RAILROAD COMMISSION OF TEXAS

Transcription

1 RAILROAD COMMISSION OF TEXAS GAS SERVICES DIVISION GAS UTILITIES INFORMATION BULLETIN No. 764 RAILROAD COMMISSION OF TEXAS Victor G. Carrillo, Chairman Charles R. Matthews, Commissioner Michael L. Williams, Commissioner Stephen L. Pitner Director Gas Services Division January 25, 2005

2 TABLE OF CONTENTS SECTION PAGE SECTION 1 - NEW APPEALS AND APPLICATIONS FILED...2 SECTION 2 - APPEALS AND APPLICATIONS SET FOR HEARING...2 SECTION 3 - STATUS OF PENDING CASES...2 SECTION 4 - NOTICES OF DISMISSAL...2 SECTION 5 - ORDERS OF THE COMMISSION SECTION 6 - MISCELLANEOUS Orders were issued in the following dockets: GAS UTILITIES DOCKET NO RATE CASE EXPENSES SEVERED FROM GAS UTILITIES DOCKET NO GAS UTILITIES DOCKET NO STATEMENT OF INTENT FILED BY ONALASKA WATER & GAS SUPPLY TO CHANGE RATES IN THE ENVIRONS OF THE CITY OF ONALASKA GAS UTILITIES DOCKET NO STATEMENT OF INTENT FILED BY CENTERPOINT ENERGY ENTEX TO CHANGE RATES IN THE ENVIRONS OF CONROE, TEXAS (CONROE ENVIRONS) GAS UTILITIES DOCKET NO STATEMENT OF INTENT FILED BY ATMOS ENERGY CORPORATION TO CHANGE GAS RATES IN THE ENVIRONS OF LUBBOCK, TEXAS 1

3 SECTION 1 NEW APPEALS AND APPLICATIONS FILED DOCKET NO CAPTION -- Joint Application filed by Texas State Natural Gas, Inc. (Purchaser) and Texas Gas Service Company, a division of Oneok, Inc. (Seller) for Review of the Sale of the Eagle Pass Gas Distribution System. DATE FILED -- January 14, 2005 FILED BY -- Javier A. Libson & Susan M. Westbrook EXAMINER -- Mark Brock DOCKET NO CAPTION -- Application filed by Southwestern Gas Pipeline, inc. and Acacia Natural Gas Corporation to Review the Sale of Certain Assets to Enbridge Gathering (North Texas) L.P.. DATE FILED -- January 25, 2005 FILED BY -- Gene K. Veleska EXAMINER -- Mark Evarts SECTION 2 APPEALS AND APPLICATIONS SET FOR HEARING OR PREHEARING CONFERENCE None at this time. SECTION 3 STATUS OF PENDING CASES None at this time. SECTION 4 NOTICES OF DISMISSAL None at this time. 2

4 SECTION 5 ORDERS OF THE COMMISSION BEFORE THE RAILROAD COMMISSION OF TEXAS RATE CASE EXPENSES SEVERED FROM GAS UTILITIES DOCKET NO GAS UTILITIES DOCKET NO FINAL ORDER Notice of Open Meeting to consider this Order was duly posted with the Secretary of State within the time period provided by law pursuant to TEX. GOV T CODE ANN. Chapter 551, et seq. (Vernon 1994 & Supp. 2004). The Railroad Commission of Texas adopts the following findings of fact and conclusions of law and orders as follows: FINDINGS OF FACT 1. On May 23, 2003, TXU Gas Company ( TXU ) filed a statement of intent to change rates in the company's statewide gas utility system. The filing was docketed as Gas Utilities Docket No. (GUD) 9400, and styled TXU Gas Company Statement of Intent to Change Rates in the Company s Statewide Gas Utility System. 2. On March 23, 2004, the Commission severed rate case expense issues from GUD No into GUD No On May 25, 2004 the Commission issued its final order in GUD No The final hearing in GUD No was conducted on October 21 and 22, On October 1, 2004, TXU Gas Company and Atmos Energy Corporation completed a transaction in which Atmos Energy Corporation acquired the operations of TXU Gas Company. 6. Atmos Energy Corporation f/k/a TXU Gas Company ( Atmos ) is a gas utility and is subject to the jurisdiction of the Railroad Commission of Texas ( Commission ). 7. The Allied Coalition of Cities ( ACC ) participated as an intervenor in this docket and previously intervened on behalf of the following municipalities in GUD No. 9400: Abilene, Addison, Allen, Alvarado, Angus, Argyle, Arlington, Athens, Austin, Bedford, Bellmead, Bells, Benbrook, Blossom, Blue Ridge, Bowie, Bridgeport, Brownwood, Bryan, Burkburnett, Burleson, Caddo Mills, Carrollton, Cedar Hill, Celina, Cleburne, Clyde, College Station, Colleyville, Comanche, Coppell, Corinth, Corral City, Crandall, Crowley, Dalworthington Gardens, Denison, DeSoto, Duncanville, Early, Eastland, Edgecliff Village, Ennis, Euless, Everman, Fairview, Farmers Branch, Farmersville, Fate, Flower Mound, Forest Hill, Fort Worth, Frisco, Gainesville, Garland, Garrett, Grand Prairie, Grapevine, Haltom City, Harker Heights, Haskell, Haslet, Henrietta, Highland Park, Highland Village, Honey Grove, Howe, Hurst, Irving, Justin, Kaufman, Keller, Kennedale, Kerrville, Killeen, Krum, Lake Worth, Lancaster, Lewisville, Lincoln Park, Little Elm, Malakoff, Mansfield, McKinney, Megargel, Mesquite, Midlothian, Murphy, Newark, Nocona, North Richland Hills, Northlake, Ovilla, Palestine, Pantego, Paris, Parker, Pecan Hill, Petrolia, Plano, Ponder, Pottsboro, Prosper, Putnam, Red Oak, Richardson, Richland Hills, Robinson, Rockwall, Rowlett, Sachse, Saginaw, San Angelo, Seagoville, Sherman, Snyder, Southlake, Springtown, Stamford, Stephenville, Sulphur Springs, Sweetwater, The Colony, Throckmorton, Trophy Club, University Park, Vernon, Waco, Watauga, Waxahachie, Westworth Village, White Settlement, Whitesboro, Wichita Falls, Woodway, and Wylie. 3

