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HomeMy WebLinkAboutCity Council Resolutions (R-02-2066)-12/03/2002 RESOLUTION R-02-2066 APPROVAL OF A SETTLEMENT AGREEMENT WITH TXU ELECTRIC AND TXU GAS RELATING TO CLAIMS ARISING OUT OF ELECTRIC AND GAS FRANCHISE FEE CALCULATIONS PRIOR TO JANUARY 1, 2002 WHEREAS, thirty-seven cities filed a suit in the 134th Judicial District Court of Dallas County, Texas styled City of Denton, Texas et aI, VS, TXU Electric Company et al. which included claims arising out of the calculation and amount of franchise fees paid by TXU Electric and TXU Gas; and WHEREAS, the Litigation was resolved by agreement and TXU Electric and TXU Gas have agreed to offer the City of Colleyville, Texas, as well as all cities served by the company, the same benefits offered to the Plaintiffs in the Litigation; and WHEREAS, TXU Electric (Oncor) will pay the City a sum of money in the amount of $15,919.44; and WHEREAS, TXU Gas will pay the City a sum of money in the amount of $50,223.51; and WHEREAS, the City acknowledges that TXU Gas has the right to and shall recover the sum of $50,223,51 from its ratepayers through a surcharge to the monthly bills rendered to its ratepayers; and WHEREAS, the City has agreed to accept the offer by TXU Electric and TXU Gas in order to fully and finally resolve all disputes and claims arising out of the calculation and payment of franchise fees to the City prior to and through December 31,2001. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF COLLEYVILLE, TEXAS: Sec. 1. THAT the City Council of the City of Colleyville, Texas, approves the Compromise, Settlement, and Release Agreement, hereby attached as Exhibit "A", Resolution R-02-2066 Page 2 of 2 AS IT IS SO RESOLVED. PASSED BY A VOTE OF .5" AYES, 0 NAYS AND 0 ABSTENTIONS ON THISTHE .j1tPt- DAYOF 1~ 2002. ATTEST: CITY OF COLLEYVILLE: rz~~ rA~71)~ Donna Arp Mayor Cynthia Singleton, TRMC City Secretary "Exhibit A" COMPROMISE, SETTLEMENT AND RELEASE AGREEMENT This Compromise, Settlement, and Release Agreement (the "Agreement") is made and entered into as of the date set forth below by and between the City of Colleyville (the "City") and TXU Electric Company nlkJa TXU US Holdings Company ("TXU Electric") and TXU Gas Company ("TXU Gas"): WHEREAS, thirty seven cities filed a suit in the 134th Judicial District Court of Dallas County, Texas, in Cause No. 00-9383, styled City of Denton, Texas et al. vs. TXV Electric Company. et al. (the "Litigation") which included claims arising out of the electric and gas franchise ordinances similar in some respects to the franchise ordinances entered into by and between the City and TXU Electric and TXU Gas and, specifically, the Litigation involved a dispute with regard to the calculation and amount of franchise fees paid by TXU Electric and TXU Gas; WHEREAS, the Litigation was resolved by agreement and TXU Electric and TXU Gas have agreed to offer the City the same benefits offered to the Plaintiffs in the Litigation and the City has agreed to accept the offer by TXU Electric and TXU Gas and to release any claims related to the payment of franchise fees prior to and through December 31, 200 I ; NOW, THEREFORE, in order to fully and finally resolve all disputes and claims arising out of the calculation and payment of franchise fees to the City by TXU Electric and TXU Gas prior to and through December 31, 200 I, for the mutual promises and covenants set forth in this Agreement, the adequacy and sufficiency of which consideration is acknowledged the City and TXU Electric and TXU Gas agree as follows: 1. AMENDMENTS TO THE ELECTRIC FRANCHISE ORDINANCE As the result of electric industry restructuring, the electric franchise formerly held by TXU Electric has been assigned to Oncor Electric Delivery Company ("Oncor"), accordingly, COMPROMISE. SElTLEMENT AND RELEASE AGREEMENT - Paee I effective January 1,2002, the City agrees to enter into and TXU Electric agrees to cause Oncor to accept an amendment to the current electric franchise ordinance substantially in the form of the amendment attached as Exhibit A which amendment shall, at the election of the City, provide that the Discretionary Services Charges identified in Section 6.1.2 of the Tariff for Retail Delivery applicable to Oncor which are directly paid by the customer and which are those charges identified as items DDl through and inclusive ofDD24 in said tariff, shall be subject to an additional franchise fee based on 4% of such charges which additional franchise fee shall be paid to the City pursuant to the tenns of the amendment attached as Exhibit A. The City acknowledges that Oncor may file with the Texas Public Utility Commission and/or the City a tariff amendment in compliance with the tenns of this agreement, which will provide that Oncor shall have the right to collect from the customer the franchise fee on such Discretionary Service Charges such that the customer shall bear 100% of the franchise fee on such Discretionary Service Charges. The City acknowledges that Oncor is an intended third-party beneficiary of this agreement and agrees to cooperate with Oncor in order for Oncor to pass through to customers the entire franchise fee on such Discretionary Service Charges by taking the following actions: (i) to the extent the City acts as regulatory authority, by adopting and approving that portion of any tariff in compliance with the terms