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HomeMy WebLinkAbout2001-482FILE REFERENCE FORM 2001-482 X Additional File Exists Additional File Contains Records Not Public, According to the Public Records Act Other Professional Services Agreement with Diversified Utility Consultants, Inc. authorized in Section 3 of ordinance (original agreement is located in 2002 Contract Late imuats 01/16/02 1 )R Agreement for Professional Legal Services with the Law Office of Jim Boyle, PLLC authorized in Section 3 of ordinance (original agreement is located in 2002 Contract file) 01/30/02 1R 5\Our Oaum"m w= WMXU hdim ft ORDINANCE NO a M/- 4A AN ORDINANCE ACCEPTING JURISDICTION OF A COMPLAINT FILED BY SPENCER GENERATING COMPANY, L P (SPENCER) AGAINST TXU LONE STAR PIPELINE (TXU) CLAIMING TXU IS ATTEMPTING TO CHARGE UNREASONABLE RATES FOR GAS UTILITY SERVICE TO THE SPENCER GENERATING STATION, MAKING FINDINGS WITH RESPECT TO THE COMPLAINT FILED BY SPENCER AGAINST TXU FOR FAILURE TO PROVIDE GAS UTILITY SERVICE ON REASONABLE TERMS, ORDERING INTERIM RELIEF BY REQUIRING TXU TO MAINTAIN GAS UTILITY SERVICE TO THE SPENCER GENERATING STATION UNDER THE EXISTING AGREEMENT BETWEEN TXU AND SPENCER WITHOUT INTERRUPTION AFTER DECEMBER 31, 2001, UNTIL A JUST AND REASONABLE RATE IS ESTABLISHED OR UNTIL TXU AND SPENCER REACH AN AGREEMENT ON A JUST AND REASONABLE RATE, ORDERING AN INVESTIGATION TO MAKE SURE THAT RATES CHARGED BY TXU TO SPENCER GENERATING COMPANY OR OTHER CITY OF DENTON INDUSTRIAL RATEPAYERS ARE NOT DISCRIMINATORY OR PREFERENTIAL, AUTHORIZING THE HIRING OF RATE CONSULTANTS, PROVIDING FOR THE RECOVERY OF RATE EXPENSES, PROVIDING A SEVERABILITY CLAUSE, AND PROVIDING AN EFFECTIVE DATE WHEREAS, on or about July 17, 2001, the City Council passed Ordinance No 2001-251 (Rate Ordinance) establishing maximum permitted rates and charges TXU Gas Distribution (TXU-GD) may assess residential and commercial customers in the City of Denton and failing to approve rates for industrial customers requested by TXU-GD but approving rates for industrial customers established by contract between TXU-GD and such industrial customers, and WHEREAS, TXU accepted the Rate Ordinance and did not appeal to the Railroad Commission and the time for appeal has now expired, and WHEREAS, Spencer Station Generating Company, L P (Spencer) has filed a complaint against TXU Lone Star Pipeline (TXU-LSP) and (TXU-GD) for failure to provide gas utility service on reasonable terms and stating that it is unable to obtain Just and reasonable rates for gas utility service to Spencer Generating Station (Spencer Station) as set out more fully in the Complaint which is attached to this Ordinance, has requested a public hearing on this issue and has requested interim rate relief from the City of Denton, and WHEREAS, after a public hearing where both Spencer and TXU-GD and TXU-LSP were given an opportunity to present evidence concerning the allegations in Spencer's Complaint, the City Council deems it in the public interest to make the findings and orders, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINS SECTION 1 FINDINGS That the City Council, pursuant to its exclusive original Jurisdictional authority over the rates, operations and service of TXU-GD and TXU-LSP s w.. v.wmem.wNm®...wntzu FIWNI m hereinafter referred to as TXU GAS within Denton and in the exercise of its sound legislative discretion, after reasonable notice and hearing, makes the following findings of fact 1 1 That under Section 104 003(a) of the Texas Utilities Code and Section 13 04 of the Denton City Charter and Section 3 "Reservation of Rights" of the Rate Ordinance, the City Council has exclusive and original Jurisdictional authority over the subject matter of the Complaint of Spencer and the other rate matters set forth herein 12 That the Rate Ordinance passed by the City Council on July 17, 2001 (Rate Ordinance) found in accordance with Section 104 003(b) of the Texas Utilities Code, that the City knew of no reason that the contractual industrial gas rates between TXU GAS and its industrial customers at the time the Rate Ordinance was enacted on July 17, 2001, were not considered to be just and reasonable and refused to approve the industrial rates requested by TXU GAS and instead approved rates for industrial customers in Denton established by contract between TXU GAS and such industrial customers at the time the Rate Ordinance was enacted 13 That the Rate Ordinance did not set a just and reasonable rate for gas distribution service into the Spencer Station unless the