
Conditions of Street Occupancy
Indemnification and Liability for Damages
Liability Insurance
Facility Upgrade, Rebuild, New Developments
Operational Standards
Underground Installation
Emergency Use of the CATV System
Compliance with State and Federal Laws
Modifications by FCC; Jurisdiction of FCC
Employment Requirements
Other Business Activity
Payments to City
Records and Reports
Free Drops and Service to Schools and
Public Buildings
Senior Citizen Promotional Program
Customer Relations
~_.
_. .._..._.__.__~.~..Il:~,.
, '
, "
I LIII!JIillD,IU _ .._111.
Section 26.
Section 27.
Section 28.
Section 29.
Section 30.
Section 31.
Section 32.
Section 33.
Section 34.
Section 35.
Section 36.
Section 37.
Section 38.
Section 39.
Section 40.
Section 41.
Section 42.
Section 43.
,JIIlI1IJIIl'llITlf ,
-LJIlJ' ','I 1
D -- - --- -- .. r::.....J
\.
044
Grantee's Rules
11
I I
I
I
Rates
Discontinuance of Service
Prohibition of Discriminatory or
Preferential Practices
Non-Exclusive Franchise
Non-Compliance of Franchise
liquidated Damages
Revocation of Franchise
Notices
Transfer of Ownership or Control
Failure of City to Enforce This Franchise, No
Waiver of the Terms Thereof
Valuation
l
~
Grantee to Have No Recourse
Acceptance of Franchise
Severability
Superceder Clause
Publication
Passage and Effective Date
]