2001-482FILE REFERENCE FORM I 2001-482 I
Additional File Exists
Additional File Contains Records Not Public, According to the Public Records Act
Other
FILE(S) Date Initials
Professional Services Agreement with Diversified Utility Consultants,
Inc. authorized in Section 3 of ordinance (original agreement is located
in 2002 Contract file) 01/16/02
Agreement for Professional Legal Services with the Law Office of Jim
Boyle, PLLC authorized in Section 3 of ordEame (original agreement is
located in 2002 Contract file) 01/30/02
ORDINANCE NO (~/- 7./~:~
AN 0 NANCE ^¢¢EPT NO *, SDICTION OF A COMPLAINT Fn.E
GE~T~G COMPS, L P (SPENCER) AGA~ST TXU LONE ST~ PIPEL~
(TXU> CL~M~G T~ IS ATTE~T~G TO CH~GE ~ASON~LE ~TES FOR
GAS UTILITY SERVICE TO THE SPENCER GENE~T~G STATION, MA~G
F~GS ~TH ~SPECT TO THE COMPL~NT FILED BY SPENCER AG~ST TXU
FOR F~L~ TO PROVIDE GAS UTILITY SERVICE ON ~ASON~LE TE~S,
O~E~G ~TE~M ~LIEF BY ~QUI~G TXU TO M~T~ GAS UTILITY
SERVICE TO THE SPENCER GE~T~G STATION ~ER THE EXIST~G
AG~EMENT BET~EN TXU A~ SPENCER WITHOUT ~TE~TION ~TER
DECEMBER 31, 2001, ~TIL A ~ST ~ ~ASON~LE ~TE IS EST~LISHED OR
~TIL T~ ~ SPENCER ~ACH AN AG~EMENT ON A JUST ~ ~ASON~LE
~TE, O~E~G ~ ~ESTIGATION TO M~ S~ THAT ~TES CH~GED BY
TXU TO SPENCER GE~T~G COMPA~ OR OTHER CITY OF DENTON
~UST~ ~TEPAYERS ~ NOT DISC~M~ATORY OR P~FE~NTI~,
AUTHO~Z~G THE HI~G OF ~TE CONS~T~TS, PROVID~G FOR THE
~COVERY OF ~TE EXPENSES, PROVID~G A SEVE~ILITY CLAUSE, ~
PROVinG ~ EFFECTIVE DATE
~E~AS, on or about July 17, 2001, the City Co~cfl passed Ordln~ce No 2001-251
(Rate Ordm~ce) estabhshmg m~lmm pe~ltted rates and ch~ges T~ Gas Dls~buUon
(TXU-GD) may assess residential ~d commemlal customers m the City of Denton ~d fmhng to
approve rates for mdus~al customers requested by T~-GD but approwng rates for mdus~al
customers estabhshed by con.act be~een TXU-GD ~d such lndustnal customers, ~d
~E~AS, TXU accepted the Rme Ordln~ce ~d &d not appeal to ~e Rmlroad
Commission ~d the ~me for appeal has now expired, ~d
~E~AS, Spencer Station Generating Comply, L P (Spencer) has filed a complaint
agmnst T~ Lone St~ Plpehne (T~-LSP) ~d (TXU-GD) for fadure to prowde gas utility
se~me on reasonable terns ~d stating that it is ~able to obtmn just ~d reasonable rates for gas
utility se~lce to Spencer Generating Station (Spencer StaUon) ~ set out more ~lly ~n the
Complmnt which is attached to thru Ordln~ce, has requested a pubhc hearing on th~s ~ssue ~d
has requested mtenm rate rehef ~om the C~ty of Denton, ~d
~E~AS, after a pubhc hemng where both Spencer ~d TXU-GD ~d TXU-LSP
were given ~ oppo~ty to present ewdence concerning the allegations in Spencer's
Complmnt, ~e C~ty Co~ml deems it in the pubhc lmerest to m~e the findings ~d orders,
NOW, THE~FO~,
THE CITY CO~CIL OF THE CITY OF DENTON, TEXAS HEREBY O~A~S
SECTION 1 F~GS That the C~ty Co.cfi, p~su~t m its exchmve original
junsdlctlonal au~onty over the rates, operations ~d se~lce of TXU-GD ~d T~-LSP
hereinafter referred to as TXU GAS within Denton and in the exercise of ~ts sound legislative
thscretlon, after reasonable notice and heanng, makes the following findings of fact
1 1 That under Section 104 003(a) of the Texas Utlhtles Code and Section 13 04 of the
Denton City Charter and Section 3 "Reservation of Pdghts" 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
1 2 That the Rate Ordinance passed by the City Councd on July 17, 2001 (Rate Ordmance)
found m accordance with Section 104 003(b) of the Texas Utthtles 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 ~nstead
approved rates for mdustnal customers m Denton estabhshed by contract between TXU GAS
and such industrial customers at the t~me the Rate Ordinance was enacted
1 3 That the Rate Ordinance did not set a just and reasonable rate for gas distribution servme
into the Spencer Station unless the approval of the then ex~st~ng ~ndustnal contractual rates
estabhshed the gas d~stnbutlon rates as those rates ~n the current lntermptlble natural gas