5 8. The Association of TXU Municipalities ( ATM ) participated as an intervenor in this docket and previously intervened on behalf of the following municipalities in GUD No. 9400: Balch Springs, Bandera, Belton, Bertram, Bremond, Burnet, Caldwell, Cameron, Cedar Park, Cisco, Clifton, Coleman, Commerce, Copperas Cove, Corsicana, De Leon, Denton, Dublin, Electra, Fredricksburg, Frost, Gatesville, Goldthwaite, Granbury, Grandview, Greenville, Groesbeck, Hamilton, Hillsboro, Holland, Lake Dallas, Lampasas, Leander, Lexington, Llano, Lometa, Longview, Manor, Mart, McGregor, Mexia, Pflugerville, Ranger, Rockdale, Rogers, Round Rock, San Saba, Santa Ana, Seymour, Somerville, Thorndale, Trinidad, West, and Whitney. 9. The City of Dallas ( Dallas ), the State of Texas through the Attorney General's Office ( State of Texas ), and Staff of the Railroad Commission of Texas ( Staff ) participated as intervenors in this docket and previously intervened in GUD No On February 10, 2004, the Commission ordered Atmos Energy Corporation f/k/a TXU Gas Company to reimburse municipal intervenors for rate case expenses on a quarterly basis, subject to Atmos Energy Corporation f/k/a TXU Gas Company being reimbursed upon a Commission determination of reasonableness and subject to payment of interest on the quarterly payments by Atmos. 11. The requested rate case expenses of ACC in the amount of $2,260,983 are reasonable. Those expenses include the following: a. ACC s requested actual rate case expenses of $1,995,983 for actual work performed. b. ACC s estimated future rate case expenses of $265, The requested rate case expenses of ATM in the amount of $696,978 are reasonable. Those expenses include the following: a. ATM s requested actual rate case expenses of $562,103 for actual work performed. b. ATM s estimated future rate case expenses of $134, The requested rate case expenses of Dallas in the amount of $757,321 are reasonable. Those expenses include the following: a. Dallas requested actual rate case expenses of $656,764 for actual work performed. b. Dallas estimated future rate case expenses of $100, The requested rate case expenses of Atmos in the amount of $6,407,063 are reasonable. Those expenses include the following: a. Atmos requested actual rate case expenses of $5,554,563 for actual work performed. b. Atmos estimated future rate case expenses of $852, It is reasonable for Atmos to charge an interest rate of 3.53% per annum on all rate case expenses reimbursed to intervenors pursuant to the order entered by the Commission on February 10, 2004, in Gas Utilities Docket No It is reasonable for Atmos to include a carrying charge of 3.53% per annum on the balance of all rate case expenses reimbursed to intervenors after the effective date of this order until recovered by surcharge on all customers subject to the final order entered by the Commission in GUD No a. It is reasonable for Atmos to include a carrying charge of 3.53% per annum on its own rate case expenses after the effective 4

6 date of this order until recovered by surcharge on all customers subject to the final order entered by the Commission in GUD No It is reasonable that Atmos recover all rate case expenses approved herein by use of per Mcf and per MMBtu surcharges over a period of thirty-six (36) months billed to all customers subject to the final order approved in GUD No It is reasonable that all rate case expenses approved herein be recovered on a system-wide basis from all customers subject to the final order approved in GUD No It is reasonable that any surcharge to recover rate case expenses allocate all rate case expenses approved herein on the basis of non-gas revenues per customer class, for all customer classes subject to the final order approved in GUD No CONCLUSIONS OF LAW 1. Atmos Energy Corporation f/k/a TXU Gas Company is a gas utility as defined in TEX. UTIL. CODE ANN (7), (Vernon Supp. 2004) and is subject to the Commission s jurisdiction under TEX. UTIL. CODE ANN , (Vernon 1998). 2. Each party seeking reimbursement for its rate case expenses has the burden to prove the reasonableness of such rate case expenses by a preponderance of the evidence, under 16 TEX. ADMIN. CODE (2002). 3. The rate case expenses enumerated in the findings of fact herein are reasonable and comply with 16 TEX. ADMIN. CODE ANN (2002). 4. The Commission has the authority to allow Atmos Energy Corporation f/k/a TXU Gas Company to recover rate case expenses through a surcharge on its rates, under TEX. UTIL. CODE ANN (Vernon 1998 & Supp. 2004). 5. It is reasonable for the Commission to order Atmos Energy Corporation f/k/a TXU Gas Company to pay ACC s, ATM s and Dallas incurred rate case expenses, and estimated future rate case expenses. TEX. UTIL. CODE ANN (Vernon 1998 & Supp. 2004). 6. It is reasonable for the Commission to order Atmos Energy Corporation f/k/a TXU Gas Company to pay ACC s, ATM s and Dallas actually incurred reasonable rate case expenses within 30 days of the date of this Order pursuant to TEX. UTIL. CODE ANN (Vernon 1998). IT IS THEREFORE ORDERED that Atmos Energy Corporation f/k/a TXU Gas Company is authorized to recover all rate case expenses incurred in GUD No and approved by this order by means of a surcharge on its rates charged to ratepayers subject to the final order entered in GUD No A surcharge on rates shall be calculated on a per Mcf basis for residential and commercial customers and on a per MMBtu basis for industrial sales and transportation, pipeline transportation and city-gate customers and implemented over a period of thirty-six (36) months, commencing with the date this final order becomes effective. As estimated expenses are actually incurred, Atmos Energy Corporation is authorized to add to the amount subject to surcharge up to the total of estimated future expenses for Atmos, ACC, ATM and the City of Dallas approved herein. IT IS ALSO ORDERED that Atmos Energy Corporation f/k/a TXU Gas Company shall file a quarterly report informing the Railroad Commission of the balance of the surcharge with the Director of the Gas Services Division. IT IS ALSO ORDERED that Atmos, ACC, ATM and the City of Dallas shall file a quarterly report informing the Railroad 5

