SETTLEMENT AGREEMENT
Exhibit
10(h)
This
Settlement Agreement (“Agreement”) is made and entered into between TXU Electric
Delivery Company (“Electric Delivery”) and the Steering Committee of Cities
Served by TXU Electric Delivery Company on behalf of all cities listed on
Exhibit A to this Agreement (“Cities”), hereinafter referred to jointly herein
as “Signatories.”
WHEREAS,
the city councils of 23 cities who are members of Cities passed resolutions in
2004 requiring Electric Delivery to file with those cities information that
demonstrates good cause for showing that Electric Delivery’s transmission and
distribution rates should not be reduced (hereinafter referred to as “Show Cause
Actions”);
WHEREAS,
other cities who are members of Cities are contemplating initiating similar Show
Cause Actions against Electric Delivery;
WHEREAS,
Cities and Electric Delivery desire to resolve all outstanding issues related to
the existing and potential Show Cause Actions and other regulatory issues;
and
WHEREAS,
after extensive negotiations, Cities and Electric Delivery have reached a
compromise and settlement to resolve those issues.
NOW,
THEREFORE, the Signatories, through their undersigned representatives, hereby
agree to the following:
1. Electric
Delivery agrees to propose and support in its next system-wide rate case or city
rate inquiry one or more municipal rates, each without a demand ratchet, that
together will cover all municipal accounts, including a street lighting rate and
municipal pumping rate that will be lower than they otherwise would be. Cities
agree to provide to Electric Delivery any information needed to design the rates
described in this paragraph.
2. Electric
Delivery agrees to file a system-wide rate case at the Public Utility Commission
of Texas (“PUC”) no later than July 1, 2006, based on a test year ending
December 31, 2005 unless Cities and Electric Delivery mutually agree that such a
filing is unnecessary. For those cities that do not have a City Council meeting
in July, 2006, Electric Delivery will extend its effective date to accomplish
suspension by August 31, 2006. However, if Electric Delivery files a system-wide
rate case at the PUC on or before June 1, 2006, then Electric Delivery will not
extend its effective date.
3. Cities
agree that Electric Delivery is not required to respond to any pending Show
Cause Action initiated by any city listed on Exhibit A to this Agreement prior
to July 1, 2006. Cities further agree to xxxxx or dismiss all pending Show Cause
Actions, not to pursue any abated Show Cause Actions, and not to initiate
similar actions before July 1, 2006, provided the provisions of this Settlement
Agreement are honored. Cities agree not to intervene in, or participate in any
manner in, any show cause action initiated at the PUC or in any other
jurisdiction prior to the proceeding described in paragraph 2, or in any appeals
of such show cause actions, except as necessary to protect the tariff or
tariff-efforts associated with paragraph 1 or to protect the city or its
residents from being prejudiced in any show cause action pending on appeal at
the PUC. If Cities intervene in a show cause action pending on appeal at the
PUC, then Cities agree not to take any position in that proceeding that is
inconsistent with its obligations under this Settlement Agreement.
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4. In
consideration for Cities’ obligations under this Agreement, Electric Delivery
agrees to make a cash payment of $8.5 million to Cities by the later of March
31, 2005 or two weeks after receiving notice from Cities that (1) all cities
listed on Exhibit B to this Settlement Agreement have abated or dismissed show
cause actions pending against Electric Delivery, and (2) each city on Exhibit C
to this Settlement Agreement has passed a resolution ratifiying this Settlement
Agreement or provided to Cities a letter in substantially the same form as
Exhibit D to this Settlement Agreement that has been signed by an authorized
representative of the city. Starting March 31, 2006, and each March
31st
thereafter, Electric Delivery will make an annual cash payment of $8 million to
Cities. Electric Delivery’s obligation to make this payment ceases on the date
upon which Cities fail to comply with their obligations under this Agreement or
the date upon which the tariffs approved in Electric Delivery’s next system-wide
rate case at the PUC or in a city rate inquiry become effective on a temporary
or permanent basis (“Termination Date”); provided, however, in the year the new
tariffs become effective, the annual payment shall be prorated until the
Termination Date.
5. Electric
Delivery agrees to work with Cities to improve the timeliness of streetlight
maintenance and to develop a process so that every city-owned and Electric
Delivery-owned street light is assigned an identifiable geographic location.
