Loading...
HomeMy WebLinkAbout2006-160— S:\Our Documents\0rdinances\06\TXU Electric Delivery.doc ORDINANCE NO. W0 `IC-C7 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE A LETTER AGREEMENT WITH TXU ELECTRIC DELIVERY EXTENDING THE SETTLEMENT AND OFFERING ADDITIONAL TERMS OF SETTLEMENT BETWEEN TXU ELECTRIC DELIVERY AND THE STEERING COMMITTEE OF CITIES SERVED BY TXU ELECTRIC DELIVERY; AND PROVIDING AN EFFECTIVE DATE. i WHEREAS, by Ordinance No. 2005`208 passed on July 26, 2005, the City Council authorized the City Manager to execute a Letter of Agreement with TXU Electric Delivery ("Electric Delivery") and the Steering Committee of Cities served by Electric Delivery ("Steering Committee") settling all issues relating to existing and potential Show Cause Actions and other pending regulatory issues regarding municipal street lighting and other electric rates; and WHEREAS, Electric Delivery has written Mayor Euline Brock offering the City to extend the Settlement Agreement between Electric Delivery and the Steering Committee in •- accordance with the terms of the Extension and Modification of the Settlement Agreement and the January 27, 2006 Agreement to Resolve Outstanding Franchise Issues agreed to by Electric Delivery and the Steering Committee; and WHEREAS, the City Council considers it in the public interest to accept the Settlement Extension outlined in the Letter Agreement with Electric Delivery in return for its agreement not to initiate, intervene or participate in a Show Cause Action or similar proceeding concerning Electric Delivery's rates before July 1, 2008; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings set forth in the preamble of this Ordinance are incorporated by reference into the body of this Ordinance as if fully set forth herein. SECTION 2. The City Manager is hereby authorized and directed to execute and accept the Letter Agreement dated May 4, 2006, including acceptance of numbered paragraphs one .. through seven, extending the February 22, 2005 settlement between Electric Delivery and the Steering Committee in accordance with the terms of the Extension and Modification of Settlement Agreement and the Agreement to Resolve Outstanding Franchise Issues of January 27, 2006 as expressed in the Letter Agreement, which Letter Agreement is attached to and made a part of this Ordinance for all purposes. SECTION 3. The City Manager, or his designee, is authorized to exercise all rights and duties of the City of Denton under the Letter Agreement. SECTION 4. The City Manager is directed to return one (1) executed original of the May 4, 2006 Letter Agreement to Danny Hodges, Community Relations Manager, TXU Electric Delivery, 3100 S. Garrison Road, Corinth, TX .76210. S:\Our Documents\0rdinances\06\TXU Electric Dclivery.doc SECTION 5. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the ly — day ofa�4—tL2006. ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY T otn�,_ 5'&& ERR McNEILL, MAYOR Page 2 of 2 • • TXU Electric Delivery TXU Electric Delivery 3100 Garrison Corinth, TX 76210 RECEIVED May 4, 2006 MAY 0 5 2006 CITY OF DENTON LEGAL DEPT The Honorable Euline Brock City of Denton 215 E. McKinney Street Denton, Texas 76201 Re: Extension and Modification of Settlement Between TXU Electric Delivery and the Steering Committee of Cities Served by TXU Electric Delivery & Agreement to Resolve Outstanding Franchise Issues Dear Mayor Brock, As we told you in early January, TXU Electric Delivery Company ("Electric Delivery") and the Steering Committee of Cities Served by TXU Electric Delivery ("Steering Committee") have agreed to extend the February 22, 2005 settlement between Electric Delivery and the Steering Committee and to resolve outstanding franchise issues. Copies of the January 27, 2006 Extension and Modification of Settlement Agreement and the January 27, 2006 Agreement to Resolve Outstanding Franchise Issues that reflect those agreements between Electric Delivery and the Steering Committee are enclosed with this Letter Agreement as Enclosures 1 and 2, respectively. The purpose of this Letter Agreement is to offer your city benefits comparable to the benefits reflected in those agreements. Please note that paragraphs 5 through 7 of this Letter Agreement are available to your city only if your city also agrees to the provisions in paragraphs 1 through 4. Extension and Modification of Settlement Agreement 1. In consideration for your city's continuing agreement not to initiate a Show Cause Action or similar