7 Commission of rate case expenses incurred in the further litigation of Gas Utilities Docket Nos. 9400, 9517, 9460, 9461, 9463, and 9463 after the effective date of this order, and any information required by the Gas Services Division Staff of the Railroad Commission. IT IS FURTHER ORDERED that Atmos Energy Corporation f/k/a TXU Gas Company shall reimburse ACC, ATM and the City of Dallas their incurred rate case expenses approved herein, and estimated rate case expenses up to the amount authorized herein. IT IS FURTHER ORDERED that Atmos Energy Corporation f/k/a TXU Gas Company shall be allowed to charge an interest rate of 3.53% per annum on funds advanced to reimburse ACC, ATM and the City of Dallas their rate case expenses approved herein, and estimated rate case expenses up to the amount authorized herein, until such funds are recovered through means of the surcharge approved by this order. IT IS FURTHER ORDERED that Atmos Energy Corporation f/k/a TXU Gas Company shall be allowed to charge an interest rate of 3.53% per annum on the rate case expenses approved herein for Atmos Energy Corporation f/k/a TXU Gas Company, and on the estimated rate case expenses up to the amount authorized herein, until such funds are recovered through means of the surcharge approved by this order. IT IS FURTHER ORDERED that Atmos Energy Corporation f/k/a TXU Gas Company shall reimburse ACC, ATM and the City of Dallas their incurred rate case expenses as approved herein within 30 days after the date of this order. IT IS FURTHER ORDERED that any proposed findings of fact and conclusions of law not specifically adopted herein are DENIED. IT IS ALSO ORDERED that each exception to the Examiners Proposal for Decision not expressly granted herein is overruled and all pending motions and requests for relief not previously granted herein are hereby DENIED. IT IS FURTHER ORDERED that this order will not be final and effective until 20 days after a party is notified of the Commission s order. A party is presumed to have been notified of the Commission s order three days after the date on which the notice is actually mailed. If a timely motion for rehearing is filed by any party at interest, this order shall not become final and effective until such motion is overruled, or if such motion is granted, this order shall be subject to further action by the Commission pursuant to TEX. GOV T CODE (e), the time allotted for Commission action on a motion for rehearing in this case prior to its being overruled by operation of law, is hereby extended until 90 days from the date the order is served on the parties. SIGNED this 25 th day of January, RAILROAD COMMISSION OF TEXAS /s/ VICTOR CARRILLO CHAIRMAN CHARLES R. MATTHEWS COMMISSIONER 6 /s/ MICHAEL L. WILLIAMS COMMISSIONER

8 ATTEST: /s/ Kim Williamson SECRETARY RAILROAD COMMISSION OF TEXAS STATEMENT OF INTENT FILED BY ONALASKA WATER & GAS SUPPLY TO CHANGE RATES IN THE ENVIRONS OF THE CITY OF ONALASKA GAS UTILITIES DOCKET NO FINAL ORDER Notice of Open Meeting to consider this Order was duly posted with the Secretary of State within the time period provided by law pursuant to TEX. GOV T CODE ANN. Chapter 551 et seq. (Vernon 1994 & Supp. 2004). The Railroad Commission of Texas adopts the following findings of fact and conclusions of law and orders as follows: FINDINGS OF FACT 1. Onalaska Water and Gas Supply ( Onalaska ) owns and operates a natural gas distribution system in the incorporated community of Onalaska, Texas and its environs. 2. On April 22, 2004, Onalaska filed with the Railroad Commission of Texas ( Commission ) a Statement of Intent to increase its rates in the environs of Onalaska, Texas. 3. Onalaska requested an effective date of October 21, On May 11, 2004, the Commission suspended the implementation of Onalaska s proposed rates for 150 days beyond the proposed effective date, or until March 20, Onalaska provided adequate notice to customers by publishing notice four consecutive times in the Polk County Enterprise prior to October 7, Onalaska seeks a cost of service of $218,233, excluding the cost of gas, in order to make up a test year revenue deficiency of $64, The data submitted to the Commission in this docket encompasses a full test-year, i.e., the twelve-month period ending December 31, Onalaska s invested capital rate base, adjusted for investments and deductions is $435, Administrative and General expenses in the amount of $80,735 are reasonable. 10. Depreciation and Amortization expenses in the amount of $23,675 are reasonable. 11. Taxes other than income taxes, excluding revenue-related taxes, in the amount of $1,501 are reasonable. 12. Operations and Maintenance expenses in the amount of $77,829 are reasonable. 7