transportation agreement between TXU GAS and Spencer dated December 14, 1999
(Agreement),
1 4 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 ~n Spencer's
Complaint are just and reasonable or that the current rate under the existing Agreement w~th
Spencer 15 unreasonable
1 5 That TXU GAS has failed to establish that the proposed rates for gas utility service to
Spencer Station are just and reasonable as reqmred by Texas Utilities Code Section 104 003(a)
1 6 That insufficient evidence has been presented by TXU GAS to deviate from the finding
m the Rate Ordinance that the rates under the current Agreement between TXU GAS and
Spencer are just and reasonable
1 7 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 entttled to and continue to receive gas
utd~ty service to the Spencer Station after December 31, 2001 until the City has sufficient t~me to
analyze the matters set forth ~n the Complmnt, conclude ~ts ~nvestlgatlon and make an informed
demslon on th~s matter
1 9 That costs of investigation of the Complmnt of Spencer and all other rate matters
~ncluded ,m tins Ordinance, require the servmes of attorneys, accountants, auditors, engineers and
Page 2
rate consultants and the reasonable cost of such services are reimbursable expenses under
Section 103 022 of the Texas Utlhty Code
SECTION 2 ORDER That based on the findings of fact set forth ~n Section 1 of this
Ordlnance~ and m accordance with its prewous findings and orders in Ordinance 2001-251 the
City Council hereby makes the followmg Interim order
2 1 The City Council accepts jurisdiction over the Spencer Complmnt in accordance wtth
Section 13 04 of the Denton City Charter and Section 104 003(a) of the Texas Utthty Code and
assigns tins Complaint Number 2001-1 and orders all affected persons and parties to cooperate
with the City staff and all rate consultants and provide necessary reformation to allow the City to
conclude its investigation and to make a proper chspos~tlon of this proceeding
2 2 That TXU GAS is ordered not to change the rate to Spencer Station under the exlstmg
Agreement and is ordered to continue to prowde gas utility service to the Spencer Station on an
interim basis w~thout interruption under the terms of the ex~stlng Agreement after December 31,
2001 until either (1) TXU GAS files for new industrial rates w~th C~ty Council, demonstrate to
the City Council that the proposed rates for gas utility serwce to the Spencer Station are just and
reasonable and are not preferential or discriminatory, that relevant facllmes are properly
classified as distribution fatalities and these famht~es are used and useful m provlrhng
distribution service to the Spencer Station, and has the rates approved by the C~ty Council or the
Rmlroad Commission, or (2) TXU GAS and Spencer negotmte a just and reasonable rate
pursuant to Section 104 003(b) of the Texas Utlhtles Code
2 3 Dunng the period ofth~s interim order there shall be an investigation conducted to msure
that mdustnal rates for the Spencer Station are not preferentml or d~scnmlnatory, TXU GAS and
Spencer are ordered to cooperate with the City Council which hereby retmns its jurisdiction to
~mtlate an investigation to examine rates with other TXU GAS contract generating facilities and
other m{u. stnal customers to insure that no rates being charged to Denton industrial gas
customers by TXU are dtscnmlnatory or preferential
2 4 That TXU GAS is ordered to reimburse the C~ty for all reasonable costs of the services of
rate consultants, attorneys, accountants, auditors, and engineers necessary to this proceeding in
accordance w~th Section 103 002 of the Texas Utlht~es Code
SECTION 3 That the City Manager and the City Attorney are authorized to take all
actions n~cessary to enforce th~s ordinance including the engagement of rate consultants and the
retention ~of legal counsel to enforce this ordinance and Orchnance No 2001-251 and the City
Manager ,~s further authorized to pay Diversified Utility Consultants, Inc and the Law Offices of
