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Res 96-21 Authorizing the Steering Committee of Lone Star Gas Service Area Cities to Retain Legal CounselTOWN OF WESTLAKE RESOLUTION 96-21 A RESOLUTION AUTHORIZING THE STEERING COMMITTEE OF LONE STAR GAS SERVICE AREA CITIES TO RETAIN LEGAL COUNSEL AND CONSULTANTS; AUTHORIZING THE STEERING COMMITTEE TO INTERVENE ON BEHALF OF THE TOWN OF WESTLAKE IN TEXAS RAILROAD COMMISSION GAS UTILITIES DOCKETS 8647 AND 8664 AND RELATED DOCKETS AND CASES INQUIRING INTO THE RATES AND SERVICES AND OPERATIONS OF LONE STAR GAS COMPANY. WHEREAS, the Texas Railroad Commission has initiated an inquiry into the rates, services and operations of Lone Star Gas Company (GUD 8647); and WHEREAS, Lone Star Gas Company has filed a city gate rate case (GUD 8664); and WHEREAS, conditions have changed substantially in the gas industry since the last Lone Star Gas gate rate case in 1982; and WHEREAS, Texas Utilities Electric Company is purchasing Lone Star Gas Company; and WHEREAS, the rates determined in the above proceeding may have an impact on the electric rates of Texas Utilities Electric Company customers; and WHEREAS, the Town of Westlake, Texas, ("Town") is a regulatory authority and whose citizens will be substantially affected by the rates established as a result of such proceedings; WHEREAS, the Steering Committee of Lone Star Gas Service Area Cities has been formed to facilitate and coordinate the participation of cities in the service areas; NOW, THEREFORE, BE IT RESOLVED by the Board of Aldermen of the Town of Westlake, Texas that: 1. The Town hereby authorizes the Steering C ommittee of Lone Star Gas Service Area Cities of which this Town is a member, to retain legal counsel and engage consultants, and intervene on behalf of the Town in Texas Railroad Commission Gas Utilities Docket Nos. 8647 and 8664 and related dockets and cases, including appeals. 2. The Town designates Paul C. Isham, Town Attorney, as its representative at all meetings and to receive all notices at P. O. Box 534045, Grand Prairie, Texas 75053- 4045. Resolution 96-21 Page 2 3. The Town authorizes payment to the Steering Committee of Lone Star Gas Service Area Cities of five cents (.05) per capita based upon the latest Texas Municipal League population figures for the Town. 4. The Town Secretary shall cause a copy of this resolution and appropriate payment to be made to the Chair of the Steering Committee. PASSED AND APPROVED by the Board of Aldermen of the Town of Westlake this 9"' day of December, 1996, by a vote of 4 ayes and 0 nays. Scott Bradley, Mayor ATTEST: roger 6rosswy, Town Sece ary APPROVED AS TO FORM: Paul C. Isham, Town Attorney GtyofArhngtonTexas iK • Office of the City Attomey TO: All Cities Served by Lone Star Gas Company FROM: Jay B. Doege�C SUBJECT: Lone Star Gas Gate Rate Case; Summary of Meeting of Steering Committee Cities and Recommendations j?n�Jem1�� r 1,9- 1996 Summary of Meeting of Steering Committee on November 15, 1996 Representatives of cities served by Lone Star Gas Company met at the TML Conference in Corpus Christi to discuss how to respond to the recently instituted inquiry of the Texas Railroad Commission (GUD 8647) and the Lone Star Gas Company filed gate rate case (GUD 8664). The meeting was held in response to a letter I sent on November 4, 1996, describing how a major group of TU Electric and Lone Star Gas cities had met to discuss the manner in which they and other cities would participate in these Lone Star Gas proceedings and the vehicle to use to bring about such participation. Presentations by Garland and Fredericksburg Groups Those in attendance at the Corpus Christi meeting heard from representatives of the City of Garland group, made up of approximately seven cities, which had already intervened in the case, hired rate attorneys Lloyd, Gosselink, Fowler, Blevins and Mathews, and uo7isuli:.ants Recd-Stcac. The Garland group proposed that the City of Garland would front the cost of rate attorneys and consultants, and would later assess up to a 5¢ per capita fee if the Railroad Commission disallowed any of its participation expenses. Another group from Fredericksburg, which consisted of approximately thirteen small cities made a presentation through its rate attorney Jim Boyle. This group had engaged Diversified Utilities Consultants. It proposed to finance its participation through either an agreement by Lone Star or an order by the Commission to reimburse its cities a portion of its expenses periodically through the duration of the case with a true -up at the end. (There is no assurance Lone Star or the Commission will do this.) The Fredericksburg and 200 West Abram Street • Box 231 • Arlington, Texas 76004-0231 • (817) 459-6878 • (Metro 817) 265-3311 • FAX (817) 459-6897 All Cities Served by Lone Star Gas Company November 19, 1996 Page 2 Garland groups stated they were cooperating with each other to divide up the case so that there would be no duplication. These consultants, however, would not cover cost of gas, affiliate transactions, merger and transfer, and competition issues that would likely be major parts of the case. The Fredericksburg group indicated they were trying to secure additional consultants for this purpose. Discussion by Steering Committee Representatives of the cities attending the meeting who are not part of the Garland or Fredericksburg group (Steering Committee) expressed concern that neither group had given them adequate opportunity to meet first to organize and decide who the rate attorneys and consultants would be. The risk, of course, with multiple representations is that if there- are duplications of effort, expenses might be disallowed. Recommendation After considerable discussion, a motion was unanimously passed to engage on the Steering Committee's behalf the law firm of Butler, Porter, Gay & Day to represent the cities. The Steering Committee attorney would meet with attorneys for the Garland and Fredericksburg groups to determine which issues each group would cover, particularly with respect to the cost of gas, affiliate transactions, competitive and merger issues. The entire case was to be divided up among the three separate groups so that there would be no -4tte,� attorney duplication of effort. he =C - ' would also negotiate agreements with Steering Committee consultants providing for substantial retainage and expense caps. The attorney would also seek reimbursement of periodic rate case expenses from the company or the Railroad Commission as appropriate. Finally, the Steering front Committee recommended a 50 per capita assessment to pay p for participation costs. Reasonable attorneys and consultants expenses are reimbursable to the cities. Model Resolution Attached A model participation resolution is attached for your city's consideration. Every effort will be made to coordinate with All Cities Served by Lone Star Gas Company November 19, 1996 Page 3 the Garland and Fredericksburg groups in order to avoid any duplication of efforts. Participation resolutions and participation fees should be sent to the address indicated at the bottom of the model resolution. Please call if you have any questions. j'BD/bk