proceeding concerning Electric Delivery's rates before July 1, 2008 and not to intervene in or participate in any manner in any Show Cause Action concerning Electric Delivery's rates initiated at the Public Utility Commission of Texas ("PUC") or in any other jurisdiction prior to July 1, 2008, Electric Delivery will make a cash payment of $1,680.72 to your city on March 31, 2007, March 31, 2008 and March 31, 2009. The amounts paid under this Letter Agreement are paid solely in consideration for your city's forbearance from filing, pursuing, or intervening in any Show Cause Action or similar proceeding against Electric Delivery and are not a rate reduction, refund, rebate, discount, preference, or privilege of any kind for services provided by Electric Delivery. 2. Electric Delivery's obligation to make the payments described in paragraph 1 ceases o n (1) t he d ate t hat your city initiates, i ntervenes i n, o r p articipates i n a S how Cause Action or similar proceeding, (2) the date that Electric Delivery ceases to have any obligation to pay any amounts to Steering Committee under paragraph 4 of the January 27, 2006 Extension and Modification of Settlement Agreement (Enclosure 1), or (3) the date that 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. 3. Electric Delivery and the Steering Committee have also agreed in the January 27, 2006 Extension and Modification of Settlement Agreement (Enclosure 1) to pursue discussions concerning various subjects. Any improved processes or revised tariffs that result from that agreement will be made available to and will be applicable to your city. 4. Electric Delivery also agrees to pay your city $6,126.90 for beneficial public use 45 days after Electric Delivery receives an executed original of this Letter Agreement. Electric Delivery also agrees to pay your city $6,126.90 for beneficial public use on March 31, 2007. Your city agrees to apply both of these amounts for beneficial public use. The determination of what activities are beneficial to the public is within the discretion of your city. Those activities include, but are not limited to, energy education for citizens, reductions in rates for city services, investments in community facilities, and investments in energy efficiency measures. Agreement to Resolve Outstanding Franchise Issues 5. As described in the enclosed January 27, 2006 Agreement to Resolve Outstanding Franchise Issues (Enclosure 2), to recognize the increasing cost and complexity of managing utilities in public rights -of -way, Electric Delivery agrees to increase the franchise fee factor for your city effective January 1, 2006 by 2%. Electric Delivery will also increase the franchise fee factor for your city an additional 1% on January 1, 2007, on January 1, 2008, and on January 1, 2009, for a total potential increase of 5% above the franchise fee factor in effect on December 31, 2005. Electric Delivery's obligation to increase its franchise fee payments to reflect the increased franchise fee factors described in this paragraph ceases on the date upon which: (1) Electric Delivery is called in for a rate case by any municipality; (2) a proceeding c oncerning Electric Delivery's rates is initiated under Subchapters C or D of the Public Utility Regulatory Act, Tex. Util. Code Title 2, ("PURA") Chapter 36; (3) a proceeding affecting Electric Delivery's rates is initiated as a result of a settlement; or (4) legislation becomes effective that modifies the franchise fee authorized by the PURA. 6. Your city's acceptance of paragraphs 5 through 7 of this Letter Agreement signifies its agreement that if the PUC denies recovery in Electric Delivery's rates of the fees associated with the increased franchise fee factors described in paragraph 5, then the franchise fee factor in your city immediately reverts to the franchise fee factor in effect in your city on December 31, 2005. Electric Delivery will not seek to impose a refund or credit obligation on your city for franchise fees already paid under the increased franchise fee factors. 