J~m Boyle for sermces performed through the date of tfus 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 m Denton are just and reasonable to both TXU and their customers,
Denton reserves the nght and privilege at any time to increase, decrease, alter change or amend
Page 3
this Ordinance or the rates estabhshed 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,
orchnanee 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, pnor 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 reheanng as set forth in this Section $ Upon receipt of a request for reheanng, the
City Council will promptly provide a forum dunng a pubhc heanng on an open meeting m 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 reheanng to render a final
dec~sion 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 reheanng has been
rendered The provisions of this Ordinance shall remain m 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 mvahd, inoperative or void for any reason by a court of
competent jurisdiction, the remaimng portions, sections or parts of sections of th~s ordinance
shall be and remain in full force and effect and shall not in any way be ~mpaired or affected by
such decision, oplmon or judgment
St~CTION 7 It ~s hereby found and determined that the meeting at which flus ordinance
was passed was open to the pubhc, as required by Texas law, and that advance pubhc notice of
the time, place and purpose of the meeting was given
St~CTION 8 EFFECTIVE DATE This interim ordinance shall take effect and be m 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 tame this Ordinance shall have no
further force or effect The City Secretary ~s hereby d~rected to dehver a certified copy of this
Ordinance to TXU Gas by sending the ordinance by U S Mail to the Company's anthonzed
representative, Autrey Warren, Regulatory Financial Manager, TXU Business Services, 1601
Bryan Street, Dallas, Texas 75201-3411
RONI BEASLE~, I(/AYO~PRO TEM
Page 4
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPRb4VED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
Page 5
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 Secbon 105 051 of the Texas Ut~ht~es Code (TUC), Spencer Stabon
Generabng Company, L P, (Spencer) files th~s Original Complaint against TXU Lone
Star Pipehne (TXU LSP) and TXU Gas DIstnbut~on (TXU GD), d~wslons of TXU Gas
Company (TXU Gas), that Spencer ~s unable to obtain just and reasonable rates for gas
ut~hty service to the Spencer Generating Station (Spencer Station) ~n Denton, Texas,
after December 31, 2001 Spencer's current gas transportabon agreement w~th TXU
LSP for gas ut~hty servme to the Spencer Station expires on December 31, 2001 The
Spencer Station must have continuous and umnterrupted gas ubl~ty service after
December 31, 2001, or the Spencer Stabon w~ll cease to operate Spencer therefore
respectfully requests the C~ty to consider and to take appropnate acbon on th~s mater to
the full extent of the C~ty's authority at the City's December 18, 2001, public meeting to
ensure that gas ut~hty service to the Spencer Station continues umnterrupted 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 Nabonal Energy
Group (PG&E) which operates the Spencer Station ~n Denton, Texas Spencer ~s a gas
transportation customer of TXU LSP, the gas transmission division of TXU Gas
044143 0038 AUSTIN 257018 v3
Company The C~ty budt the gas-fired Spencer Station ~n the 1950s and operated the
plant thereafter untd June of 2001, when the C~ty sold the Spencer Station to PG&E
The gas utdlty facdlbes that serve the Spencer Station consist of a 6-rode
segment of ten-~nch p~pe (the Spur) connected d~rectly to the Spencer Station, and two
e~ght-inch hnes connected to the Spur at the South Denton Meter Station These
facdltles prev~de the only access the Spencer Station has to gas utility service TXU
LSP has represented to Spencer that the Spencer Stabon and the gas ubhty facd~t~es
serving the Spencer Stabon all are located w~thm the C~ty of Denton If th~s