of this Agreement which provides for 100% recovery of such franchise fees; (ii) in the event the City intervenes in any regulatory proceeding before a federal or state agency in which the recovery of the franchise fees on such Discretionary Service Charges is an issue, the City will take an affirmative position supporting the 100% recovery of such franchise fees by Oncor and; (iii) in the event of an appeal of any such regulatory proceeding in which the City has intervened, the City will take an affirmative position in any such appeals in support of the 100% recovery of such franchise fees by Oncor. The City further agrees not to take any action to prevent the recovery of the franchise fees COMPROMISE. SETTLEMENT AND RELEASE AGREEMENT - Pal!e 2 on such Discretionary Service Charges by On cor and to take other action which may be reasonably requested by Oncor to provide for the 100% recovery of such franchise fees by Oncor. 2. AMENDMENTS TO THE GAS FRANCHISE ORDINANCE Effective January I, 2002, the City agrees to enact and TXU Gas agrees to accept an amendment to the current gas franchise ordinance substantially in the form of the amendment attached as Exhibit B to provide that, at the election of the City, the franchise fee will increase to a maximum of 4.00% of the applicable franchise fee payment base and, at the election of the City, the franchise fee payment base shall be amended to include miscellaneous fees, contributions in aid of construction, bad debt expense, transportation revenues and third-party gas sales and gross receipts fees as well as a favored nations clause with respect to franchise fee payments and franchise fee calculations, substantially in the form of the provisions in Exhibit B. The City acknowledges that TXU Gas has the right to recover from its ratepayers such additional franchise fee payments to the City and the City agrees to cooperate with TXU Gas in order for TXU Gas to pass through to its ratepayers the entire franchise fee payment, as amended, by taking the following actions: (i) as regulatory authority, by adopting and approving the ordinance, rates or tariff which provide for 100% recovery of such franchise fees as part ofTXU Gas' rates; (ii) in the event the City intervenes in any regulatory proceeding before a federal or state agency in which the recovery of TXU Gas' franchise fees is an issue, the City will take an affirmative position supporting 100% recovery of such franchise fees by TXU Gas and; (iii) in the event of an appeal of any such regulatory proceeding in which a City has intervened, the City will take an affirmative position in any such appeals in support of the 100% recovery of such franchise fees by TXU Gas. The City further agrees not to take any action to prevent the recovery of such franchise fees by TXU Gas and to take other COMPROMISE. SETTLEMENT AND RELEASE AGREEMENT - Pa2e 3 action which may be reasonably requested by TXU Gas to provide for the 100% recovery of such franchise fees from TXU Gas' ratepayers. 3. PAYMENTS TO THE CITY Upon execution and delivery of a fully executed and notarized original of this Agreement: A. TXU Gas agrees to pay to the City the sum of $50,223 .51. The City acknowledges that TXU Gas has the right to and shall recover this amount from its ratepayers pursuant to the tax adjustment clause applicable to TXU Gas, by applying a surcharge to the monthly bills rendered to its ratepayers, provided that the recovery of such surcharge shall be limited as follows: (1) the surcharge shall be amortized over a period not less than three years, and (2) the accrual balance will not be subject to interest. TXU Gas agrees that the franchise fee paid to the City and recovered from ratepayers under this Agreement will not include any amounts collected in the past from ratepayers. B. TXU Electric agrees to pay, or cause Oncor to pay the City, the sum of$15,919.44. 4. RELEASE OF TXU ELECTRIC, TXU GAS AND THEIR AFFILIATES BY THE CITY Except for claims arising out of a breach of this Agreement, the City of Colleyville, on behalf of itself and its successors and assigns and any and all persons, entities or municipalities claiming by, through or under them, hereby RELEASES, DISCHARGES AND ACQUITS, forever and for all purposes, TXU Electric Company (now known as TXU US Holdings Company), its successor Oncor Electric Delivery Company, TXU Gas Company, including its division TXU Gas Distribution, TXU Corp. and each of their respective agents, employees, officers, directors, shareholders, partners, insurers, attorneys, legal representatives, successors and assigns as well as COMPROMISE. SEITLEMENT AND RELEASE AGREEMENT - Pal!e 4 their affiliated corporations, including TXU Business Services Company and TXU Energy Company LLC and its subsidiaries, from and against any and all liability which they now have. have had or may have, and all past, present and future actions, causes of action, claims, demands, damages, costs. expenses, compensation, losses and attorneys' fees of any kind or nature whatsoever, or however described, whether known or unknown, fixed or contingent, in law or in equity, whether asserted or unasserted, whether in tort or contract, whether now existing or accruing in the future arising out of or related to the payment, calculation or rendition of franchise fees to the City on or before December 31, 2001 and all claims which could be asserted against TXU Electric and/or TXU Gas in litigation in any way related to the payment, calculation or rendition of franchise fees by TXU Electric and/or TXU Gas on or before December 31, 2001. This release is intended to only release claims related to the payment, calculation or rendition of franchise fees by TXU Electric and TXU Gas on or before December 31, 2001 and is not intended to release any other claim or cause of action that any party to this Agreement has, known or unknown, or which accrues in the future. 