7. If your city receives its annual franchise fee payments from Electric Delivery on a prospective basis and your city would like to instead receive those prospective franchise fee payments on a quarterly basis, then Electric Delivery agrees to amend your existing franchise agreement in a manner that is consistent with paragraph 5 of the enclosed January 27, 2006 Agreement to Resolve Outstanding Franchise Issues (Enclosure 2). The cities who are not members of the Steering Committee who are eligible to choose this option are listed on Attachment 1 to this Letter Agreement. If your city is not listed on Attachment 1 to this Letter Agreement, then your city is not eligible to choose the option described in this paragraph. Execution Instructions 8. if your city agrees to the provisions of paragraphs 1 through 4 of this Letter Agreement, please have a properly authorized representative of your city sign in the first space reflected below and return the executed original to the undersigned. 9. If your city agrees to the provisions in paragraphs 1 through 4, then your city may also agree to the provisions in paragraph 5 through 7 by having a properly authorized representative of your city sign in the second space reflected below and returning the fully executed original to the undersigned. 10. The offers reflected in this Letter Agreement expire on July 1, 2006. Sincerely, PARAGRAPHS 1 THROUGH 4 ARE AGREED TO AND ACCEPTED: City 1 c By: Its: er Date: TlGv1Q (O, ZDO46 PARAGRAPHS 5 THROUGH 7 ARE AGREED TO AND ACCEPTED: City o o �1n By: V V1� �, Its: " 1IN1117ader Date: %CU?2 (a , Z 11 C Enclosure 1 Extension and Modification of Settlement Agreement between TXU Electric Delivery and the Steering Committee of Cities Served by TXU Electric Delivery dated January 27, 2006 EXTENSION AND MODIFICATION OF SETTLEMENT AGREEi ENT This Extension and Modification of 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, on February 22, 2005, the Signatories entered into a Settlement Agreement that resolved numerous issues, including issues arising out of the resolutions passed in 2004 by 23 cities that are members of Cities 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, as part of that February 22, 2005 Settlement Agreement, Electric Delivery agreed to file a system -wide rate case by July 1, 2006; WHEREAS, Cities and Electric Delivery desire to extend certain terms of the February 22, 2005 Settlement Agreement and to resolve all outstanding issues related to the pending and Potential Show Cause. Actions, the upcoming system -wide rate filing, 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, agree to the following: through their undersigned representatives, hereby 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 reformation 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, 2008, based on a test year ending December 31, 2007 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, 2008, Electric Delivery will extend its effective date to accomplish suspension by August 31, 2008. However, if Electric Delivery files a system -wide rate case at the PUC on or before June 1, 2008, then Electric Delivery will not extend its effective date. 3. Cities agree not to pursue any abated Show Cause Actions and not to initiate similar actions before July I, 2008, provided the provisions of this Agreement are honored. Cities agree not to inter ene in, or participate in any manner in, any show cause action initiated at the PUC or in any other jurisdiction on -or 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 Agreement. 4. Cities agree to provide notice to Electric Delivery that (1) all cities listed on Exhibit B to this Agreement have continued their abatements of, or have dismissed, show cause actions pending against Electric Delivery, and (2) each city listed on Exhibit C to this Agreement has passed a resolution ratifying this Agreement or provided to Cities a letter in substantially the same form as Exhibit D to this Agreement that has been signed by an authorized representative of the city. On March 31, 2007, March 31, 2008, and March 31, 2009, Electric Delivery will make a cash payment of $8 million to Cities. Electric Delivery's obligation to make those payments 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. "System -wide rate case" includes any system -wide change to base rate tariffs as a result of proceedings initiated under Subchapters C or D of PURA Chapter 36 and any proceeding changing Electric Delivery's base rates initiated as a result of a settlement. 5. The Signatories acknowledge and agree that under paragraph 4 of the February 22, 2005 Settlement Agreement, Electric Delivery will pay Cities $8 million on March 31, 2006. 6. 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 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 Agreement by either Cities or Electric Delivery. .7 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 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 Agreement by either Cities or Electric Delivery. 