representation is correct, the City has exclusive onglnal jurisdiction over the subject
matter of th~s Complaint pursuant to TUC Section 103 001 To the best of Spencer's
knowledge, the City has not surrendered such mumclpal jurisdiction to the Radroad
Commission of Texas (RCT) pursuant to TUC 103 003
However, Spencer respectfully requests the C~ty to determine whether the C~ty
beheves,that the RCT has exclusive original jurisdiction over all or a port~on of the
subject matter of this Complaint In the event that the C~ty determines that the C~ty does
not have exclusive ]unsd~ct~on over all or a port~on of the subject matter of th~s
Complaint, or otherwise cannot prowde the full rehef required to ensure that gas utdlty
service into the Spencer Stabon wdl continue umnterrupted after December 31, 2001,
then Spencer also respectfully requests the City to ask the RCT to ~ssue a companion
~ntenm order, on an emergency bas~s, to ensure that gas utdlty servme to the Spencer
Station continues uninterrupted after December 31, 2001 at the just and reasonable
rates that presently are being charged
0441430038 AUSTIN 257018v3 2
II THE SPENCER STATION HISTORICALLY HAS BEEN SERVED SOLELY BY
TXU LONE STAR PIPELINE
The Spencer Station h~stor~cally has received gas transportation service d~rectly
from TXU LSP under contract between the C~ty and TXU LSP Th~s arrangement
between the C~ty and TXU LSP, or TXU LSP's predecessor, dates back to the 1950s,
when the Spencer Station first was placed ~nto service The rates that TXU LSP
charged the C~ty of Denton for service to the Spencer Stabon were negotiated rates, as
authonzed by the negobated rate prows~ons of TUC Section 104 003(b) The current
interruptlble natural gas transportation agreement between TXU LSP and the C~ty
(Agreement) dated December 14, 1999, has been assigned to Spencer as of June 18,
2001 The Agreement w~ll 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 Stabon and during recent
negobabons regarding conbnu~ng gas service to the Spencer Stabon after December
31, 2001, TXU LSP represented to Spencer, for the first time. that the Spur d~rectly
connected to the Spencer Stabon ~s, and always has been, a d~str~bubon I~ne. not a
transmission I~ne TXU LSP contends that the rates for gas utility service to the
Spencer Stabon under the Agreement ~nclude a two-cent per MMBtu component
attributable to d~stnbubon service prowded on the Spur The C~ty has ~nd~cated to
Spencer that ~t has no knowledge of such d~strlbubon service or charge therefor
Spencer has seen no not~ce, contract prows~on, or other documentation reflecting such
a charge or service, or estabhsh~ng the bas~s for the rate or class~flcabon of the Spur
fac~ht~es. TXU LSP asserts that, for some per~od of t~me, TXU LSP has pa~d such two-
044143 0038 AUSTIN 257018v3 3
cent per MMBtu component to TXU GD (for a purpose that ~s not clear to Spencer), but
which TXU LSP claims ~s authorized by an ~ntra-company agreement made in 1987
(which has not been d~sclosed to Spencer)
W~thout conceding that gas ut~hty service to the Spencer Station ever has
involved dlstnbut~on serwce, any costs that TXU LSP claims are attnbutable to
d~stnbut~on service have been mwslble 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 dlstnbut~on servme 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 ~ncreased rate for d~stnbutlon service, ~n addition to paying a substantially
~ncreased transportation service rate The proposed ~ncreased rate for d~str~but~on
service, which TXU GD, the gas d~smbutlon division of TXU Gas Company, claims ~s
necessary to recover Its revenue reqmrement for prowd~ng service ~n the C~ty, 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 clmm to have been prowd~ng dlstnbubon service into the
Spencer Station ~s unsubstantiated To the best of Spencer's knowledge, the C~ty never
has approved a rate for gas dlstnbubon service into the Spencer Station, no regulatory
authomy ever has found any assets to be used and useful ~n prowd~ng gas distribution