approval of the then existing industrial contractual rates established the gas distribution rates as those rates in the current interruptible natural gas transportation agreement between TXU GAS and Spencer dated December 14, 1999 (Agreement), 14 That TXU GAS accepted the Rate Ordinance, has not filed for different industrial rates, and has not demonstrated that the rates which it is attempting to charge Spencer for natural gas transportation service to Spencer Station after December 31, 2001, as set forth in Spencer's Complaint are just and reasonable or that the current rate under the existing Agreement with Spencer is unreasonable 15 That TXU GAS has failed to establish that the proposed rates for gas utility service to Spencer Station are just and reasonable as required by Texas Utilities Code Section 104 003(a) 16 That insufficient evidence has been presented by TXU GAS to deviate from the finding in the Rate Ordinance that the rates under the current Agreement between TXU GAS and Spencer are just and reasonable 17 That TXU GAS and Spencer have failed to reach agreement on reasonable rates and terms and conditions for service to Spencer after December 31, 2001 1 8 That it is in the public interest that Spencer be entitled to and continue to receive gas utility service to the Spencer Station after December 31, 2001 until the City has sufficient time to analyze the matters set forth in the Complaint, conclude its investigation and make an informed decision on this matter 19 That costs of investigation of the Complaint of Spencer and all other rate matters mcluded,in this Ordinance, require the services of attorneys, accountants, auditors, engineers and Page 2 s w�, n�m.�uw�amw.anonrxu rmamp as rate consultants and the reasonable cost of such services are reimbursable expenses under Section 103 022 of the Texas Utility Code SECTION 2 ORDER That based on the findings of fact set forth in Section 1 of this Ordinances and in accordance with its previous findings and orders in Ordinance 2001-251 the City Council hereby makes the following interim order 21 The City Council accepts Jurisdiction over the Spencer Complaint in accordance with Section 13 04 of the Denton City Charter and Section 104 003(a) of the Texas Utility Code and assigns this Complaint Number 2001-1 and orders all affected persons and parties to cooperate with the City staff and all rate consultants and provide necessary information to allow the City to conclude its investigation and to make a proper disposition of this proceeding 22 That TXU GAS is ordered not to change the rate to Spencer Station under the existing Agreement and is ordered to continue to provide gas utility service to the Spencer Station on an interim basis without interruption under the terms of the existing Agreement after December 31, 2001 until either (1) TXU GAS files for new industrial rates with City Council, demonstrate to the City Council that the proposed rates for gas utility service to the Spencer Station are Just and reasonable and are not preferential or discriminatory, that relevant facilities are properly classified as distribution facilities and these facilities are used and useful in providing distribution service to the Spencer Station, and has the rates approved by the City Council or the Railroad Commission, or (2) TXU GAS and Spencer negotiate a Just and reasonable rate pursuant to Section 104 003(b) of the Texas Utilities Code 23 During the period of this interim order there shall be an investigation conducted to insure that industrial rates for the Spencer Station are not preferential or discriminatory, TXU GAS and Spencer are ordered to cooperate with the City Council which hereby retains its Jurisdiction to initiate an investigation to examine rates with other TXU GAS contract generating facilities and other industrial customers to insure that no rates being charged to Denton industrial gas customers by TXU are discriminatory or preferential 24 That TXU GAS is ordered to reimburse the City for all reasonable costs of the services of rate consultants, attorneys, accountants, auditors, and engineers necessary to this proceeding in accordance with Section 103 002 of the Texas Utilities Code SECTION 3 That the City Manager and the City Attorney are authorized to take all actions necessary to enforce this ordinance including the engagement of rate consultants and the retention of legal counsel to enforce this ordinance and Ordinance No 2001-251 and the City Manager is further authorized to pay Diversified Utility Consultants, Inc and the