9 13. Onalaska s proposed cost of service, exclusive of gas cost, of $218,233 is reasonable. 14. Onalaska proposed a rate for gas service comprised of a minimum customer charge of $10.00 and a volumetric gas charge of $8.00 per Mcf with a $5.75 per Mcf minimum gross margin on gas sold. 15. Onalaska s proposed rate design is not reasonable because the rate design proposed does not allow Onalaska to recover its cost of service on test year throughput of 21,797 Mcf. 16. A General Customer Rate applicable to both residential and commercial customers consisting of a minimum customer charge of $10.00 and a volumetric charge of $6.158 per Mcf, plus a cost of gas component to be determined in accordance with the Purchased Gas Adjustment Clause attached hereto as Exhibit A, will allow Onalska to achieve the cost of service approved herein. 17. The rates proposed by described in Finding of Fact No. 17 is just and reasonable and allows the utility to earn the cost of service approved herein. CONCLUSIONS OF LAW 1. Onalaska is a gas utility as defined in TEX. UTIL. CODE ANN (7) and TEX. UTIL. CODE ANN (Vernon Supp. 2004) and is subject to the Commission s jurisdiction under TEX. UTIL. CODE ANN and (Vernon 1998). 2. The Commission has exclusive original jurisdiction over Onalaska and Onalaska s statement of intent under TEX. UTIL. CODE ANN (Vernon 1998). 3. The revenue, rates, and rate design recommended in the findings of fact are reasonable and fix an overall level of revenues for Onalaska that will permit Onalaska a reasonable opportunity to earn a reasonable return on its invested capital used and useful in rendering service to the public over and above its reasonable and necessary operating expenses under TEX. UTIL. CODE ANN (Vernon 1998), and otherwise comply with Chapter 104 of the Texas Utilities Code. 4. It is reasonable for the Commission to allow Onalaska to include a cost of gas clause in its tariffs that allows the recovery of Onalaska gas costs, under 16 TEX. ADMIN. CODE (2002). 5. The overall revenue requirement established in this Order will permit Onalaska a reasonable opportunity to earn a reasonable return on its invested capital used and useful in providing service to the public in excess of its reasonable and necessary operating expenses under TEX. UTIL. CODE ANN (Vernon 1998 & Supp. 2004). 6. Onalaska failed to meet its burden of proof on the elements of its requested rate design pursuant to TEX. UTIL. CODE ANN (Vernon 1998 & Supp. 2004). 7. The rates established in this Order will not yield more than a fair return on the adjusted value of the invested capital used and useful in providing service to the public, under TEX. UTIL. CODE ANN (Vernon 1998 & Supp. 2004). 8. The rates and rate design reflected in the findings of fact are just and reasonable, not unreasonably preferential, prejudicial, or discriminatory, but are sufficient, equitable, and consistent in application to each class of customer, under TEX. UTIL. CODE ANN (Vernon 1998 & Supp. 2004). 8

10 IT IS THEREFORE ORDERED that Onalaska requested rates are DENIED. IT IS FURTHER ORDERED that the rates and rate design reflected in the findings of fact, in the Schedules attached and conclusions of law are APPROVED. IT IS FURTHER ORDERED that Onalaska shall file tariffs incorporating rates consistent with this Order within thirty days of the date of this Order. IT IS FURTHER ORDERED that Onalaska SHALL include in its purchase gas adjustment only its reasonable and necessary gas purchase expenditures and that the reasonableness and prudence of Onalaska gas purchases pursuant to its Cost of Gas clause may be subject to an adjustment and potential refund in a subsequent proceeding. IT IS FURTHER ORDERED that any proposed findings of fact and conclusions of law not specifically adopted herein are DENIED. IT IS ALSO ORDERED that each exception to the Examiners Proposal for Decision not expressly granted herein is overruled and all pending motions and requests for relief not previously granted herein are hereby DENIED. IT IS FURTHER ORDERED that this order will not be final and effective until 20 days after a party is notified of the Commission s order. A party is presumed to have been notified of the Commission s order three days after the date on which the notice is actually mailed. If a timely motion for rehearing is filed by any party at interest, this order shall not become final and effective until such motion is overruled, or if such motion is granted, this order shall be subject to further action by the Commission pursuant to TEX. GOV T CODE (e), the time allotted for Commission action on a motion for rehearing in this case prior to its being overruled by operation of law, is hereby extended until 90 days from the date the order is served on the parties. SIGNED this 25 th day of January, RAILROAD COMMISSION OF TEXAS /s/ VICTOR CARRILLO CHAIRMAN /s/ CHARLES R. MATTHEWS COMMISSIONER ATTEST: /s/ MICHAEL L. WILLIAMS COMMISSIONER /s/ Kim Williamson SECRETARY 9

11 BEFORE THE RAILROAD COMMISSION OF TEXAS STATEMENT OF INTENT FILED BY CENTERPOINT ENERGY ENTEX TO CHANGE RATES IN THE ENVIRONS OF CONROE, TEXAS (CONROE ENVIRONS) GAS UTILITIES DOCKET NO FINAL ORDER Notice of Open Meeting to consider this Order was duly posted with the Secretary of State within the time period provided by law pursuant to TEX. GOV=T CODE ANN. Chapter 551 (Vernon 2004). The Railroad Commission of Texas adopts the following findings of fact and conclusions of law and orders as follows: FINDINGS OF FACT Background 1. CenterPoint Energy Entex (Entex) is a utility as that term is defined in the Texas Utility Code. 2. Entex owns and operates a gas distribution system, referred to as the Houston Division. 3. The Environs of Conroe (Conroe Environs) are part of Entex=s Houston Division and are comprised of all customers located in the Environs of the cities of Conroe, New Waverly, Willis, Cut and Shoot, Shenandoah Valley, Panorama Village, and Oak Ridge North. 4. Entex acquired the system that serves the Conroe Environs customers from Moran Utilities Company on September 10, On June 8, 2004, the Railroad Commission of Texas (Commission) set rates for the Houston Division Environs customers, excluding rates for the Conroe Environs, in Gas Utilities Docket (GUD) 9469, Statement of Intent Filed by CenterPoint Energy Entex to Change rates in the Environs of the City of Houston. 6. The rates approved by the Commission that are applicable to customers located in the Environs of the Houston Division are the same as the rates approved by the City of Houston for the City of Houston customers, except that franchise fees are not collected from Environs customers. 7. On December 19, 2003, Entex filed with the City of Conroe a Statement of Intent to increase rates applicable to customers located within the municipality of Conroe. 8. On June 24, 2004, the City of Conroe approved rates for customers located within the city limits, effective for bills rendered on and after July 1,