Signatories agree to establish a task force of senior employees that will
develop, by June 30, 2005, the process and planned rollout for the street light
assignment project. Electric Delivery also agrees to provide to Cities a
specific contact person (or persons) within Electric Delivery who will be
responsible for handling all unresolved Cities’ requests with respect to
streetlights, including, but not limited to, billing, maintenance, installation,
removal, and account initiation and closure. Signatories agree to diligently
pursue resolution of the issues discussed in this paragraph; however, failure to
reach an agreement with respect to these issues will not constitute a breach of
this Settlement Agreement by either Cities or Electric Delivery.
6. Electric
Delivery agrees to work with Cities to establish improved communication,
coordination, and timing of construction concerning relocations of Electric
Delivery’s facilities in public right of way. Signatories agree to establish a
task force of senior employees that will develop, by June 30, 2005, the process
and planned rollout of an improved relocation process. Signatories agree to
diligently pursue resolution of the issues discussed in this paragraph; however,
failure to reach an agreement with respect to these issues will not constitute a
breach of this Settlement Agreement by either Cities or Electric
Delivery.
7. Electric
Delivery agrees to discuss with Cities the payment of franchise fees on a
quarterly basis regardless of whether the basis for a quarterly payment is
historic or prospective and the standardization of a franchise renewal process
that permits transition from a prospective basis to a historic basis where the
franchise is up for renewal. Signatories agree to diligently pursue discussion
of the issues discussed in this paragraph; however, failure to reach a
resolution of these issues will not constitute a breach of this Settlement
Agreement by either Cities or Electric Delivery.
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8. Electric
Delivery agrees to negotiate with Cities, and Cities agree to approve, a tariff
that permits Cities to request undergrounding of new or existing distribution
facilities. The tariff shall ensure full cost recovery by Electric Delivery
through a surcharge in the requesting city in the event that no third party is
required by Electric Delivery’s tariff, or applicable city ordinance, to pay for
undergrounding costs. That tariff will also allow Cities to request
undergrounding of transmission lines to the extent Electric Delivery determines
that (a) such undergrounding is feasible, (b) such undergrounding is consistent
with the PUC’s Substantive Rules and ERCOT’s requirements, and (c) Electric
Delivery can recover the costs of such undergrounding through a surcharge in the
requesting city. Electric Delivery will not be obligated to file the tariff for
city approval until after the expiration of the Price to Beat or the
modification of the Price to Beat in a manner that allows pass through of tariff
charges to the ultimate consumer.
9. Electric
Delivery agrees to provide quarterly updates to representatives designated by
Cities and their consultants concerning Electric Delivery’s capital expenditure
projects and affiliate transactions, the creation and regulatory treatment of a
Pension and Health Benefits Reserve for Electric Delivery, possible workable
parameters for performance based rates for Electric Delivery, and other topics
as agreed upon by the Signatories. Electric Delivery will work with Cities to
provide information requested by Cities concerning those topics.
10. Electric
Delivery shall pay up to $10,000 per month in regulatory expenses directly to
Cities’ consultants, after receipt of appropriate documentation and invoices,
provided said expenses may be deferred for recovery. Cities agree to support
recovery of such costs in Electric Delivery’s next rate case. Should recovery be
denied by the PUC, then the payments will immediately cease.
11. Electric
Delivery agrees to work with Cities to establish better communications between
the Cities and Electric Delivery with respect to access to city meters for
monthly reading. Each city shall provide in writing, by March 31, 2005, a
contact person for inaccessible meters for city accounts, and shall promptly
notify Electric Delivery of any change in the contact person. In months where a
meter reader is unable to gain access to the premises to read the meter on
regular meter reading trips, or in months when meters are not read, Electric
Delivery agrees to provide the customer with a postcard and request the customer
to read the meter and return the card to Electric Delivery. If the postcard is
not received by Electric Delivery in time for billing, Electric Delivery may
estimate the meter reading and issue a xxxx. Electric Delivery agrees that all
municipal meters will be read at least once every three months by it or by the
respective city. The failure of a city to designate a contact person for
inaccessible meters affects only that city and does not adversely impact any
other city or mitigate responsibilities and benefits otherwise inherent to this
Agreement.
12. Electric
Delivery agrees to reimburse Cities for the expenses incurred related to the
Show Cause Actions in an amount not to exceed $100,000 after receipt of
appropriate documentation and invoices, and Cities agree that those costs can be
deferred for recovery in its next rate case and agree to support deferral and
recovery in that case. Notwithstanding any provisions in existing applicable
franchise agreements to the contrary, Electric Delivery agrees to reimburse
Cities for reasonable and necessary expenses incurred in Electric Delivery’s
next rate case in an amount not to exceed $2,000,000. The rate case expense
reimbursements will be made monthly, beginning with the first month after the
consultants are hired. Cities further agree not to contest the recovery of
Cities’ rate case expenses and Electric Delivery’s reasonable and necessary rate
case expenses in Electric Delivery’s next rate case. Electric Delivery further
agrees to pay, and Cities agrees to accept, $150,000 in settlement of all
previously disputed regulatory expenses. Electric Delivery will not seek
reimbursement of that $150,000 amount in Electric Delivery’s rates.