Law Offices of Jim Boyle for services performed through the date of this ordinance and to seek reimbursement of these expenses from TXU GAS SECTION 4 RESERVATION OF RIGHTS In order to ensure that rates and charges assessed by TXU GAS in Denton are Just and reasonable to both TXU and their customers, Denton reserves the right and privilege at any time to increase, decrease, alter change or amend Page 3 5 WurO .meo�iou IXTM WnEivSs this Ordinance or the rates established herein or to enact any ordinance or adopt any rates and charges which would effectuate that purpose In this connection, Denton further reserves the right and privilege to exercise any authority and power granted to it under any applicable law, ordinance or administrative rule or regulation SECTION 5 REHEARING BY CITY COUNCIL In the event the City Council adopts a final order and TXU GAS disputes all or any portion of this Ordinance, prior to filing an appeal with the Railroad Commission of Texas, TXU GAS shall file with the City Secretary a request for rehearing on the merits by the City Council and shall comply with the procedures established for such a rehearing as set forth in this Section 5 Upon receipt of a request for rehearing, the City Council will promptly provide a forum during a public hearing on an open meeting in order for TXU GAS to set forth the aspects of this Ordinance which they dispute The City Council shall have sixty (60) calendar days following the date of such rehearing to render a final decision Action of the City Council shall not be considered final for purposes of appeal to the Railroad Commission of Texas until a final decision on nay motion for rehearing has been rendered The provisions of this Ordinance shall remain in full force and effect from and after its adoption unless modified by a subsequent ordinance adopted by the City Council as a result of a final decision following a rehearing SECTION 6 SEVERABILITY If any portion, section or part of a section of this Ordinance is subsequently declared invalid, inoperative or void for any reason by a court of competent jurisdiction, the remaining portions, sections or parts of sections of this ordinance shall be and remain in full force and effect and shall not in any way be impaired or affected by such decision, opinion or judgment S CTION 7 It is hereby found and determined that the meeting at which this ordinance was passed was open to the public, as required by Texas law, and that advance public notice of the time, place and purpose of the meeting was given SECTION 8 EFFECTIVE DATE This interim ordinance shall take effect and be in full force and effect from and after the date of its adoption until such time as the conditions in Section 2 2 of this Ordinance have been satisfied at which time this Ordinance shall have no further force or effect The City Secretary is hereby directed to deliver a certified copy of this Ordinance to TXU Gas by sending the ordinance by U S Mail to the Company's authorized representative, Autrey Warren, Regulatory Financial Manager, TXU Business Services, 1601 Bryan Street, Dallas, Texas 75201-3411 /- PASSED AND APPROVED this the � day of 2001 Page 4 S OurO gmwu npoM ff=Wndinpdoo ATTEST JENNIFER WALTERS, CITY SECRETARY IO-VA APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY r �10 Page 5 s �OueWwmenu\CoanoY\01\spmca Comphiol WC COMPLAINT OF SPENCER § STATION GENERATING COMPANY, § BEFORE THE CITY OF L P., AGAINST TXU LONE STAR § PIPELINE AND TXU GAS DISTRIBUTION § FOR FAILURE TO PROVIDE GAS UTILITY § DENTON, TEXAS SERVICE ON REASONABLE TERMS § SPENCER STATION GENERATING COMPANY, L P 'S ORIGINAL COMPLAINT Pursuant to Section 105 051 of the Texas Utilities Code (TUC), Spencer Station Generating Company, L P , (Spencer) files this Original Complaint against TXU Lone Star Pipeline (TXU LSP) and TXU Gas Distribution (TXU GD), divisions of TXU Gas Company (TXU Gas), that Spencer is unable to obtain lust and reasonable rates for gas utility service to the Spencer Generating Station (Spencer Station) in Denton, Texas, after December 31, 2001 Spencer's current gas transportation agreement with TXU LSP for gas utility service to the Spencer Station expires on December 31, 2001 The Spencer Station must have continuous and uninterrupted gas utility service after December 31, 2001, or the Spencer Station will cease to operate Spencer therefore respectfully requests the City to consider and to take appropriate action on this mater to the full extent of the City's authority at the City's December 18, 2001, public meeting to ensure