Consider approval of resolution authorizing ratification of the unanimous settlement agreements in Public Utility Commission of Texas Docket Nos. 36918 and 37200 regarding Centerpoint Energy Houston Electric, LLC's applications for approval of hurricane restoration costs and of a financing order authorizing securitization of such costs.

In response to Hurricane Ike, the Texas Legislature adopted Senate Bill 769 authorizing utilities to seek recovery of their reasonable costs associated with restoring power caused by storm damage. The bill was signed into law on April 16, 2009.

Among the hardest hit areas of the state was CenterPoint’s service territory in which there was widespread damage and loss of electric power.

On April 21, 2009, the cities of Alvin, Dickinson, Friendswood, Kemah, Lake Jackson, La Marque, Mont Belvieu, Morgan’s Point, Nassau Bay, Santa Fe, Seabrook, South Houston, Spring Valley, Sugar Land, Taylor Lake Village and Texas City, collectively known as the Gulf Coast Coalition of Cities ("GCCC") and with Lloyd Gosselink acting as counsel on behalf of the Coalition intervened on  both of the CenterPoint proceedings at the Public Utility Commission. Each proceeding is noted below:

On April 17, 2009, CenterPoint filed with the Commission an application seeking approval of $677,816,820 in restoration costs, and the Commission assigned the application Docket No. 36918. The application included $429 million for contractor services, $68 million in payroll costs, $12.2 million for hotels, $45.6 million for catering/tents, $30 million for materials and
supplies and $54.7 million in carrying costs.

Under the terms of the settlement agreement, CenterPoint agreed to reduce its Hurricane Ike cost recovery to $662,816,820 which includes costs incurred through February 28, 2009, plus carrying costs on that amount through August 31, 2009. The settlement also provided that, in the event that CenterPoint receives any insurance proceeds, grants, or other types of compensation in connection to Hurricane Ike damage or restoration costs, it will credit such payments to reduce the amount of recoverable costs, or it will account for the payments in a future proceeding. 

The settlement agreement was approved by the Commission on August 14, 2009.

On July 8, 2009, CenterPoint filed a related application with the PUC, Docket No. 37200, seeking approval of a financing order authorizing securitization of the approved costs. On August 18, 2009 a unanimous settlement in Docket No. 37200 was reached authorizing issuance of a financing order. 

The settlement agreement was approved by the Commission on August 26, 2009.

The GCCC is a signatory to the settlement agreements in both dockets. Lloyd Gosselink find the settlements are reasonable and in the public interest, therefore it is recommended City Commission approve the resolution ratifying the signature of counsel on behalf of the Coalition.