Title
Consider a resolution authorizing the Mayor to execute Supplemental Agreement No. 2 to "City of Round Rock Agreement for Professional Consulting Services related to Expert Witness/Litigation Services for Wholesale Rate Cases with Raftelis Financial Consultants, Inc."
Body
After years of working closely with all the City’s wholesale customers as our cost and rate needs were updated for our water and wastewater utility, five of the wholesale customers chose to retain outside counsel and file an appeal of their wholesale rates to the Public Utility Commission of Texas (PUCT). This appeal was filed October 31, 2018. This action kicked off a very lengthy and complex series of legal and information proceedings before the PUCT, the State Office of Administrative Hearings, and their supporting staff and judges. COVID, along with the February 2021 Winter Storm Uri, resulting focus on power grid and change in PUCT commissioners, both further delayed the process.
The five MUDs appealing the City’s rates are
• Paloma Lake MUD No. 1
• Paloma Lake MUD No. 2
• Williamson County MUD No. 10 (TeraVista)
• Williamson County MUD No. 11 (TeraVista)
• Vista Oaks MUD
For the past two rate updates in 2014 and 2017, the City has contracted with Raftelis Financial Consultants, Inc. to be our rate consultant in regards to rate analysis and design for the City’s water and wastewater rates established for our retail and wholesale customers. In addition, the City contracted with Raftelis for necessary expert witness/litigation services in regards to the current rate case filed by the five wholesale customers. Raftelis has been providing financial and rate analysis and support throughout the rate case as it relates to the 2017 Wholesale Rate Study. This includes providing rebuttal testimony and participation in hearings, if necessary, as well as provide input to rate case strategy and any additional analysis required for settlement discussion. The initial Expert Witness/Litigation Services contract was for a not-to-exceed amount of $175,000 and has been billed on a time and materials basis.
The City has since filed a full rate case defending the City’s cost of service to its wholesale customers with the PUCT on November 14, 2022. This was the agreed upon deadline in the now long running case with the five wholesale customers. Alfred Herrera, outside rate attorney, RFC, outside rate consultants, and City Finance & U&ES staff have worked countless hours over the past few months on this specific deadline set by the PUCT in addition to our ongoing work to maintain a sound financial and capital plan for the City’s water and wastewater utility.
Below is the schedule showing the dates for the key events in the case.
|
DATE |
EVENT |
|
February 9, 2024 |
Round Rock's Direct Case/Testimony |
|
February 29, 2024 |
Mediation |
|
May 10, 2024 |
MUDs' Direct Case/Testimony |
|
July 9, 2024 |
PUCT Staff's Direct Case/Testimony |
|
August 23, 2024 |
Round Rock's Rebuttal Case/Testimony |
|
Sept. 17, 2024 |
Hearing on Merits (4-day Hearing) |
|
Sept. 30, 2024 |
Initial Post-Hearing Briefs |
|
October 14, 2024 |
Reply Post-Hearing Briefs |
|
Dec. 13, 2024 |
Administrative Law Judges' Proposal for Decision (PFD) |
|
Dec. 23, 2024 |
Exceptions to PFD (estimated date) |
|
Dec. 30, 2024 |
Reply to Exceptions to PFD (estimated date) |
|
Jan. 13, 2025 |
PUCT Open Meeting (estimated date) |
|
Feb. 7, 2025 |
Motion for Rehearing of Final Order (estimated date) |
|
Feb. 22, 2025 |
Reply to Motions for Rehearing |
|
March 9, 2025 |
PUCT Ruling on Motions for Rehearing |
|
April 8, 2025 |
Appeal of PUCT Final Order |
Although Mediation between the parties is set for February 29, 2024, if a settlement is not agreed to, then the full completion of the case will most likely extend into 2025 should either party decide to appeal the final ruling. Because the rate case has continued longer than expected, the City needs to increase Raftelis’s expert witness/litigation services budget by $170,000, which will billed on a time and materials basis. This Supplemental No. 2 brings the total compensation for consulting services to $486,256.
Cost: $170,000
Source of Funds: Utility Fund