that gas utility service to the Spencer Station continues uninterrupted after December 31, 2001, at a just and reasonable rate THE CITY HAS JURISDICTION OVER THIS COMPLAINT Spencer is a power generation company subsidiary of PG&E National Energy Group (PG&E) which operates the Spencer Station in Denton, Texas Spencer is a gas transportation customer of TXU LSP, the gas transmission division of TXU Gas 0441430038 AUSTIN 257018 v3 1 5 Due wuumm se nnp I%Spw C 11.lm HOC Company The City built the gas -fired Spencer Station in the 1950s and operated the plant thereafter until June of 2001, when the City sold the Spencer Station to PG&E The gas utility facilities that serve the Spencer Station consist of a 6-mile segment of ten -inch pipe (the Spur) connected directly to the Spencer Station, and two eight -inch lines connected to the Spur at the South Denton Meter Station These facilities provide the only access the Spencer Station has to gas utility service TXU LSP has represented to Spencer that the Spencer Station and the gas utility facilities serving the Spencer Station all are located within the City of Denton If this representation is correct, the City has exclusive original jurisdiction over the subject matter of this Complaint pursuant to TUC Section 103 001 To the best of Spencer's knowledge, the City has not surrendered such municipal jurisdiction to the Railroad Commission of Texas (RCT) pursuant to TUC 103 003 However, Spencer respectfully requests the City to determine whether the City believesithat the RCT has exclusive original jurisdiction over all or a portion of the subject matter of this Complaint In the event that the City determines that the City does not have exclusive jurisdiction over all or a portion of the subject matter of this Complaint, or otherwise cannot provide the full relief required to ensure that gas utility service into the Spencer Station will continue uninterrupted after December 31, 2001, then Spencer also respectfully requests the City to ask the RCT to issue a companion interim order, on an emergency basis, to ensure that gas utility service to the Spencer Station continues uninterrupted after December 31, 2001 at the just and reasonable rates that presently are being charged 044143 0038 AUSTIN 257018 v3 2 5 \Our Womn<nu\CoowoY\ol\9pawa Compldoi Mc II THE SPENCER STATION HISTORICALLY HAS BEEN SERVED SOLELY BY TXU LONE STAR PIPELINE The Spencer Station historically has received gas transportation service directly from TXU LSP under contract between the City and TXU LSP This arrangement between the City and TXU LSP, or TXU LSP's predecessor, dates back to the 1950s, when the Spencer Station first was placed into service The rates that TXU LSP charged the City of Denton for service to the Spencer Station were negotiated rates, as authorized by the negotiated rate provisions of TUC Section 104 003(b) The current interruptible natural gas transportation agreement between TXU LSP and the City (Agreement) dated December 14, 1999, has been assigned to Spencer as of June 18, 2001 The Agreement will expire on December 31, 2001 III TXU LONE STAR PIPELINE AND TXU GAS DISTRIBUTION NOW CONTEND THAT THE SPENCER STATION REQUIRES DISTRIBUTION SERVICE Following PG&E's purchase of the Spencer Station and during recent negotiations regarding continuing gas service to the Spencer Station after December 31, 2001, TXU LSP represented to Spencer, for the first time, that the Spur directly connected to the Spencer Station is, and always has been, a distribution line, not a transmission line TXU LSP contends that the rates for gas utility service to the Spencer Station under the Agreement include a two -cent per MMBtu component attributable to distribution service provided on the Spur The City has indicated to Spencer that it has no knowledge of such distribution service or charge therefor Spencer has seen no notice, contract provision, or other documentation reflecting such a charge or service, or establishing the basis for the rate or classification of the Spur facilities, TXU LSP asserts that, for some period of time, TXU LSP has paid such two- 0441430038 AUSTIN 257018 v3 3 5 �w wament.M n0aaM Bspmwv Complaint MC cent per MMBtu component to TXU GD (for a purpose that is not clear to Spencer), but which TXU LSP claims is authorized by an intra-company agreement made in 1987 (which has not been disclosed to Spencer) Without conceding that gas utility service to the Spencer Station ever has involved distribution service, any costs that TXU LSP claims are attributable to