2 $. The Signatories acknowledge that they have reached a separate agreement concerning outstanding issues related [otranchises. By its terms, that separate agreement becomes effective only upon this Agreement's becoming effective pursuant to the terns of paragraphs 4 and 19. 9. Electric Delivery agrees to negotiate with Cities, and Cities agree to approve, a tariff that Permits Cities to request undergrounding of new or existing distrbution 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. 10. 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. 11. Electric Delivery shall pay up to SI0,000 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. 12. Electric Delivery shall pay up to S40,000 per month through December 2009 to reimburse Cities for their involvement before ERCOT and the PUC concerning market design issues, after receipt of appropriate documentation and invoices. 13. Electric Delivery agrees to reimburse Cities for the expenses incurred related to the negotiation of this Agreement in an amount not to exceed S25,000 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 paragraph 14, any rights Cities may have under PURA, and 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 system-wide rate case in an amount not to exceed 52,000,000. 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 system -wide rate case. 3 14. Electric Delivery agrees that, in franchise negotiations, it will not seek to extend the Prohibition on reimbursement of municipal rate case expenses beyond June 2003. 15. Electric Delivery agrees to pay Cities S1S million for beneficial public use. The Signatories agree that that amount will be paid in two installments: (1) 59 million will be payable two weeks after Electric Delivery receives the notice from Cities required in paragraph 4 of this Agreement; and (2) 59 million will be payable by January 31, 2007. The Signatories agree that member cities are to apply these funds for beneficial public use and that the determination of what activities are beneficial to the public is within the discretion of each member city. Those activities include, but are not limited to, energy education for citizens, reductions in rates for city services, investments in community facilities, and investments in energy efficiency measures. 16. The Signatories acknowledge that Electric Delivery intends to offer certain terms of this 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. 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. 17. The Signatories agree that the amounts paid by Electric Delivery to Cities pursuant to paragraphs 4, 11, 12, 13, and 15 of this Agreement are paid solely in consideration for Cities' continued 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. 18. The Signatories agree that the rights, duties, benefits, and obligations set forth in this Agreement are binding upon their successors in interest. 19. This Agreement shall become effective only upon the execution of this Agreement and the entry of resolutions or orders continuing the abatements or dismissing the Show Cause Actions. 20. Each person executing this Agreement represents that he or she is authorized to sign this Agreement on behalf of the party represented. 4 21. 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. 22. The Signatories agree that this Agree -meat extends and modifies the terms of their February 22, 2005 Settlement Agreement. To the extent that any terms of that February 22, 2005 Settlement Ageement are not restated here, the Signatories agree that those terms have expired. To the extent that there are any inconsistencies between the terms of this Agreement and the terms of the February 22, 2005 Settlement Agreement, the Signatories agree that the terms of this Agreement control. Executed on this the G day of January, 2006, by the Signatories hereto, by and through their undersigned duly authorized representatives. TXU Electric Delivery Company By:- —7, Its:_ �—I Ct P9L-S I DEN i- Steering Committee of Cities Served by TXU Electric Delivery Company on behalf of all cities listed on Exhibit A to this Agreement By: Its: cjk'.,r Exhibit A Ciry of Addison City of Highland Park City of Allen City of Honey Grove City of Alvarado City of Howe City of Andrews City of Hurst City of Archer City Ciry, of Hutto City of Arlington City of Irving City of Belton City of Jolly City ofBenbrook City of Josephine City of Big Spring City of Justin City of