12 Procedural History 9. On August 9, 2004, Entex filed a Statement of Intent requesting that the Commission approve rates for the customers located in the Environs of Conroe. 10. Entex requested that the rates for all customer classes become effective on September 13, On August 24, 2004, the Commission suspended the implementation of Entex=s proposed rates for 150 days after the date the rate schedule would otherwise be effective. 12. Entex provided adequate notice to customers through publication in a newspaper of general circulation in Montgomery County. The notice was published once each week for four successive weeks in the Houston Chronicle, a newspaper having general circulation in that county. Notice was published on August 24, August 31, September 7, and September 14, A hearing was held on November 17, 2004, to take testimony, other evidence, and legal argument on all issues of law and fact that were raised in or relevant to Entex s statement of intent, for the purpose of developing a record that the commission will use in setting rates. 14. The Statement of Intent rate filing package including testimony, cost of service data, and discovery materials submitted by Entex in GUD 9469 support the rate schedules proposed by Entex in this docket for the Conroe Environs. 15. On November 17, 2004, the Hearings Examiners took official notice of all documents in the Commission s GUD 9469 file and admitted those documents into evidence in this docket. 16. The utility s closing arguments and response to Examiners questions was filed on November 24, No protests were filed with the Commission regarding the proposed rate schedules for Entex=s Conroe Environs; no Environs customer requested a hearing or filed a petition to intervene. Conroe Environs Rates 18. The Commission most recently approved rates and miscellaneous service charges applicable to the Conroe Environs customers on January 5, 1987, in GUD Nos Entex is required to seek Commission approval whenever there is a change in rates and services. 20. The six rate schedules applicable to the Conroe Environs customers, with changes, are attached: Rate Schedule No. R-1987-B GSS-1987-B GSLV-594-C MISC-3 PGA-2 TA-2 Rate Schedule Name Residential Service General Service Small Volume General Service Large Volume Miscellaneous Service Charges Purchased Gas Adjustment (PGA) Tax Adjustment 21. The data submitted by Entex in this docket encompass a full test-year, i.e. the twelve-month period ending December 31,

13 22. There are approximately 10,414 Residential, 677 General Service-Small Volume, and 29 General Service-Large Volume customers that will be affected by Entex s rate changes for the Conroe Environs. 23. Entex s rate schedules for the Conroe Environs customers are the same as those rate schedules approved by the City for the customers located within the Conroe city limits, except that franchise fees are not collected from Environs customers. 24. To allow for a more gradual impact to the residential customer class, Entex requested that the Commission approve the same twostep rate process that was approved by the City of Conroe for its in-city customers. 25. Entex s two-step process applies only to residential customers. 26. The two-step process for the Conroe residential Environs customers results in rates that, on and after July 1, 2005, will be equal to the rates approved by the Commission in GUD 9469 for the Houston Division residential Environs customers. 27. The approved rate schedules provide that the transition residential rate will consist of a customer charge of $8.00 and a commodity charge of $ per 100 cubic feet (Ccf) for all gas delivered and services provided on and after the date of this Commission Order through June 30, The approved rate schedules provide that the final residential rate will consist of a customer charge of $10.50 and a commodity charge of $ per 100 cubic feet (Ccf) for all gas delivered and services provided on and after July 1, 2005, as shown in Rate Schedule No. R-1987-B. 29. Entex s rate schedule for Conroe Environs residential customers results in an approximate $61,009 revenue decrease from $5,508,215 in current revenue to $5,447,206 in proposed revenue, for bills on and after the effective date of this order. 30. The approved rate schedules provide that the total revenue from Environs commercial and industrial customers classified as general service-small volume will consist of a customer charge of $18.85 and a commodity charge of $ per 100 cubic feet (Ccf) for the first 150,000 cubic feet; $ per 100 cubic feet (Ccf) for amounts from 150,001 to 1,000,000 cubic feet, and $ per 100 cubic feet (Ccf) for amounts consumed over 1,000,000 cubic feet, as shown in Rate Schedule No. GSS-1987-B. 31. Entex s rate schedule for Conroe Environs commercial and industrial customers classified as general service-small volume customers results in an approximate $10,494 revenue decrease from $1,141,013 in current revenue to $1,130,519 in proposed revenue. 32. The total revenue from Environs commercial and industrial customers classified as general service-large volume will consist of a customer charge of $310 and a commodity charge of charge of $ per 100 cubic feet (Ccf) for the first 150,000 cubic feet; $ per 100 cubic feet (Ccf) for amounts between 150,001 to 1,000,000 cubic feet, and $ per 100 cubic feet (Ccf) for amounts consumed over 1,000,000 cubic feet, as shown in Rate Schedule GSLV-594-C. 33. Entex s rate schedule for Conroe Environs commercial and industrial customers classified as general service-large volume customers results in an approximate $39,656 revenue decrease from $1,177,285 in current revenue to $1,137,629 in proposed revenue. 34. Entex s rate schedules for Residential, General Service-Small Volume, and General Service-Large Volume customer classes will result in an approximate total $111,159 annual revenue decrease. 35. Rate Schedule No. MISC-3, Miscellaneous Service Charges, will increase Entex s annual revenue by approximately $149, The net effect of Entex s rate schedule changes for Conroe Environs customers will be an approximate $38,580 annual revenue increase. 12