service into the Spencer Station, or has properly classified any assets serving the
Spencer Station as dlstnbutlon assets, and the Agreement does not reflect any mutual
understanding that the gas utility service into the Spencer Station included d~stnbut~on
0441430038 AUSTIN 257018v3 4
serwce or that d~stnbutlon charges were collected under the Agreement Therefore,
Spencer respectfully requests the C~ty to estabhsh whether the C~ty has approved a
lawful rate for d~stnbut~on service to the Spencer Station, by contract or otherwise, and
whether any part of the servme provided under the Agreement has been shown by
ewdence prowded to the City to be d~stnbut~on service If TXU GD beheves ~t ~s entitled
to revenues for prowd~ng d~stnbut~on service to the Spencer Station, then TXU GD ~s
entitled to petition the C~ty to demonstrate that the fac~ht~es ~n quesbon are d~stnbut~on
faclhtles 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 d~stnbut~on rates for
TXU GD ~n the City of Denton ~ TXU GD d~d not appeal the Ordinance The Ordinance
~s final and the time for appeals has passed In the Ordinance, the C~ty d~d not set
distribution rates for ~ndustnal customers as requested by TXU GD, but instead found
that "contractual ~ndustnal gas rates are considered to be just and reasonable,''2 and
approved "rates for ~ndustnal customers ~n Denton established by contract between
TXU Gas and such industrial customers"3 However, the Agreement for utlhty
service to the Spencer Plant is between TXU LSP and Spencer, not TXU GD and
Spencer4 Thus, there appears to be no lawfully-approved rate for gas d~stnbut~on
service into the Spencer Station If that ~s the case, TXU GD is not lawfully entitled to
charge a rate for distribution serwce into the Spencer Station until e~ther (1) TXU GD
City of Denton, Ordinance 2001-251 (July 17, 2001)
2 Ordinance, Section 1 2
3 Ordinance, Secbon 1 {5
4 The City and TXU GD have entered ~nto a separate agreement for "Plant Protection" servtce to
the Spen(~er Station, however, that agreement ~s not at issue ~n th~s Complaint
044143 0038 AUSTIN 287018 v3 5
and Spencer negottate a just and reasonable rate pursuant to TUC Section 104 003(b),
or, (2) TXU GD obtains an ordinance from the C~ty estabhsh~ng a distribution rate upon
a sufficient showing by TXU GD that relevant fac~ht~es are properly classified as
d~stnbut~on fac~ht~es, that such fac~ht~es are used and useful ~n providing d~stnbut~on
service to the Spencer Station, and that the rate requested for such serwce ~s just and
reasonable
V THE RATE NEGOTIATIONS HAVE NOT RESULTED IN JUST AND
REASONABLE RATES FOR SERVICE TO THE SPENCER STATION
Under TUC Section 104003(b), a gas ut~hty service rate charged to a
transportation, ~ndustnal, or s~m~lar large-volume contract customer, such as Spencer, ~s
considered to be just and reasonable only ~f one or more of three cond~bons are met (1)
neither the gas ut~hty nor the customer had an unfair advantage dunng the negotiations,
(2) the rate is substantially the same as the rate between the gas ut~hty and at least two
other customers under the same or s~m,lar conditions of service, or (3) competition
exists e~ther w~th another gas utility, another suppher of natural gas, or a suppher of an
alternative form of energy Wh~le the Agreement may have met these conditions,
negotiations for continued rates and terms of service for the Spencer Station after
December 31, 2001, have fa~led Spencer ~s not aware that any other ~ndustrlal
customer of TXU LSP or TXU GD which receives gas under the same or s~m~lar
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 ~s no alternate
gas suppher to compete w~th 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 serwce ~nto the Spencer Station, as required by TUC
044143 0038 AUSTIN 257018 v3 6
Section 104 003(a) The proposed rates appear to be discriminatory and preferential,
based on the s~ze of the ~ncreases proposed, and the fact that Spencer is unaware that