distribution service have been invisible to the customer, because the Agreement provides for a bundled rate payable only to TXU LSP Neither PG&E nor Spencer has been aware of any distribution service being received through the Agreement Nevertheless, TXU LSP contends that, in order for the Spencer Station to continue receiving gas utility service after December 31, 2001, Spencer must pay a substantially increased rate for distribution service, in addition to paying a substantially increased transportation service rate The proposed increased rate for distribution service, which TXU GD, the gas distribution division of TXU Gas Company, claims is necessary to recover its revenue requirement for providing service in the City, combined with the proposed transportation rate to be charged by TXU LSP, would make continued operation of the Spencer Station economically unfeasible TXU GD's recent claim to have been providing distribution service into the Spencer Station is unsubstantiated To the best of Spencer's knowledge, the City never has approved a rate for gas distribution service into the Spencer Station, no regulatory authority ever has found any assets to be used and useful in providing gas distribution service into the Spencer Station, or has properly classified any assets serving the Spencer Station as distribution assets, and the Agreement does not reflect any mutual understanding that the gas utility service into the Spencer Station included distribution 0441430038 AUSTIN 257018v3 4 S �rU MCQblConYpcWOIIpwccr C MPIWRID service or that distribution charges were collected under the Agreement Therefore, Spencer respectfully requests the City to establish whether the City has approved a lawful rate for distribution service to the Spencer Station, by contract or otherwise, and whether any part of the service provided under the Agreement has been shown by evidence provided to the City to be distribution service If TXU GD believes it is entitled to revenues for providing distribution service to the Spencer Station, then TXU GD is entitled to petition the City to demonstrate that the facilities in question are distribution facilities and to request an approved rate IV THE CITY HAS NOT ESTABLISHED A DISTRIBUTION RATE FOR TXU GAS DISTRIBUTION TO CHARGE SPENCER On July 17, 2001, the City by ordinance (Ordinance) set new distribution rates for TXU GD in the City of Denton 1 TXU GD did not appeal the Ordinance The Ordinance is final and the time for appeals has passed In the Ordinance, the City did not set distribution rates for industrial customers as requested by TXU GD, but instead found that "contractual industrial gas rates are considered to be just and reasonable,"2 and approved "rates for industrial customers in Denton established by contract between TXU Gas and such industrial customers 4 However, the Agreement for utility service to the Spencer Plant is between TXU LSP and Spencer, not TXU GD and Spencer Thus, there appears to be no lawfully -approved rate for gas distribution service into the Spencer Station If that is the case, TXU GD is not lawfully entitled to charge a rate for distribution service into the Spencer Station until either (1) TXU GD 1 City of Denton, Ordinance 2001-251 (July 17, 2001) P Ordinance, Section 1 2 3 Ordinance, Section 1 5 4 The City and TXU GD have entered into a separate agreement for 'Plant Protection" service to the Spencer Station, however, that agreement is not at issue in this Complaint 044143 0038 AUSTIN 257018 v3 5 S bin WC and Spencer negotiate a just and reasonable rate pursuant to TUC Section 104 003(b), or, (2) TXU GD obtains an ordinance from the City establishing a distribution rate upon a sufficient showing by TXU GD that relevant facilities are properly classified as distribution facilities, that such facilities are used and useful in providing distribution service to the Spencer Station, and that the rate requested for such service is just and reasonable V THE RATE NEGOTIATIONS HAVE NOT RESULTED IN JUST AND REASONABLE RATES FOR SERVICE TO THE SPENCER STATION Under TUC Section 104 003(b), a gas utility service rate charged to a transportation, industrial, or similar large -volume contract customer, such as Spencer, is considered to be just and reasonable only if one or more of three conditions are met (1) neither the gas utility nor the customer had an unfair advantage during the negotiations, (2) the rate is substantially the same as the rate between the gas utility and at least two other customers under the same or similar conditions of service, or (3) competition exists either with another gas utility, another supplier of natural gas, or a supplier of an alternative form of energy While the Agreement may have met these conditions, negotiations for continued rates and terms of service for the Spencer Station after December 31, 2001, have faded Spencer is not aware that any other industrial customer of TXU LSP or TXU GD which receives gas under the same or similar conditions of service as Spencer is charged rates that are substantially the same as the rates TXU LSP and TXU GD propose to charge Spencer Further, there is no alternate gas supplier to compete with TXU LSP or TXU GD for service to the Spencer Station The rates TXU LSP and TXU GD have proposed to charge Spencer are not just and reasonable rates for gas utility service into the Spencer Station, as required by TUC 0441430038 AUSTIN 267018 v3 6 S, urO umnnluMnnwnW0MM"r COmylulm WC Section 104 003(a) The proposed rates appear to be discriminatory and preferential, based on the size of the Increases proposed, and the fact that Spencer is unaware that similar customers are charged similar rates for similar services TXU LSP and TXU GD have proposed to charge rates which, in combination, are vastly in excess of currently approved rates, and which, if charged, would make continued operation of the Spencer Station economically unfeasible The pricing provisions of the current Agreement have been provided under seal for the City's consideration in Appendix A 5 TXU LSP and TXU GD now collectively propose to charge rates to Spencer which represent a sixty percent (60%) increase in the cost of transportation service, a six hundred -fifty percent (650%) increase in the cost of swing service, and a three hundred sixteen percent (316%) increase in the cost of distribution service (based on TXU GD's alleged assessment of a prior two -cent distribution rate) By inserting TXU GD into the contracting chain for purposes of pricing gas utility service to the Spencer Station for the first time in over forty years, TXU LSP in essence has proposed a combined rate which would result in rate shock which would detrimentally impact the Spencer Station, is unjust and unreasonable, and would make the Spencer Station uneconomical to operate Thus, it is necessary for the City to protect the public interest by exercising the full extent of the City's authority to issue an ordinance to ensure the continued provision of gas utility service to the Spencer Station after December 31, 2001 at a just and reasonable rate which, on an interim basis, are 5 Section 71 of the Agreement requires the parties to keep the terms and provisions of the Agreement confidential Thus, Information in the Agreement that is material to this Complaint is Included in Appendix A, which Spencer has filed under seal As part of this Complaint, therefore, Spencer respectfully requests the City to take all appropriate and necessary actions to protect the confidentiality of the Information in Appendix A, which is entitled to protection from public disclosure pursuant to Section 552110(b) of Texas Government Code TEx GOV'T CODE ANN § 552110(b) (Vernon Supp 2001) (exception for certain commercial or financial information) 0441430038 AUSTIN 2570180 7 S �Oue Cocum. tl�nlncM0113pmmacp W., Mc the same as the rates set in the Agreement Such rates must continue in effect until either (1) TXU GD and Spencer negotiate a just and reasonable rate pursuant to TUC Section 104 003(b), or, (2) TXU GD obtains an ordinance from the City establishing a distribution rate upon a sufficient showing by TXU GD that relevant facilities are properly classified as distribution facilities, that such facilities are used and useful in providing distribution service to the Spencer Station, and that the rate requested for such service is just and reasonable VI THE NET EFFECT OF TXU GAS'S, TXU LONE STAR PIPELINE'S, AND TXU GAS DISTRIBUTION'S TACTICS AND ACTIONS ARE UNLAWFUL AND AGAINST PUBLIC POLICY. The reality behind this Complaint is that the City sold the Spencer Station to a competitor of TXU Gas's power generation affiliate The Spencer Station is located in the monopoly service area of TXU Gas's utility divisions, TXU LSP and TXU GD Not until the Spencer Station was purchased by a competitor of a TXU Gas affiliate did TXU LSP and TXU GD disclose or attempt to explain that distribution service is being provided and charged for under the Agreement On its face, the Agreement describes no such service and provides for no such charges TXU Gas and its utility divisions are