HomeMy WebLinkAboutR08-192247
RESOLUTION NO. R08-192
A RESOLUTION DENYING THE RATE INCREASE
PROPOSED BY THE SOUTHWESTERN PUBLIC
SERVICE COMPANY; REQUIRING THE
REIMBURSEMENT OF MUNICIPAL RATE CASE
EXPENSES; FINDING THAT THE MEETING
COMPLIES WITH THE OPEN MEETINGS ACT;
MAKING OTHER FINDINGS AND PROVISIONS
RELATED TO THE SUBJECT; AND DECLARING
AN EFFECTIVE DATE
WHEREAS, Southwestern Public Service Company (SPS) filed a
Statement of Intent with the City of Plainview, Texas ("City") on or about June 12,
2008 to increase its system-wide, annual revenue requirement, by approximately
$84.2 million; and
WHEREAS, the City is a regulatory authority under the Public Utility
Regulatory Act ("PURA") and under Chapter 33, §33.001 et seq. of PURR has
exclusive original jurisdiction over SPS' rates, operations, and services of a utility
within the municipality; and
WHEREAS, the original effective date for the SPS rate increase request
was July 17, 2008, and the City suspended the effective date for the City to take
final action until October 15, 2008; and
WHEREAS, the City, acting in concert with other cities known as the
Alliance of Xcel Municipalities ("AXM"), has employed rate experts to review the
testimony, schedules, workpapers and other documents provided by SPS in its
Statement of Intent and in response to discovery requests; and
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WHEREAS, the City's rate experts have reviewed the books and records
of SPS and additional voluminous data provided by SPS and the review is on-
going; and
WHEREAS, based upon the review of the rate experts the request to
increase rates should be denied.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PLAINVIEW,
TEXAS THAT:
PART 1. FINDINGS
(A) On or about June 12, 2008, SPS filed crate-filing package with the
City based on a test year ending December 31, 2007, seeking to increase rates
by approximately $84.2 million with a proposed effective date of July 17, 2008,
which was suspended, to October 15, 2008.
(B) SPS' requested increase represents an increase in base-rate
revenue of approximately 21.35%.
(C) Based on company-provided information, SPS' proposal would
result in an average monthly increase per customer within the City for the
following sample of rates assuming consumption of 1000 kWh per month:
Current Proposed
Total Total Dollar Percentage
Charges Charges Increase Change
Residential Service
Summer $108.58 $120.56 $11.98 11.03%
Winter $84.55 $109.64 $9.50 9.49%
Residential Service
With Space Heaters
Summer $108.58 $120.56 $11.98 11.03%
Winter $88.74 $94.90 $6.16 6.94%
Small General Service
Summer $111.11 $108.44 -$2.67 -2.40%
Winter $102.11 $99.35 -$2.76 -2.70%
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(D) The City has exclusive original jurisdiction under the Public Utility
Regulatory Act, Texas Utilities Code Chapter 33, §33.001 et seq. to evaluate
SPS' proposed rate increase.
(E) The City has joined a coalition of cities, known as the Alliance of
Xcel Municipalities ("AXM").
(F) AXM has hired experts to evaluate and make recommendations
regarding the proposed rate increase.
(G) While AXM's experts will conclude their investigation no earlier
than October 13, 2007, including fuel reconciliation issues, based on current
information, AXM's experts believe that SPS is not entitled to its requested
increase in rates.
(H) These experts have determined that the rate increase proposed by
SPS is not just and reasonable based upon, but not limited to, the following
factors:
SPS has failed to reasonably calculate its consolidated tax savings
adjustment, thereby significantly overstating its asserted revenue
requirement.
SPS has failed to normalize its non-fuel production operations and
maintenance (O&M) expenses, which were unusually high in the test year,
thereby overstating its revenue requirement.
SPS failed to adjust its Test-Year energy sales to account for abnormal
weather, thereby understating present base rate revenue requirements.
SPS has overstated its asserted cost of equity by seeking an excessive
return on equity of 11.25%;
The request seeks an excessive level of depreciation expenses in rates
and understates the net salvage value of its production plant; and
The request proposes a marked departure from SPS' historic rate design
by directly assigning and surcharging all municipal franchise fees to in-city
ratepayers only, which change is unreasonable;
SPS has proposed to increase its Service Availability Charge for
Residential Service from $5.10 to $6.50 for residential consumers, an
increase of approximately 27% in the customer charge, which brings into
question such changes' consistency with energy conservation measures;
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SPS overstates the credits associated with SPS' interruptible service.
(I) The meeting at which this Resolution was approved was in all
things conducted in strict compliance with the Texas Open Meetings Act, Texas
Government Code, Chapter 551.
PART 2. Based upon the foregoing findings the rate increase proposed by SPS
and filed with the City on or about June 12, 2008, is denied.
PART 3. SPS is directed to reimburse all municipal rate case expenses incurred
by the City in relation to the filing and to continue to do so in the event SPS
appeals the City's actions on SPS' rate application.
PART 4. A copy of this Resolution shall be sent to Mr. James Bagley, Manager,
Regulatory Administration, Xcel Energy, P.O. Box 1261, Amarillo, Texas 79105,
and to Mr. Marcus W. Norris, City Attorney, City of Amarillo, 509 E. 7th, P.O. Box
1971, Amarillo, Texas 79105-1971.
PART 5. This resolution shall become effective from and after its passage.
PASSED AND APPROVED this 14th day of
ATTEST:
City Secretary
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