s~m~lar customers are charged s~m~lar rates for s~m~lar services
TXU LSP and TXU GD have proposed to charge rates whmh, ~n comb~nabon, are
vastly ~n excess of currently approved rates, and which, ~f charged, would make
continued operabon of the Spencer Stabon economically unfeasible The pnc~ng
prows~ons of the currant Agreement have been prowded under seal for the C~ty's
consideration ~n Appendix A5 TXU LSP and TXU GD now collectively propose to
charge rates to Spencer which represent a s~xty percent (60%) increase ~n the cost of
transportation service, a six hundred-fifty percent (650%) increase in the cost of swing
service, and a three hundred s~xteen percent (316%) ~ncrease ~n the cost of &stnbutlon
service (based on TXU GD's alleged assessment of a pnor two-cent distribution rate)
By inserbng TXU GD into the contracting chain for purposes of pricing gas ubhty
service to the Spencer Stabon for the first brae ~n over forty years, TXU LSP ~n essence
has proposed a combined rate which would result m rate shock which would
detrimentally ~mpact the Spencer Station, ~s unjust and unreasonable, and would make
the Spencer Station uneconomical to operate Thus, ~t ~s necessary for the City to
protect the pubhc interest by exercising the full extent of the C~ty's authority to ~ssue an
ordinance to ensure the conbnued provIs~on of gas ubhty servme to the Spencer Stabon
after December 31, 2001 at a just and reasonable rate which, on an ~ntenm basis, are
Section 7 1 of the Agreement requires the part~es to keep the terms and prows~ons of the
Agreement confidential Thus, ~nformatlon ~n the Agreement that ~s material to th~s Cornpla~nt ~s ~ncluded
~n Appendix A, which Spencer has filed under seal As part of th~s Complaint, therefore, Spencer
respectfully requests the City to take all appropriate and necessary actions to protect the confldentiahty of
the information in Appendix A, which ~s entitled to protecbon from public disclosure pursuant to Section
552 110(b) of Texas Government Code TEX GOV'T CODE ANN § 552 110(b) (Vernon Supp 2001)
(exception for certain commemlal or financial informat~on)
0441430038 AUSTIN 257018v3 7
the same as the rates set ~n the Agreement Such rates must conbnue ~n effect unbl
e~ther (1) TXU GD and Spencer negotiate a just and reasonable rate pursuant to TUC
Secbon 104 003(b), or, (2) TXU GD obtains an ordinance from the C~ty estabhsh~ng a
d~stnbutlon rate upon a sufficient showing by TXU GD that relevant fac~l~bes are properly
classified as distribution fac~htles, that such fac~ht~es are used and useful ~n prowdmg
dlstnbubon 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 reahty behind th~s Complaint ~s that the C~ty sold the Spencer Stabon to a
competitor of TXU Gas's power generation affiliate The Spencer Station ~s located in
the monopoly servme area of TXU Gas's utlhty d~vls~ons, TXU LSP and TXU GD Not
until the Spencer Station was purchased by a competitor of a TXU Gas affiliate d~d TXU
LSP and TXU GD d~sclose or attempt to explain that d~stnbubon service is being
provided and charged for under the Agreement On its face, the Agreement descnbes
no such service and provides for no such charges TXU Gas and ~ts utility dlws~ons are
attempting to assess additional charges where service and faclhtles have not changed,
no lawful rate has been approved, no notice has been prowded to customers, and no
regulatory approval has been sought or obtained
In Spencer's judgment, TXU Gas and ~ts utlhty d~v~s~ons are seeking to take
advantage of what they hope ~s a gap between the jurisdiction of the C~ty and the
jurisdiction of the RCT over gas utlhty rates and services Regardless, Texas law does
not permit ut~hty service to be provided where a just and reasonable rate has not been
0441430038 AUSTIN 257018v3 8
estabhshed by law or regulatory authority Perhaps equally as ~mportant, the net effect
of the actions and tactics pursued by TXU Gas and ~ts utility d~v~slons is to close down a