attempting to assess additional charges where service and facilities have not changed, no lawful rate has been approved, no notice has been provided to customers, and no regulatory approval has been sought or obtained In Spencer's judgment, TXU Gas and its utility divisions are seeking to take advantage of what they hope is a gap between the jurisdiction of the City and the jurisdiction of the RCT over gas utility rates and services Regardless, Texas law does not permit utility service to be provided where a just and reasonable rate has not been 0441430038 AUSTIN 25701E v3 8 s Wur Uocumenu\ConlncuWlV4penom Cpmpleme DOC established by law or regulatory authority Perhaps equally as important, the net effect of the actions and tactics pursued by TXU Gas and its utility divisions is to close down a power plant recently acquired by a competitor of TXU Gas's power generation affiliate Surely the laws of the State of Texas, including the amendments to the Public Utility Regulatory Act made in S B 7 in 1999,E do not permit this kind of anti -competitive behavior by gas and electric affiliates of a combined utility VII SPENCER IS ENTITLED TO RECEIVE CONTINUED GAS UTILITY SERVICE INTO THE SPENCER STATION Pursuant to TUC Section 121 103, Spencer is entitled to receive continued gas utility service into the Spencer Station after December 31, 2001 A gas utility in Texas has a continuing obligation to serve a transportation, industrial, commercial, or other similar large -volume end -use customer, unless certain specific conditions are met A gas utility's continuing obligation to serve such a customer is extinguished only if the customer reduces or ceases the purchase of natural gas service from the gas utility and purchases natural gas service from another supplier or purchases an alternate form of energy 7 Spencer has not reduced or ceased the purchase of natural gas service for the Spencer Station from TXU LSP, or purchased natural gas service for the Spencer Station from another supplier or purchased an alternate form of energy, nor does Spencer have the option of obtaining gas utility service from an alternate supplier If no gas utility service is provided to the Spencer Station after December 31, 2001, then the Spencer Station will not continue to operate 6 TEX S B 7, 76TH LEG R S (1999) 7 TUC Section 121 103(a) 0441430038 AUSTIN 257018v3 9 S wurU umenuMunvfclMl%4 rC Plalw WC VIII THE INFORMATION IN APPENDIX A IS ENTITLED TO PROTECTION FROM PUBLIC DISCLOSURE The information from the Agreement that is material to this Complaint is set forth in Appendix A, which Spencer has provided under seal The Information in Appendix A is confidential Information pursuant to the terms of the Agreement, and is entitled to protection from public disclosure pursuant to Section 552110(b) of the Texas Government Code, which provides an exception to the public disclosure requirements of the open records laws for certain commercial or financial information 8 Thus, Spencer respectfully requests the City to take all appropriate and necessary actions to protect the confidentiality of the information contained in Appendix A IX NECESSITY FOR EMERGENCY MEETING The Agreement will expire on December 31, 2001 In order to ensure an uninterrupted continuation of gas utility service to the Spencer Station after December 31, 2001, Spencer respectfully requests the City to consider this matter and to take action at its next regularly scheduled public meeting on December 18, 2001 If such prompt Consideration and action requires an emergency notice of an addition to the City's agenda under the Texas Open Meetings Act,9 such emergency notice is appropriate The City's immediate action is required to address the emergency and urgent public necessity presented by the reasonably unforeseeable situation that gas utility service to the Spencer Station may be interrupted or cease entirely after December 31 2001, and to ensure continued gas utility service to the Spencer Station without interruption at just and reasonable rates after December 31, 2001 9 TEx Gov'T CODE ANN § 552 110(b) (Vernon Supp 2001) 9 TEx GOV'T CODE ANN § 551 045 (Vernon 1994) 044143 0038 AUSTIN 257018 v3 10 S �CmummkV_oafecY�0113pmca Canpldol00C X REQUEST FOR RELIEF Based on the foregoing facts, and, given the historical use of the Spur, the public benefits associated with the operation of the Spencer Station, and the potential for rate shock which would detrimentally impact the Spencer Station, Spencer respectfully requests the City to take the following actions on December 18, 