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13. Electric
Delivery agrees that, in franchise negotiations, it will not seek to extend the
prohibition on reimbursement of municipal rate case expenses beyond June
2008.
14. Electric
Delivery agrees that if the 2005 Texas Legislature considers the implementation
of a nodal pricing system in ERCOT, then Electric Delivery will provide
information to the Legislature concerning the importance of a vibrant electric
transmission system and the benefits of the expansion of transmission facilities
in helping to reduce congestion costs.
15. Signatories
acknowledge that Electric Delivery intends to offer certain terms of this
Settlement Agreement to cities served by Electric Delivery that are not listed
on Exhibit A (“Negotiations”). Electric Delivery agrees that all cities listed
on Exhibit A are entitled to Most Favored Nations protection during those
Negotiations and that any benefits that Electric Delivery agrees to provide to
any city during those Negotiations that are not already included in this
Settlement Agreement will be offered to all cities listed on Exhibit A. Cities
acknowledge and agree that to receive any additional benefits from Electric
Delivery, additional consideration from Cities to Electric Delivery may be
required.
16. The
Signatories agree that the amounts paid by Electric Delivery to Cities pursuant
to paragraphs 4, 10, and 12 of this Agreement are paid solely in consideration
for Cities’ abatement or dismissal of, and forbearance from filing or pursuing,
Show Cause Actions against Electric Delivery and Cities’ agreement to abide by
the terms of this Agreement, and to reimburse Cities’ expenses associated with
the Show Cause Actions and other regulatory proceedings. To the extent that the
amounts paid may be in excess of Cities’ expenses, the excess is paid solely in
order to settle the matters that are the subject of this Agreement. Signatories
recognize and agree that the payments specified in this Agreement are not a rate
reduction, refund, rebate, discount, preference or privilege of any kind for
services provided by Electric Delivery or any of its affiliates or predecessors
in interest under any tariff, whether in the past, now, or in the future. As
such, the provision of electric delivery service to Cities by Electric Delivery
or any affiliate or predecessor has been and will continue to be governed solely
by the rates, terms, and conditions of the applicable tariffs.
17. Cities
agree that for a ten-day period following the date this Settlement Agreement is
executed, neither Cities nor the cities listed on Exhibit A will make any public
statements or take any public action concerning the existence of a settlement or
the terms of the Settlement Agreement.
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18. This
Agreement shall become effective only upon the execution of this Agreement and
the entry of resolutions or orders abating or dismissing the Show Cause Actions.
19. Each
person executing this Agreement represents that he or she is authorized to sign
this Agreement on behalf of the party represented.
20. The
Signatories expressly acknowledge and agree that oral and written statements
made by any party or its representative during the course of the settlement
negotiations that led to this Agreement cannot be used or portrayed as an
admission or concession of any sort and shall not be admissible as evidence in
any proceeding in any forum.
Executed
on this the ____ day of February, 2005, by the Signatories hereto, by and
through their undersigned duly authorized representatives.