power plant recently acquired by a competitor of TXU Gas's power generation afl, hate
Surely the laws of the State of Texas, including the amendments to the Pubhc Ubhty
Regulatory Act made ~n S B 7 m 1999,6 do not permit this kind of ante-competitive
behavior by gas and electric affihates of a combined ut~hty
VII SPENCER IS ENTITLED TO RECEIVE CONTINUED GAS UTILITY SERVICE
INTO THE SPENCER STATION
Pursuant to TUC Section 121 103, Spencer ~s entitled to receive continued gas
utility service into the Spencer Station after December 31, 2001 A gas ut~hty in Texas
has a continuing obhgatlon to serve a transportation, industnal, commercial, or other
s~m~lar large-volume end-use customer, unless certain specific conditions are met A
gas utlhty's continuing obhgat~on to serve such a customer ~s extinguished only ~f the
customer reduces or ceases the purchase of natural gas service from the gas ut~hty and
purchases natural gas service from another suppher or purchases an alternate form of
energy 7 Spencer has not reduced or ceased the purchase of natural gas servme for
the Spencer Station from TXU LSP, or purchased natural gas service for the Spencer
Station from another suppher or purchased an alternate form of energy, nor does
Spencer have the option of obtalmng gas ut~hty service from an alternate suppher If no
gas utility service ~s prowded to the Spencer Station after December 31,2001, then the
Spencer Station w~ll not continue to operate
TEX SB 7,76THLEG RS (1999)
TUC Section 121 103(a)
0441430038 AUSTIN 257018v3 9
VIII THE INFORMATION IN APPENDIX A IS ENTITLED TO PROTECTION FROM
PUBLIC DISCLOSURE
The ~nformat~on from the Agreement that ~s mater~al to th~s Complaint ~s set forth
in Appendix A, which Spencer has prowded under seal The ~nformat~on ~n Appendix A
~s confidential information pursuant to the terms of the Agreement, and ~s enbtled to
protection from pubhc d~sclosure pursuant to Section 552 110(b) of the Texas
Government Code, which provides an excepbon to the pubhc d~sclosure requirements of
the open records laws for certain commercial or financial ~nformat~on 8 Thus, Spencer
respectfully requests the Qty to take all appropriate and necessary acbons to protect
the confident~ahty of the ~nformat~on contained ~n Appendix A
IX NECESSITY FOR EMERGENCY MEETING
The Agreement will expire on December 31, 2001 In order to ensure an
uninterrupted continuation of gas ut~hty service to the Spencer Stabon after December
31, 2001, Spencer respectfully requests the Qty to consider this matter and to take
action at ~ts next regularly scheduled pubhc meeting on December 18, 2001 If such
prompt conslderabon and acbon requires an emergency notice of an addlbon to the
Qty's agenda under the Texas Open Meebngs Act,9 such emergency nobce ~s
appropriate The C~ty's immediate acbon ~s reqmred to address the emergency and
urgent pubhc necessity presented by the reasonably unforeseeable s~tuabon that gas
ubhty service to the Spencer Station may be interrupted or cease enbrely after
December 31 2001, and to ensure continued gas ubhty service to the Spencer Stabon
w~thout interruption at just and reasonable rates after December 31, 2001
TEX (~OV'T CODE ANN § 552 110(b) (Vernon Supp 2001)
TEX GOV'T CODE ANN § 551 045 (Vernon 1994)
044143 0038 AUSTIN 287018 v3 1 0
X REQUEST FOR RELIEF
Based on the foregoing facts, and, g~ven the h~stoncal use of the Spur, the pubhc
benefits associated w~th the operabon of the Spencer Station, and the potential for rate
shock which would detrimentally ~mpact the Spencer Stabon, Spencer respectfully
requests the C~ty to take the following actions on December 18, 2001, to the full extent
of the C~ty's authority and junsdlct;on
(1) To take all appropriate and necessary acbons to protect the confldent~ahty of the
~nformatlon submitted under seal ~n Appendix A,
(2) To cons;der m pubhc hearing this Complaint and to take such actions as it deems
necessary and appropnate,
(3) To ;ssue an ordinance that