2001, to the full extent of the City's authority and jurisdiction (1) To take all appropriate and necessary actions to protect the confidentiality of the information submitted under seal in Appendix A, (2) To consider in public hearing this Complaint and to take such actions as it deems necessary and appropriate, (3) To issue an ordinance that (A) Finds that TXU LSP, TXU GD, and Spencer have faded to reach agreement on reasonable rates and terms and conditions for service to the Spencer Station after December 31, 2001, (B) Finds that TXU LSP's and TXU GD's proposed rates for gas utility service into the Spencer Station after December 31, 2001, are unreasonably discriminatory and preferential, (C) Finds that such proposed rates are not just and reasonable, and (D) Finds that Spencer is entitled to continue to receive gas utility service into the Spencer Station after December 31, 2001 (4) To issue an ordinance that also requires TXU LSP, and TXU GD to the extent that it currently is providing service, to continue to provide gas utility service to the Spencer Station, without interruption, under the rates and terms and conditions of the existing Agreement after December 31, 2001 To the extent the City determines that it cannot lawfully provide the full relief required to ensure such continuation of gas utility service into the Spencer Station after December 31, 2001, then Spencer respectfully requests the City to request the RCT to issue a companion interim order to the City's ordinance, on an emergency basis, to ensure such continuation of service, without interruption, under the rates and terms and conditions of the existing Agreement after December 31, 2001 (5) To the extent the City concludes that has not set a gas distribution rate for service to the Spencer Station, to issue an ordinance which also 0441430038 AUSTIN 267018v3 11 5 bur OanammIR C nt,eWW1\Bpnnnm Complaint WC (A) Finds that the City has never set a just and reasonable rate for gas distribution service into the Spencer Station, (B) Concludes that there is no lawfully -approved rate for distribution service by TXU GD into the Spencer Station, and, thus, that TXU GD shall not be entitled to charge a distribution rate for service into the Spencer Station until either (1) TXU GD and Spencer negotiate a just and reasonable rate pursuant to TUC Section 104 003(b), or, (2) TXU GD obtains an ordinance from the City establishing a distribution rate upon a showing by TXU GD that relevant facilities are properly classified as distribution facilities, that such facilities are used and useful in providing distribution service to the Spencer Station, and provide evidence upon which the City can establish that the approved rate is just and reasonable (6) To make any such ordinance issued pursuant to this Complaint interim in nature, and to provide that such ordinance shall remain in effect until such time as either (1) TXU GD and Spencer negotiate a just and reasonable rate pursuant to TUC Section 104 003(b), or, (2) TXU GD obtains an ordinance from the City establishing a distribution rate upon a showing by TXU GD that relevant facilities are properly classified as distribution facilities, that such facilities are used and useful in providing distribution service to the Spencer Station, and provide evidence upon which the City can establish that the approved rate is just and reasonable In addition, Spencer respectfully requests the City to provide any and all such further relief within the City's jurisdiction necessary to ensure the continued and uninterrupted gas utility service into the Spencer Station after December 31, 2001 Respectfully submitted, By G Gad Watkins State Bar No 20923400 AKIN, GUMP, STRAUSS, HAUER & FELD, L L P 1900 Frost Bank Plaza 816 Congress Avenue Austin, Texas 78701 (512) 499-6212 (512) 703-1111 Fax ATTORNEYS FOR SPENCER STATION GENERATING COMPANY, L P 0441430038 AUSTIN 257018 v3 12 S \our DocumemvMnnrtwlvW44pwwr Campldm WC CERTIFICATE OF SERVICE I hereby certify a true and correct copy of the foregoing has been served on the persons listed below via Federal Express delivery, postage prepaid, on this the 13th day of December, 2001 G Gail Watkins Mr Stephen J Houle TXU Electric & Gas 1601 Bryan Street, 32nd Floor Dallas, Texas 75201 Mr Richard A Erskine TXU Lone Star Pipeline 301 S Harwood Dallas, Texas 75201 0441430038 AUSTIN 2570180 13 S Our Wcumvi%W onWcN0l4p wQmpl.ln1000 APPENDIX A APPENDIX A HAS BEEN PROVIDED TO THE DENTON CITY ATTORNEY, MR. HERB PROUTY, UNDER SEPARATE SEALED COVER. 0441430038 AUSTIN 287018v3