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City Council Agenda Request
May 15, 2018
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AGENDA REQUEST NO: VIII.A.
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| | AGENDA OF: City Council Meeting |
| INITIATED BY: Eugenia A. Cano, First Assistant City Attorney
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| PRESENTED BY: Eugenia Cano, First Assistant City Attorney and Thomas Brocato, Lloyd Gosselink Rochelle & Townsend
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| | RESPONSIBLE DEPARTMENT: Legal |
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| | | | | | | | | AGENDA CAPTION: | | FIRST CONSIDERATION: Consideration of and action on CITY OF SUGAR LAND ORDINANCE NO. 2133 AN ORDINANCE ADOPTING THE UNANIMOUS SETTLEMENT AGREEMENT SETTING RATES AND ESTABLISHING TARIFFS FOR THE PROVISION OF NATURAL GAS SERVICE BY SIENERGY, LP WITHIN THE CITY OF SUGAR LAND, TEXAS; AND DECLARING THIS ORDINANCE TO BE A FINAL DETERMINATION OF RATES. |
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| | | | | | | | | RECOMMENDED ACTION: | Approve Ordinance No. 2133 adopting the unanimous settlement agreement setting rates and establishing tariffs for the provision of natural gas service by SiEnergy, LP within the City of Sugar Land; and declaring the ordinance to be a final determination of rates. |
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| | | | | | | | | EXECUTIVE SUMMARY: | On January 5, 2018, SiEnergy, LP ( SiEnergy) filed a Statement of Intent seeking to increase gas utility rates within the City and other cities and unincorporated areas in its service territory. SiEnergy is a gas utility operating within the Riverstone and Imperial Redevelopment District areas of the City. As of the filing, SiEnergy had 233 residential customers and one commercial customer in Sugar Land.
By Resolution No. 18-02 approved on February 6, 2018, the City Council suspended the rate change for 90 days from SiEnergy’s proposed effective date of February 9, 2018 to May 10, 2018 to allow the City time to evaluate the filing. During the review period the parties have reached a unanimous settlement agreement that was filed with the Railroad Commission on Friday, April 27, 2018. SiEnergy has agreed to postpone the effective date to allow the City to act on second reading of the ordinance on June 5, 2018.
Among other things, the settlement agreement results in:
(1) The average monthly bill, including the cost of gas for a:
(a) Residential customer, increasing from $44.99 to $53.23 (vs. $55.51) (an $8.24 monthly increase); and
(b) Small general service customer, increasing from $213.26 to $261.10 (vs. $273.01) (a $47.84 monthly increase);
(2) A revenue requirement of $8.25 million annually vs. $9.5 million annually (Based on the federal Tax Cut and Jobs Act of 2017, the lower corporate tax rate of 21% vs. 35%, caused the revenue requirement to be reduced to $8,743,970. An additional reduction of $493,970 was negotiated to lower the revenue requirement to $8.25 million annually); and
(3) Reimbursement of the GCCC's legal and consulting fees in the amount of $52,000.
The settlement rate increase is supported in that:
(1) SiEnergy is growing as a company and needs additional funds for its investment in capital to provide services to its customers;
(2) Weather impacts have contributed to a revenue deficiency; and
(3) SiEnergy has not filed to increase its rates charged for distributing natural gas within its service territory in approximately 10 years.
By Ordinance No. 2133, the City is setting rates for SiEnergy, which must be done by ordinance.
Staff recommends approval of Ordinance No. 2133.
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| BUDGET |
| | EXPENDITURE REQUIRED: N/A |
| | CURRENT BUDGET: N/A |
| | ADDITIONAL FUNDING: N/A |
| | FUNDING SOURCE:N/A |
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