(A) F~nds that TXU LSP, TXU GD, and Spencer have faded to reach agreement
on reasonable rates and terms and cond~bons for service to the Spencer
Station after December 31, 2001,
(B) Finds that TXU LSP's and TXU GD's proposed rates for gas ut;hty service
into the Spencer Station after December 31, 2001, are unreasonably
d~scnm~natory and preferenbal,
(C) F~nds that such proposed rates are not just and reasonable, and
(D) F~nds that Spencer Is enbtled to continue to receive gas utdlty service into
the Spencer Station after December 31,2001
(4) To ~ssue an ordinance that also requires TXU LSP, and TXU GD to the extent
that ;t currently ~s prowd~ng service, to continue to provide gas utd~ty service to
the Spencer Station, without ~nterrupbon, under the rates and terms and
conditions of the existing Agreement after December 31,2001 To the extent the
City determines that ~t cannot lawfully prowde the full rehef required to ensure
such conbnuabon of gas utd~ty service ~nto the Spencer Stabon after December
31, 2001, then Spencer respectfully requests the C~ty to request the RCT to ~ssue
a compamon ~ntenm order to the City's ordinance, on an emergency bas~s, to
ensure such conbnuatlon of service, w~thout ~nterrupt~on, under the rates and
terms and conditions of the ex~sbng Agreement after December 31,2001
(5) To the extent the City concludes that has not set a gas d~strlbut~on rate for
service to the Spencer Stabon, to ~ssue an ordinance which also
044143 0038 AUSTIN 257018 v3 1 1
(A) F~nds that the City has never set a just and reasonable rate for gas
dlstnbut~on service ~nto the Spencer Stabon,
(B) Concludes that there ~s no lawfully-approved rate for d~stnbubon service by
TXU GD ~nto the Spencer Station, and, thus, that TXU GD shall not be
enbtled to charge a d~str~bubon rate for service ~nto the Spencer Station untd
e~ther (1) TXU GD and Spencer negobate a just and reasonable rate
pursuant to TUC Section 104 003(b), or, (2) TXU GD obtains an ordinance
from the C~ty estabhshing a d~stnbubon rate upon a showing by TXU GD that
relevant facd~bes are properly classified as d~stnbubon facd~bes, that such
faclhtles are used and useful ~n prowd~ng d~stnbutlon service to the Spencer
Station, and prowde ewdence upon which the C~ty can estabhsh that the
approved rate ~s just and reasonable
(6) To make any such ordinance ~ssued pursuant to th~s Complaint ~ntenm in nature,
and to provide that such ordinance shall remain ~n effect untd such bme as e~ther
(1) TXU GD and Spencer negotiate a just and reasonable rate pursuant to TUC
Section 104003(b), or, (2) TXU GD obtains an ordinance from the City
estabhshmg a d~str~bubon rate upon a showing by TXU GD that relevant facd~ties
are properly classified as d~strlbut~on facd~t~es, that such facd~bes are used and
useful ~n prowdlng d~stnbut~on service to the Spencer Stabon, and prowde
ewdence upon which the C~ty can estabhsh that the approved rate ~s just and
reasonable
In addition, Spencer respectfully requests the C~ty to prowde any and all such
further rehef w~th~n the C~ty's jurisdiction necessary to ensure the continued and
uninterrupted gas ubhty service into the Spencer Stabon after December 31,2001
Respectfully submitted,
By
G Gad Watk~ns
State Bar No 20923400
AKIN, GUMP, STRAUSS, HAUER & FELD, L L P
1900 Frost Bank Plaza
816 Congress Avenue
Ausbn, Texas 78701
(512) 499-6212
(512) 703-1111 Fax
ATTORNEYS FOR SPENCER STATION
GENERATING COMPANY, L P
0441430038 AUSTIN 287018v3 12
CERTIFICATE OF SERVICE
I hereby certify a true and correct copy of the foregoing has been served on
the persons hsted below wa Federal Express dehvery, postage prepaid, on th~s the
13th day of December, 2001
G Gall Watk~ns
Mr Stephen J Houle
TXU Electnc& Gas
1601 Bryan Street, 32nd Floor
Dallas, Texas 75201
Mr R~chard A Ersk~ne
TXU Lone Star P~pehne
301 S Harwood
Dallas, Texas 75201
044143 0038 AUSTIN 257018 v3 13
APPENDIX A
APPENDIX A HAS BEEN PROVIDED TO THE DENTON CITY ATTORNEY,
MR. HERB PROUTY, UNDER SEPARATE SEALED COVER.
0441430038 AUSTIN 257018v3