14 Comparison with Houston Division Schedules in GUD Entex s rate schedules for Conroe Environs customers are similar to the rate schedules approved by the Commission for the Houston Division Environs customers. Differences are described in Findings of Fact Nos Entex s Rate Schedule No. R-1987-B includes a transition rate mechanism applicable to the Conroe Environ residential customers. 39. The transition rate mechanism allows for more gradual impact to Conroe Environ residential customers. Entex s transition rate will be effective the date of this Order. Thereafter, on July 1, 2005, a subsequent rate change will make the Environs residential customer rate consistent with the rate approved by the Commission for the Houston Division Environs residential customers. 40. Entex did not propose inclusion of a prompt payment discount provision for any Conroe Environs customer class. 41. Entex s Schedule of Miscellaneous Service Charges, Rate Schedule No. MISC-3, includes a charge for institution of gas service applicable to all residential and general service customer classes. 42. The Schedule of Miscellaneous Service Charges, Rate Schedule No. MISC-3, allows for the temporary transfer of individually metered multi-family service when a tenant vacates an apartment complex. Purchased Gas Adjustment (PGA) 43. Entex s Purchased Gas Adjustment (PGA) Rate Schedule PGA-2 is the same as the PGA approved by the Commission in GUD The PGA is reasonable under the criteria in 16 TEX. ADMIN. CODE ' (2002). 45. The base cost of gas included in the PGA is $ The PGA will include gains and losses from the use of financial hedging instruments to achieve greater price stability. 47. The final Order in GUD 9469 required that beginning June 15, 2005, Entex will file annually with the Commission its Gas Purchase Plan and an annual report analyzing the results of its hedging practices showing its effect to purchased gas expense for the period of April 1, through March 31, of the preceding year. 48. Entex s gas purchase plan for the Houston Division includes consideration of the Conroe Environs customers; therefore, it is not necessary for Entex to file a separate report applicable specifically to the Conroe Environs. 49. Entex will credit charges collected for unauthorized over-run gas to the purchased gas adjustment rate. Tax Adjustment 50. Entex s Tax Adjustment Rate Schedule TA-2 is the same as the State and Local Tax Schedule approved by the Commission in GUD Conroe Environs customers will not pay the franchise fees that are incurred through the sale of gas to customers located within the corporate limits of the municipality. 13

15 52. As described in Tax Adjustment Rate Schedule No. TA-2, the collection of approved taxes as a line item on a customer=s bill is appropriate and reasonable. Miscellaneous Service Charges 53. Entex s Rate Schedule No. MISC-3 for Miscellaneous Service Charges includes connection fee, reconnecting fee, returned check charge, collection fee, tap charge, change in residential meter location, disconnection fee, and other miscellaneous service charges. 54. Entex s Miscellaneous Service Charges Schedule is reasonable. 55. Pursuant to the Quality of Service Rules at 16 TEX. ADMIN. CODE 7.45(4)(A) (2003), the due date of the bill for utility service shall not be less than 15 days after issuance. Curtailment 56. Entex is subject to the Commission s curtailment standards and requirements. 57. Entex proposed to include in Rate Schedule GSLV-594-C language to supplement the Commission s curtailment standards and requirements. 58. Entex s proposed supplemental curtailment language relates to limitation of litigation claims made by Entex s customers against the utility for total or partial interruption of gas deliveries. 59. A contractual dispute by a customer against a utility for failure to deliver gas may be a contractual or tort claim that would be within the jurisdiction of a court of law. 60. Entex s proposed supplemental curtailment language is beyond the scope of the Commission s current curtailment standards and requirements. 61. It is reasonable for the Commission to disallow the proposed curtailment paragraph in Rate Schedule GSLV-594-C. Over-Run Gas 62. Entex s charges for unauthorized over-run gas apply only to those customers that have negotiated a contract with the utility. 63. Charges for unauthorized over-run gas are necessary to encourage customers to accurately nominate gas requirements, to observe maximum daily quantities as specified in contract, and to comply with total and partial curtailment requirements. 64. It is reasonable for the Commission approve Entex s charge of $10.00 per Mcf for unauthorized over-run. 65. It is reasonable for the Commission to approve Entex s adjustment to the unauthorized over-run charge amount to allow for full recovery of all amounts charged to Entex by its gas supplier, so long as Entex assesses to each unauthorized over-run customer the same charge amount in a consistent, non-discriminatory manner. 66. Entex credits to its cost of gas the amounts assessed by the utility to customers for unauthorized over-run charges. 67. It is reasonable for the Commission to approve unauthorized over-run gas charges in Rate Schedule GSLV-594-C, in order to promote accurate gas-needs nominations and to encourage compliance with the curtailment program and curtailment standards. 14

16 Rate Case Expenses 68. The total rate case expense of $38, will be recovered over a two-year period through a surcharge to all Conroe Environs customers. These rates case expenses are reasonable. 69. It is reasonable that the above rate case expense amount will be recovered at a rate of $ per Ccf per month from all customers and will continue monthly until recovered. CONCLUSIONS OF LAW CenterPoint Energy Entex (Entex) is a gas utility as defined in TEX. UTIL. CODE ANN. ' (7) and ' (Vernon 1998 and Supp ), and is therefore subject to the jurisdiction of the Railroad Commission of Texas (Commission). The Commission has jurisdiction over Entex, Entex s Statement of Intent, and the subject matter of this case under TEX. UTIL. CODE ANN. ' , ' , and ' (Vernon 1998 and Supp ). Under TEX. UTIL. CODE ANN. ' (Vernon 1998 and Supp. 2004), the Commission has exclusive original jurisdiction over the rates and services of a gas utility that distributes natural gas in areas outside of a municipality and over the rates and services of a gas utility that transmits, transports, delivers, or sells natural gas to a gas utility that distributes the gas to the public. Under the provisions of the TEXAS UTILITIES CODE, Chapter 104 and 16 TEX. ADMIN. CODE '' 7.205, 7.210, 7.220, and (2002), a utility is required to seek Commission approval before increasing its rates and filing revised tariff schedules for Environs customers. Entex filed its Statement of Intent to change rates in accordance with the provisions of TEX. UTIL. CODE ANN. ' (Vernon 1998 and Supp ), 16 TEX. ADMIN. CODE '' 7.205, 7.210, and (2002). In accordance with16 TEX. ADMIN. CODE ' 7.315, within thirty days of the effective date of any change to rates or services, Entex is required to file with the Gas Services Division of the Commission its revised tariffs. Entex s Statement of Intent was processed in accordance with the requirements of the Gas Utility Regulatory Act (GURA), and the Administrative Procedure ACT, TEX. GOV T CODE ANN. '' (Vernon 2000 and Supp. 2004) (APA). Entex met its burden of proof, in accordance with TEX. UTIL. CODE ANN. ' (Vernon 1998), that its rate change is just and reasonable. The rates, operations, and services established in this docket are just and reasonable to customers and to the utilities, as expressed under TEX. UTIL. CODE ANN. ' (Vernon 1998 and Supp ). The revenue, rates, rate design, and service charges in the findings of fact are just and reasonable; are not unreasonably preferential, prejudicial, or discriminatory; and are sufficient, equitable, and consistent in application to each class of consumer, as required by TEX. UTIL. CODE ANN. ' (Vernon 1998). The revenue, rates, and rate design established in the findings of fact and attached schedules are reasonable; fix an overall level of revenues for Entex that will permit Entex a reasonable opportunity to earn a reasonable return on invested capital used and useful in rendering service to the public over and above reasonable and necessary operating expenses, within the meaning and intent of TEX. UTIL. CODE ANN. ' and ' (Vernon 1998); and otherwise comply with Chapter 104 of the Texas Utilities Code. 15

