On April 6, 2016, pursuant to Ordinance No. 2016-0274, City Council approved and authorized a professional services agreement (“Agreement”) with Adams and Reese, LLP (“Firm”) to represent the City in distribution cost recovery factor electric utility rate cases, energy efficiency cost recovery factor rate cases, rate adjustments, legislative matters and other related matters. Pursuant to Ordinance No. 2016-1008 (passed on December 20, 2016), the Agreement’s maximum contract amount increased to $1,300,000. Ordinance No. 2019-267 approved a first amendment to the Agreement and increased the maximum contract amount to $2,600,000. The Agreement term is open until all services have been provided or until terminated by either party.
Three gas utilities operating in the city, CenterPoint Energy Resources Corporation (“CenterPoint”); SiEnergy, LP; and Universal Gas, filed with the Railroad Commission of Texas (“RRC”) applications to approve extraordinary costs associated with Winter Storm Uri and to finance those costs by issuing bonds through a process known as securitization (Gas Securitization). The Gas Securitization amount requested by CenterPoint alone is $1.1 billion. In addition, CenterPoint will file a gas utility base rate case (“Base Rate Case”) next year. The City, as the regulatory authority over gas utilities in the City’s boundaries, must conduct a full review, analyze the data, process the case, including litigation, and engage in settlement, if necessary. The amount at issue and the number of expert witnesses will be more than other rate cases in which the City has been involved. CenterPoint will likely appeal the City’s decision to the RRC, as it has consistently done in previous base rate cases.
The estimated cost of reviewing and litigating the Gas Securitization proceedings, CenterPoint’s Base Rate Case, and other rate cases is $1 million. The additional funding will increase the maximum contract amount from $2,600,000 to $3,600,000. The City’s reasonable costs and expenses are reimbursed by the utilities at the conclusion of the rate cases. In the last base rate case, CenterPoint reimbursed all of the City’s expenses.
The City recommends the Firm because of its litigation experience and its unique history and knowledge regarding securitization proceedings and base rate cases and matters involving the RRC. The Firm’s attorneys are experienced and highly capable subject matter experts who have successfully defended complex, high exposure cases.
M/WBE Participation: Office of Business Opportunity approved a 0% M/WBE participation goal for the Agreement.
Fiscal Note: Funding for this item is included in the FY22 Adopted Budget. Therefore, no Fiscal Note is required as stated in the Financial Policies.
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Estimated Spending Authority
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Department
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Current FY
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Out Year
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Total
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Legal
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$400,000
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$600,000
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$1,000,000
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Arturo G. Michel, City Attorney