Breckenridge City of Kaufman City of Bridgeport City of Keller City of Brownwood City of Kerens City of Buffalo City of Lakeside City of Burkburnett City of Lamesa City of Burleson City of Lindale City of Caddo Mills City of Little River Academy City of Cameron City of Malakoff City of Canton City of Mansfield City of Carrollton City of McKinney City of Celina City of Midland City of Centerville City of Murphy City of Cleburne' City of Murchison City of Colleyville City of New Chapel Hill City of Collinsville City of North Richland Hills City of Comanche City of O'Donnell City of Corinth City of Oak Leaf City of Crowley City of Oak Point City of Dallas City of Odessa City of Dalworthington City of Ovilla Gardens City of Palestine City of DeLeon. City ofPantego City of Denison City of Paris City of Early City of Plano City of Eastland City of Ranger City of Edgecliff Village City of Rhome City of Euless City of Richardson City of Farmers Branch City of Richland Hills City of Flower Mound City of Roanoke City of Forest Hill City of Robinson City of Fort Worth City of Rockwall City of Frisco City of Rosser City of Frost City of Rowlett City of Glenn Heights City of Sherman City of Grand Prairie City of Snyder City of Graneer City of Southiake City of Grapevine City of Sulphur S City of Gunter l�prtttgs Ciry, of Sunnvale City of Harker Heights City of Sweetwater Ciry of Heath City of Temple City of Hen era Ciry of The Colony City of Hewitt Citv 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 R City of Arlington City ofBenbrook City of Brownwood City of Burleson City of Carrollton City of Dallas City ofDalworthington Gardens City of Denison City of Ft. Worth City of Harker Heights City of Heath City ofPantego City of Plano City of Richland Hills City of Robinson City of Rockwall City of Snyder City of Sulphur Springs City of The Colony City of Woodway City of Addison, City of Allen City of Andrews City of Arche. City City of Belton City of Big Spring City of Breckenridge City of Bridgeport City of Burkburnett City of Celina City of Cleburne City of Colleyville City of DeLeon 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 Glenn Heights City of Grand Prairie City of Grapevine City of Henrietta City of Highland Park City of Howe City of Hurst City of Irving City of Keller City of Lakeside City of Lamesa City of Lindale City of Little River Academy City of Mansfield City of McKinney City of Midland City of Murphy City of North Richland Hills City of Oak Point City of ODonnell City of Odessa City of Palestine City of Paris City of Richardson City of Roanoke City of Rowlett City of Sherman City of Southlake City of Sunnyvale City of Sweetwater Ciry of Temple Exhibit C City of Tyler City of University Park City of Waco City of Watauga City of White Settlement City of Wichita Falls Exhibit D January_, 2006 Mr. GecffreyM. Gay, Esq, Lloyd Gosselink 816 Congress Avenue, Suite 1900 Austin, Texas 78701 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 sign this letter. to Sincerely, [Name] [Position] Enclosure 2 Agreement to .Resolve Outstanding Franchise Issues between TXU Electric Delivery and the Steering Committee of Cities Served by TXU Electric Delivery dated January 27, 2006 This Agreement To Resolve Outstanding Franchise Issues ("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." The cities listed on Exhibit A to this Agreement are hereinafter referred to as "Member Cities." WHEREAS, several Member Cities have expressed concern about the increasing cost and complexity of managing utilities in public rights -of -way and the desire to receive increased compensation from utilities for the' of such rights -of -way; WHEREAS, several Member Cities who receive their franchise fee payments from Electric Delivery on a prospective yearly basis have expressed interest in transitioning to Prospective quarterly payments; WHEREAS, the Signatories desire to resolve outstanding issues related to franchises; and WHEREAS, after extensive negotiations, the Signator those issues. ies have reached a resolution of NOW, THEREFORE the Signatories, through their undersigned representatives, hereby agree to the following: 1 The Signatories agree that this Agreement shall become effective only upon the execution of this Agreement and of the Extension and Modification of Settlement Agreement between the Signatories dated JanuaryZj, 2006. The effectiveness of this Agreement shall be accomplished Pursuant to the terms of paragraphs 4 and 19 of the Extension and Modification Settlement Agreement. 