|
Steering
Committee of Cities Served by TXU Electric Delivery Company on behalf of
all cities listed on Exhibit A to this
Agreement | |
|
_________________________________ |
_________________________________ |
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Exhibit A
City of
Addison
City of
Xxxxx
City of
Xxxxxxxx
City of
Xxxxxxx
City of
Xxxxxx City
City of
Arlington
City of
Xxxxxx
City of
Benbrook
City of
Big Spring
City of
Breckenridge
City of
Bridgeport
City of
Brownwood
City of
Buffalo
City of
Burkburnett
City of
Xxxxxxxx
City of
Caddo Xxxxx
City of
Cameron
City of
Canton
City of
Carrollton
City of
Celina
City of
Centerville
City of
Cleburne
City of
Colleyville
City of
Collinsville
City of
Comanche
City of
Corinth
City of
Xxxxxxx
City of
Dallas
City of
Dalworthington Gardens
City of
XxXxxx
City of
Xxxxxxx
City of
Early
City of
Eastland
City of
Edgecliff Village
City of
Euless
City of
Farmers Branch
City of
Flower Mound
City of
Forest Hill
City of
Fort Worth
City of
Frisco
City of
Frost
City of
Xxxxx Heights
City of
Grand Prairie
City of
Xxxxxxx
City of
Grapevine
City of
Xxxxxx
City of
Xxxxxx Heights
City of
Heath
City of
Xxxxxxxxx
City of
Xxxxxx
City of
Highland Park
City of
Honey Grove
City of
Xxxx
City of
Xxxxx
City of
Xxxxx
City of
Irving
City of
Jolly
City of
Xxxxxxxxx
City of
Xxxxxx
City of
Kaufman
City of
Xxxxxx
City of
Kerens
City of
Lakeside
City of
Lamesa
City of
Lindale
City of
Little River Academy
City of
Xxxxxx
City of
Malakoff
City of
Mansfield
City of
XxXxxxxx
City of
Midland
City of
Milford
City of
Xxxxxx
City of
Xxxxxxxxx
City of
New Chapel Hill
City of
North Richland Hills
City of
X’Xxxxxxx
City of
Oak Leaf
City of
Oak Point
City of
Odessa
City of
Ovilla
City of
Palestine
City of
Pantego
City of
Paris
City of
Plano
City of
Ranger
City of
Xxxxx
City of
Xxxxxxxxxx
City of
Richland Hills
City of
Roanoke
City of
Xxxxxxxx
City of
Rockwall
City of
Xxxxxx
City of
Xxxxxxx
City of
Xxxxxxx
City of
Xxxxxx
City of
Southlake
City of
Sulphur Springs
City of
Sunnyvale
City of
Sweetwater
City of
Temple
City of
The Colony
City of
Tyler
City of
University Park
City of
Venus
City of
Waco
City of
Watauga
City of
White Settlement
City of
Wichita Falls
City of
Woodway
Exhibit
B
City of
Arlington
City of
Benbrook
City of
Brownwood
City of
Xxxxxxxx
City of
Carrollton
City of
Dallas
City of
Dalworthington Gardens
City of
Xxxxxxx
City of
Ft. Worth
City of
Xxxxxx Heights
City of
Heath
City of
Pantego
City of
Plano
City of
Richland Hills
City of
Xxxxxxxx
City of
Rockwall
City of
Xxxxxx
City of
Sulphur Springs
City of
The Colony
City of
Woodway
Exhibit C
City of
Addison
City of
Xxxxx
City of
Xxxxxxx
City of
Xxxxxx City
City of
Xxxxxx
City of
Big Spring
City of
Breckenridge
City of
Bridgeport
City of
Burkburnett
City of
Celina
City of
Cleburne
City of
Colleyville
City of
XxXxxx
City of
Early
City of
Eastland
City of
Euless
City of
Farmers Branch
City of
Flower Mound
City of
Forest Hill
City of
Frisco
City of
Xxxxx Heights
City of
Grand Prairie
City of
Grapevine
City of
Xxxxxxxxx
City of
Highland Park
City of
Xxxx
City of
Xxxxx
City of
Irving
City of
Xxxxxx
City of
Xxxxxxxx
Xxxx xx
Xxxxxx
Xxxx xx
Xxxxxxx
Xxxx of
Little River Academy
City of
Mansfield
City of
XxXxxxxx
City of
Midland
City of
Xxxxxx
City of
North Richland Hills
City of
Oak Point
City of
X'Xxxxxxx
City of
Odessa
City of
Palestine
City of
Paris
City of
Xxxxxxxxxx
City of
Roanoke
City of
Xxxxxxx
City of
Xxxxxxx
City of
Southlake
City of
Sunnyvale
City of
Sweetwater
City of
Temple
City of
Tyler
City of
University Park
City of
Waco
City of
Watauga
City of
White Settlement
City of
Wichita Falls
Exhibit
D
February
21, 2005
Xx.
Xxxxxxxx Xxx
Suite
1800
000
Xxxxxxxx Xxxxxx
Xxxxxx,
XX 00000
|
RE: |
Settlement
Agreement between Steering Committee of Cities Served by TXU Electric
Delivery and TXU Electric Delivery Company |
Dear Mr.
Gay:
I hereby
acknowledge that the Steering Committee of Cities Served by TXU Electric
Delivery has the authority to act on behalf of the City of __________________ in
the negotiation and execution of a settlement agreement with TXU Electric
Delivery Company.
I also
represent that I am duly authorized by the City of ________________ to sign this
letter.
Sincerely,
[Name]
[Position]