17 TEX. UTIL. CODE ANN. ' (Vernon 1998 and Supp ) provides the Commission s authority to suspend the operation of the schedule of proposed rates for 150 days from the date the schedule would otherwise go into effect. In accordance with TEX. UTIL. CODE ANN. ' (Vernon 1998), 16 TEX. ADMIN. CODE ' (2002), and 16 TEX. ADMIN. CODE ' (2002), adequate notice was properly provided. The Commission s decision, under 16 TEX. ADMIN. CODE (2002), whether to allow a utility to recover gas cost through a purchased gas adjustment is discretionary. It is reasonable for the Commission to allow Entex to include a purchased gas adjustment clause in its rates to provide for the flow through of part or all of its gas costs, under 16 TEX. ADMIN. CODE (2002). The Commission has the authority to allow Entex to recover rate case expenses through a surcharge on its rates, under TEX. UTIL. CODE ANN. ' (Vernon 1998 and Supp ), ' (Vernon 1998), ' (Vernon 1998), and 16 TEX. ADMIN. CODE (2002). The Commission s Curtailment Order in GUD 489 (Jan. 5, 1973); 16 TEX. ADMIN. CODE (2002); and 16 TEX. ADMIN. CODE (2002), require that in the case of curtailment, priority will be given to human needs customers. The supplemental curtailment paragraph proposed by Entex is not consistent with the Commission s curtailment standards and requirements, including the Commission s Curtailment Order in GUD 489 (Jan. 5, 1973); 16 TEX. ADMIN. CODE (2002); and 16 TEX. ADMIN. CODE (2002). IT IS THEREFORE ORDERED BY THE RAILROAD COMMISSION OF TEXAS THAT Entex=s rates as requested and to the extent recommended to be approved in the findings of fact and conclusions of law are HEREBY APPROVED for gas and services provided on and after the date of this order. IT IS FURTHER ORDERED THAT Entex SHALL include in its purchased gas adjustment only its reasonable and necessary gas purchase expenses, including direct costs of financial hedging instruments; and, that the reasonableness and prudence of Entex=s gas purchases pursuant on its Purchased Gas Adjustment clause may be subject to an adjustment and potential refund in a subsequent proceeding. IT IS FURTHER ORDERED THAT Entex SHALL apply all amounts assessed for unauthorized over-run charges to its cost of gas. IT IS FURTHER ORDERED THAT within 30 days of this order Entex SHALL electronically file tariffs and rates schedules in proper form that accurately reflect the rates approved by the Commission in this Order. IT IS FURTHER ORDERED THAT the following limited liability language shall be approved: Liability Limitation A shortage of gas due to acts of God, the elements, or requirements for residential and other uses declared superior to Consumer's by law, shall not be the basis for claims. The delivery and receipt of gas is to be resumed whenever any such shortage shall end. IT IS FURTHER ORDERED THAT Entex is authorized to recover a surcharge on its rates charged to ratepayers until recovered, to recover approved actual rate case expenses of $38, at a rate of $ per Ccf per month from all customers. The surcharge included herein shall be included in Entex=s billings to its residential, general service-small volume commercial customers, and general service-large volume commercial, Conroe Environs customers. 16

18 This Order will not be final and effective until 20 days after a party is notified of the Commission s order. A party is presumed to have been notified of the Commission s order three days after the date on which the notice is actually mailed. If a timely motion for rehearing is filed by any party at interest, this order shall not become final and effective until such motion is overruled, or if such motion is granted, this order shall be subject to further action by the Commission. Pursuant to TEX. GOV T CODE (e), the time allotted for Commission action on a motion for rehearing in this case prior to its being overruled by operation of law, is hereby extended until 90 days from the date the order is served on the parties. 17

19 Each exception to the Examiners proposal for decision not expressly granted herein is overruled. All requested findings of fact and conclusions of law which are not expressly adopted herein are denied. All pending motions and requests for relief not previously granted or granted herein are denied. SIGNED this 13 th day of January, RAILROAD COMMISSION OF TEXAS /s/ VICTOR CARRILLO CHAIRMAN /s/ CHARLES R. MATTHEWS COMMISSIONER ATTEST /s/ MICHAEL L. WILLIAMS COMMISSIONER /s/ Kim Williamson SECRETARY LIST OF ATTACHMENTS Rate Schedule No. R-1987-B GSS-1987-B GSLV-594-C MISC-3 PGA-2 TA-2 Rate Schedule Name Residential Service General Service Small Volume General Service Large Volume Miscellaneous Service Charges Purchased Gas Adjustment (PGA) Tax Adjustment 18