2. To recognize the increasing cost and complexity of managing utilities in public rights -of - way, Electric Delivery agrees to increase the franchise fee factor for each Member City an January 1, 2006, by 2%. The franchise fee factor is the amount per kilowatt hour which is multiplied times the number of kilowatt hours of electricity delivered by Electric Delivery to each retail customer whose consuming facility's point of delivery is located within the Member City's municipal boundaries. Electric Delivery will also increase the franchise fee factor to be paid to the Member Cities an additional 1% on January 1, 2007, on January 1, 2008, and on January 1, 2009, for a total potential increase of 5%. ahove t Che franchise fee factor in effect on December ZOOS. Exhibit B to this Agreement reflects the franchise fee factors in effect for all Member it es in ZOOS, and the increased franchise fee factors for Member Cities provided by this paragraph for 2006, 2007, 2008, and 2009. Electric Delivery's obligation to increase irs franchise fee payments to reflect the increased franchise fee factors described in paragraph 2 ceases on the date upon which: (1) Electric Delivery is called in for a rate case by any municipality; (2) a proceeding concerning Electric Delivery's rates is initiated under Subchapters C or D of the Public Utility Regulatory Page t Act, Tex. Util. Code Title 2 ("PURR") Chapter, 36; (3) a proceeding affecting Electric Delivery's rates is initiated as a result of a settlement; or (4) legislation becomes effective that modifies the franchise fee authorized by PURA. 4. The Signatories agree that if the Public Utility Commission of Texas denies recovery in Electric Delivery's rates of the fees associated with the increased franchise fee factors described in paragraph 2, then the franchise fee factors immediately revert to the franchise fee factors in effect on December 31, 2005. Electric Delivery will not seek to impose a refund or credit obligation on Member Cities for franchise fees already paid under the increased franchise fee factors. 5. Electric Delivery agrees to amend its existing franchise agreements with those Member Cities who receive their annual franchise fee payments from Electric Delivery on a prospective basis, and who wish, to receive franchise fee payments on a quarterly basis, to reflect the following points. Implementation of this amendment will be at each eligible Member City's Option. Exhibit C is a list of Member Cities who are eligible to take advantage of this provision. For the purposes of this Agreement, "privilege period" is the period during which Electric Delivery will have the right to use the public rights -of -way to deliver electricity to a retail customer. "Basis period" is the period during which kWh delivered to each retail customer whose consuming facility's point of delivery is located within the Member City's municipal boundaries is used for the payment calculation. (a-) In calendar year 2006, the annual payment to be made by Electric Delivery to the eligible Member Cities will be paid in full on the date required by the applicable franchise agreement. (b.) Electric Delivery agrees to amend the franchise of eligible Member Cities to make quarterly payments on a prospective basis in lieu of the annual prospective payments as follows: A quarterly payment schedule will be established with the first quarterly payment due three months after the 2006 annual payment date in the existing franchise. If the franchise amendment reflecting this Agreement is not effective prior to the first quarterly payment date, Electric Delivery will pay any quarterly payments due within 30 days of the effective date of the amendment. Subsequent payments will be made in accordance with the schedule established in the franchise amendment. (iii.) The basis period used in determining the first quarterly payment will be the three-month period immediately following the end of the basis period desiertated in the existing franchise agreement that corresponds to the last annual payment made in 2006. The basis period used in determining each subsequent quarterly payment will be the subsequent three-month period. Page 2 (tv.) The privilege period covered by the first quarterly payment will be the three-month period immediately following the end of the privilege period designated in the existing franchise agreement that corresponds to the last annual payment made in 2006. The privilege