5. WARRANTY AS TO OWNERSHIP OF CLAIMS AND AUTHORITY A. The City warrants and represents that it is the owner of the claims being compromised, settled, discharged and released pursuant to this Agreement and each further warrants and represents that it has not previously assigned all or any part of such claims to another entity or person. The City warrants and represents that there are no liens of any nature, assignments or subrogation interests in or to the money paid to the City under the terms of this Agreement. The City warrants that it will take all action necessary to properly execute and' deliver this agreement. COMPROMISE. SETfLEMENT AND RELEASE AGREEMENT - Pal!e 5 B. TXU Electric and TXU Gas warrant that the person(s) executing this Agreement on their behalf has authority to bind the entity for whom such person signs this Agreement. 6. NO ADMISSION OF LIABILITY This Agreement is made to compromise, terminate and to constitute an accord and satisfaction of all of the claims released by this Agreement and TXU Electric and TXU Gas admit no liability, fault or wrongdoing of any nature or kind whatsoever and expressly deny and disclaim any liability, fault or wrongdoing alleged or which could have been alleged with regard to the claims asserted in the Litigation if the City had become a party to the Litigation or any similar claims which might be asserted by the City against TXU Electric and/or TXU Gas. 7. RECOVERY OF DAMAGES DUE TO BREACH In the event of breach by any party of the terms and conditions of this Agreement, a non- breaching party shall be entitled to recover all expenses as a result of such breach, including, but not limited to, reasonable attorneys' fees and costs. MISCELLANEOUS PROVISIONS 8. It is understood and agreed that all agreements and understandings by and between the parties to this Agreement with respect to the payment of franchise fees and the settlement of any claims related to the payment of franchise fees are expressly embodied in this Agreement and that this Agreement supersedes any and all prior agreements, arrangements or understandings between the parties relating to the claims released pursuant to this Agreement or any matters related thereto executed by the parties. 9. The parties acknowledge and agree that the terms of this Agreement are all contractual and not mere recitals. COMPROMISE. SEITLEMENT AND RELEASE AGREEMENT - PaRe 6 10. The parties acknowledge that they have read this Agreement, understand its terms, and that this Agreement is entered into voluntarily, without duress, and with full knowledge of its legal significance. 11. This Agreement may not be modified in any manner, nor may any rights provided for herein be waived, except by an instrument in writing signed by each party. 12. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. 13. Should any term or any provision of this Agreement be declared invalid by a court of competent jurisdiction, the parties agree that all other terms of this Agreement are binding and have full force and effect as if the invalid portion had not been included. 14. The parties represent and warrant that no party has been induced to enter this Agreement by a statement, action or representation of any kind or character made by the persons or entities released under this Agreement or any person or persons representing them, other than those expressly made in this Agreement. 15. It is understood and agreed that this Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes. 16. The headings contained herein are for convenience and reference only and are agreed, in no way, to define, describe, extend or limit the scope or intent of this Agreement or its provisions. 17. This Agreement shall be construed in accordance with the laws of the State of Texas. IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date set forth. COMPROMISE. SEITLEMENT AND RELEASE AGREEMENT - PRee 7 CITY COUNCIL APPROVED THE CITY OF COLLEYVILLE, TEXAS DEe 3 2002 By: Its: Date: ~t!:r TXU ELECTRIC COMPANY n/kla TXU US HOLDINGS COMPANY By: Its: Date: TXU GAS COMPANY By: Its: Date: STATE OF TEXAS COUNTY OF ~t ' ~er- This instrument was acknowledged before me on the 1'>A day of Del 2002, by ryAlIIIIL t2r P , as ,I( g jllr on behalf of the City of d,~ tt~. ~.\ -:"'~~ ......lC..t... ....... ...... ...... ..-.. ..-. __ /':....;~~ 1; J:~"!-:~': c' CYNTHIA SINGLETON (.(~ \" NOTARY PUBLIC \">:~? STATE OF TEXAS ~." My romm Exp.04-12-2003 COMPROMISE. SETTLEMENT AND RELEASE AGREEMENT - Pal!e 8 ST ATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on the _ day of _ 2002. by , ofTXU Electric Company nIkIa TXU US Holdings Company, on behalf of said corporation. Notary Public, State of Texas STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on the _ day of _ 2002. by , ofTXU Gas Company, on behalf of said corporation. Notary Public, State of Texas COMPROMISE. SETTLEMENT AND RELEASE AGREEMENT - flee 9