20 CENTERPOINT ENERGY ENTEX RATE SHEET RESIDENTIAL SERVICE RATE SCHEDULE NO. R-1987-B APPLICATION OF SCHEDULE This schedule is applicable to any customer to whom service is supplied in a single private dwelling unit and its appurtenances, the major use of which is for household appliances, and for the personal comfort and convenience of those residing therein. Natural gas supplied hereunder is for the individual use of the customer at one point of delivery and shall not be resold or shared with others. MONTHLY RATE For gas delivered and services provided on and after the effective date of this rate schedule, the monthly rate for each customer receiving service under this rate schedule shall be the sum of the following: (a) The Base Rate consisting of: (1) Customer Charge $8.00 for all gas delivered and services provided on and after the date of the Commission s Order through June 30, 2005; $10.50 for all gas delivered and services provided on and after July 1, 2005; (2) Commodity Charge $ per 100 cubic feet (Ccf) for all gas delivered and services provided on and after the date of the Commission s Order through June 30, 2005; and, $ per 100 cubic feet (Ccf) for all gas delivered and services provided on and after July 1, 2005; and, (3) Tax Adjustment The Tax Adjustment will be calculated and adjusted periodically as defined in the Company s Tax Adjustment Rate Schedule. (b) Gas Cost Adjustment The applicable Purchased Gas Adjustment (PGA) Rate as calculated on a per Ccf basis and adjusted periodically under the applicable Purchased Gas Adjustment (PGA) Rate Schedule for all gas used. RULES AND REGULATIONS Service under this schedule shall be furnished in accordance with the Company's General Rules and Regulations, as such rules may be amended from time to time. A copy of the Company's General Rules and Regulations may be obtained from Company's office located at 1111 Louisiana Street, Houston, Texas. EFFECTIVE DATE July 1, 2004 August 3, 2004 Effective Date of Order of Railroad Commission of Texas Conroe, Cut and Shoot, Shenandoah, Willis Panorama Village Conroe Environs 19

21 CENTERPOINT ENERGY ENTEX RATE SHEET GENERAL SERVICE-SMALL RATE SCHEDULE NO. GSS-1987-B APPLICATION OF SCHEDULE This schedule is applicable to natural gas service to any customer engaging in any business, professional or institutional activity, for all uses of gas, including cooking, heating, refrigeration, water heating, air conditioning, and power. This schedule is applicable to any general service customer for commercial uses and industrial uses, except standby service, whose average monthly usage for the prior calendar year is 150,000 cubic feet or less. Natural gas supplied hereunder is for the individual use of the customer at one point of delivery and shall not be resold or shared with others. MONTHLY RATE For gas delivered and services provided on and after the effective date of this rate schedule, the monthly rate for each customer receiving service under this rate schedule shall be the sum of the following: (a) The Base Rate consisting of: (1) Customer Charge $18.85; (2) Commodity Charge First 150,000 cubic feet $ per 100 cubic feet (Ccf) 150,001 to 1,000,000 cubic feet $ per 100 cubic feet (Ccf) Over 1,000,000 cubic feet $ per 100 cubic feet (Ccf) (3) Tax Adjustment The Tax Adjustment will be calculated and adjusted periodically as defined in the Company s Tax Adjustment Rate Schedule. (b) Gas Cost Adjustment The applicable Purchased Gas Adjustment (PGA) Rate as calculated on a per Ccf basis and adjusted periodically under the applicable Purchased Gas Adjustment (PGA) Rate Schedule for all gas used. RULES AND REGULATIONS Service under this schedule shall be furnished in accordance with the Company's General Rules and Regulations, as such rules may be amended from time to time. A copy of the Company's General Rules and Regulations may be obtained from Company's office located at 1111 Louisiana Street, Houston, Texas. EFFECTIVE DATE July 1, 2004 Conroe, Cut and Shoot, Shenandoah, Willis August 3, 2004 Panorama Village Effective Date of Order of Conroe Environs Railroad Commission of Texas 20

22 CENTERPOINT ENERGY ENTEX RATE SHEET GENERAL SERVICE-LARGE VOLUME RATE SCHEDULE NO. GSLV-594-C This schedule is available at points on existing facilities of adequate capacity and suitable pressure in the area designated in the Rate Book of CENTERPOINT ENERGY ENTEX (hereinafter called "Company"). APPLICATION OF SCHEDULE This schedule is applicable to any general service customer for commercial uses and industrial uses whose average monthly usage for the prior calendar year is more than 150,000 cubic feet. Gas supplied hereunder is for the individual use of the Consumer at one point of delivery and shall not be resold or shared with others. If the Consumer has a written contract with Company, the terms and provision of such contract shall be controlling. MONTHLY RATE For gas delivered and services provided on and after the effective date of this rate schedule, the monthly rate for each customer receiving service under this rate schedule shall be the sum of the following: (a) The Base Rate consisting of: (1) Customer Charge $310.00; (2) Commodity Charge First 150,000 cubic feet $ per 100 cubic feet (Ccf) 150,001 to 1,000,000 cubic feet $ per 100 cubic feet (Ccf) Over 1,000,000 cubic feet $ per 100 cubic feet (Ccf) (3) Tax Adjustment The Tax Adjustment will be calculated and adjusted periodically as defined in the Company s Tax Adjustment Rate Schedule. (b) Gas Cost Adjustment The applicable Purchased Gas Adjustment (PGA) Rate as calculated on a per Mcf basis and adjusted periodically under the applicable Purchased Gas Adjustment (PGA) Rate Schedule for all gas used. WRITTEN CONTRACT In order to receive a delivery from Company of more than 25 Mcf during any one day, the Consumer must execute a written contract with Company on Company's form of contract covering the sale of gas by Company to it. In the case of existing Consumers, the maximum gas usage during any one day shall be obtained from the records of the Company, except in cases where the existing Consumer will be purchasing increased volumes of gas from Company because of expansions or for any other reasons, in which event the Company may estimate usage by such Consumer. Also in the case of new Consumers, the Company may estimate usage by the Consumer. Any such estimates made by Company shall be binding on Consumer in determining whether or not a contract is required. Such written contract shall be executed by Consumer upon request of Company and Company shall not be obligated to serve any such Consumer more than 25 Mcf during any one day until such written contract is executed and delivered by Consumer. 21