period for each subsequent quarterly payment will be the subsequent three-month period. (c-) For an eligible Member City that chooses to amend its franchise agreement with Electric Delivery in this manner, Electric Delivery will cease to make annual franchise fee payments after December 31, 2006. (d.) In no instance will Electric Delivery agree to payment provisions that would require payment for the same privilege period twice. (a.) The franchise amendment must extend the term of the amended franchise agreement for at least five years beyond its current expiration date. (f) Since the quarterly franchise payments will correspond to a privilege period that is more than 12 months beyond the date of the payment, no franchise payments will be made during the final year of the franchise term unless the franchise is extended as set out herein. The amended franchise agreement will include a provision allowing Electric Delivery to elect to make one or more quarterly payments during the final year of the franchise term that will prepay in full the corresponding number of quarterly franchise periods that extend beyond what would otherwise be the term of the franchise agreement. The amended franchise agreement will include a provision requiring that any subsequent franchise agreement must recognize that any quarterly payments made during the final year of the amended franchise agreement term constitute full payment for the relevant quarterly franchise periods. (g.) Unless the existing franchise agreement is due to expire within 12 months of the date this Agreement is ratified, no other changes to the franchise will be included as part of this franchise amendment. If the existing franchise agreement is due to expire within 12 months of the date this Agreement is ratified, the parties' ability to negotiate other provisions of the franchise at the time the franchise is amended to accommodate this Agreement is not so limited. 6. Each person executing this Agreement represents that he or she is authorized to Agreement on behalf of the party represented, sign this T The Signatories expressly acknowledge and agree that oral and written statements made by any war y or its representative during the course of the 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. Page 3 Executed on this the 2- - n iay of January, 2006, by the Signatories hereto, by and through their undersigned duly authorized representatives. TXU Electric Delivery Company Steering Committee of Cities Served by TXU Electric Delivery Companv on behalf of all cities listed on Exhibit A to this Agreement Sy: ' ! By: Its: l/t(.E Its: Paee 4 Exhibit A City of Addison City of Alen Ciry of Highland Park City of Alvarado City of Haney Grove City of Andrews City of Howe City of Archer City City of Hurst City of Hutto City Of Arlington City of Irving City of Belton City of Jolly City OfBenbrook City of Josephine City of Big Spring City of Justin City of Breckenridge City of Kaufman City of Bridgeport City of Keller City of Brownwood City of Kerens City of Buffalo City of Lakeside City ofBurkburnett City ofLamesa City of Burleson City ofLindale City of Caddo Mills City of Little River Academy City of Cameron. City of Malakoff City of Canton City of Mansfield City of Carrollton City of McKinney City of Celina City of Midland City of Centerville City of Murphy City of Cleburne City of Murchison City of Colleyville City of New Chapel Hill City of Collinsville City of North Richland Hills City of Comanche City of O'Donnell City of Corinth City of Oak Leaf City of Crowley City of Oak Point City of Dallas City of Odessa City of Dalworthington City of Ovilla Gardens City of DeLeon City of Palestine City of Denison City of Pantego City of Paris City of Early City of Piano City of Eastland City of Ranger City of Edgecliff Village City of Rhome City of Euless City of Richardson City of Farmers Branch City of Richland Hills City of Flower Mound City of Roanoke Ciry of Forest Hill City of Robinson City of Fort Worth City of Rockwall Ciry of Frisco City, of Rosser City of Frost Ciry of Rowlett City of Glenn Heights City of Sherman City of Grand Prairie City of Snyder City of Granger City of Southlake City of Grapevine City of Sulphur Sorin_es City of Gunter Ciry of Harker Heights Ciry, of Sunnvvaie Ciry of Heath Ci y of5we-water Ciry, of Temple City of Hen eta City of Hc,.vitt City of The Colonv 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 7vk;k;f D 55 ;HutLo .]7-4 79 :C1 81 IP2 82 :P . a 83 1p PIZ ............... 