Title
Consider/Discuss/Act on a Resolution of the City of McKinney, Texas Suspending the September 1, 2023 Effective Date of CoServ Gas, Ltd.’s Requested Rate Change to Permit the City Time to Study the Request and to Establish Reasonable Rates; Approving Cooperation With Other Cities in the CoServ Service Area, to Hire Legal and Consulting Services and to Negotiate With the Company and Direct Any Necessary Litigation and Appeals; Requiring Reimbursement of the Steering Committee of Cities Served by CoServ Gas’ Rate Case Expenses; Finding That the Meeting at Which This Resolution Is Passed Is Open to the Public as Required by Law; Requiring Notice of This Resolution to the Company and Legal Counsel.
Summary
COUNCIL GOAL: Fiscally Sound Government
MEETING DATE: August 15, 2023
DEPARTMENT: City Manager’s Office
CONTACT: Trevor Minyard, Director of Strategic Services
RECOMMENDED CITY COUNCIL ACTION:
• Approval of the resolution.
ITEM SUMMARY:
• The resolution suspends the September 1, 2023 effective date of the Company’s rate increase for the maximum period permitted by law to allow the City, working in conjunction with other similarly situated cities with original jurisdiction served by CoServ, to evaluate the filing, to determine whether the filing complies with the law, and if lawful, to determine what further strategy, including settlement, to pursue.
• The law provides that a rate request cannot become effective until at least 35 days following the filing of the application to change rates. The law permits the City to suspend the rate change for 90 days after the date the rate change would otherwise be effective. If the City fails to take some action regarding the filing before the effective date, CoServ’s rate request is deemed approved.
BACKGROUND INFORMATION:
• On July 28, 2023, CoServ Gas, Ltd. (“CoServ” or “Company”), pursuant to Subchapter C of Chapter 104 of the Gas Utility Regulatory Act, filed its Statement of Intent to change gas rates at the Railroad Commission of Texas (“RRC”) and in all municipalities exercising original jurisdiction within its service area, effective September 1, 2023.
FINANCIAL SUMMARY:
• CoServ is seeking to increase its annual revenues in incorporated areas by $10,314,726, which is an increase of 7.5% including gas costs, or 27.3% excluding gas costs. CoServ is also requesting: (1) new depreciation rates for distribution and general plant; (2) a prudence determination for capital investment; (3) specification of the factors to be used in any Interim Rate Adjustment Filing the Company makes pursuant to Texas Utilities Code § 104.302; and (4) a surcharge on customer bills to recover the reasonable rate case expenses associated with the filing of this statement of intent.
BOARD OR COMMISSION RECOMMENDATION:
• N/A