85 :'Ra 86 ;Rh 87 :R . ic . 86 Ric ........... 7 * ... 89 ;Roi 90 Rol 91 Roc ... ....... ...... 92 :Ro! 93 R . o ... 95 ;Sny " -4 ...... 1 ... 27 ;Sul[ ... 26..:Sun 99 iSwe L -10q..Tem 101 103 Umv' 104 Vow„ ExhibitE 0.003395 0.003463 0. 00 ...... ............... 0-002 703 7.00-2967* 1,103121 . ............. ........ .. 6.00 3. ­ ' "' ­ ... 0 003308 ................. ... .... ... . 03090 . P:003122 :003168............................................................. -00301,151 .. 6 002999 ........... .. ... 9 003156 - ------- .............. ... ..... - - ...... :_ 3 1 E2847 .......... 0,002834 ... . '-' . . ............ ......... .. U.R� ..... . ........... . ....... ........... ............ 0.003383 ....0.003351 0.003 ,; ........ . ...... ............... 0.0034 0.003078 -------------- 2:0031 0.003156 ------------ - - _9,0032 003181 Ca ................ 0031.62 0.002526 ... 0.003028 0-00�6 ........... ......... E'OO�Z *70" 0 0027c�i .... ......... . ................ ... 0 OC2848 .003313I ............... 2 .. .......... 0.0025831 00200-81 ....... 0.0030271 .................................. o n .......... 6.0028 10 ..... .............. W� U.007412 ...._............. 0.0077nq 0.00320 ---- 6.,66T� .... ................ 0.003161 :00311 0, ... 33 ,-3'"'f' 0.6 0.00250. 0.002839 ..0.003361 0.003307 0.002712 0.003218 _..........I......... 0.003294 -j.....................0324 O 0.002926 ............. .0 . 0.0031911 0.0 65i771 0.0031 166H 6.'Eii City of Addison City of Allen City of Alvarado City of Andrews City of Archer City City of Belton City of Benbrook City of Big Spring City of Breckenridge City of Bridgeport City of Brownwood City of Burkbumett City of Colieyville City of Corinth City of Crowley City of Dalworthington Gardens City of DeLeon City of Denison 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 Glenn Heights City of Grand Prairie City of Granger City of Grapevine City of Heath City of Henrietta City of Hewitt City of Honey Grove City of Irving City of Jolly City of Josephine City of Justin City of Lakeside City of Lamesa City of Little River Academy City of Malakoff City of Mansfield City of McKinney City of Midland City of Murchison City of Murphy City of New Chaoel Hill City of North Richland Hills City of O'Donnell Ciry of Oak Leaf City of Oak Point Exhibit C: City of Odessa City of Ovilla City of Pantego City of Pans City of Plano City of Rhome City of Richland Hills City of Roanoke City of Robinson City of Rosser City of Rowlett City of Snyder City of Southlake City of Sunnyvale City of Sweetwater City of Temple City of The Colony City of Watauga City of White Settlement City of Wichita Falls City of Woodway. A. i ACHME�NT 1 Annual Prepay Non -Steering Committee Cities ACKERLY CHANDLER FAIRVIBW KNOLLWOOD NACOGDOCHES REND-LAMAR .VALLEY VIEW ALE Do CHICO FORSAN KRUM NAVARRO REND -PARKER VAN ALMA CHIRENO GAINESVILLE LACY-LAKEVIEW NEVADA RETREAT WEIR ANGUS CLARKSVILLE GARLAND LAKE BRIDGEPORT NEW FAIRVIEW RICHLAND WELLS ANNETTA COAHOMA GARRET'T LAKE DALLAS NEWARK RIESEL ANNETTA NORTH COLORADO CITY GEORGETOWN LAKE WORTH WEST BROOK RIVER OAKS WESTOVER OVER H HILLS ANNETTA SOUTH COMMERCE GHOLSON - WESTWORTH - -LAKESIDE CITY NOLANVILLE ROSCOE VILLAGE APPLEBY COOL GODLEY LATEI,'0 NOONDAY ROKfON WICKETT ARGYLE COOPER GOLINDA LAVON NORTHLAKE RDYSE CITY WILLOW PARK ATHENS WILLOW GOODLOW LEONA OAKGROVE RUNAWAY BAY WILMER AURORA CORSICANA GORMAN LEROY . OAK VALLEY SACHSE A71E - CRWINDOM ANDALL GRAFORD LINDSAY OGLESBY SADLER WINK BALCH SPRINGS CRANE GRAHAM- ' LIPAN - PARADISE SAGINAW BARRY CRE� WYLIE SSON GRANDFALLS LORAINE - PARKER SAL ADO YANiiS BARTLETT CROSS ROADS GRAPELAND LORENA, PAYNE SPRINGS SANCTUARY ZAVALLA BEDFORD CUMBY GUN BARREL CITY LOVELADY PECAN HILL SANSOM PARK BELLEVUE DEAN HALTOM CITY LOWRY CROSSING PENELOPE SAVOY - BEL.LMEAD DESOTO HASLET MARSHALL CREEK PFLUGERVILLE SHADY SHORES BELLS DIBOLL HEBRON MAYPEARL PLEASANT VALLEY SOUTHMAYD MCLENBEVERLY HILLS DODD CITY M HICKORY CREEK - CHISHO CHISHOLM PONDER SPRINGTOWN BLUE MOUND DORCHESTER HIDEAWAY POST OAK BEND MELISSA CITY STANTON BRUCEVTLLE-EDDY DUNCANVILLE HOLLIDAY MILANO POTTSBORO SUNSET BUCKHOLTS EDOM HUDSON MILDRED POWELL THORNTONVILLE BURKE ELECTRA. - HUDSON OAKS M ILLSAP POYNOR THRALL BYNUM ELGIN HUTCHINS ENCHANTED MOBILE CITY PRINCETON TIRA CAMPBELL OAKS IOWA PARK MONAHANS PYOTE MORGANS POINT TOOL CANEY CITY EUREKA 705HUA RESORT QUINLAN CARBONTRINIDAD EUSTACE KEENE - CASHION MUENSTER RAVENNA TROPHY CLUB COMMUNITY MERMAN KENNEDALE MUSTANG RED OAK TROY