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Home My WebLink AboutMinutes - City Council - Public Hearing - 9/26/1978430E SEP2�1978 78-37-430E-1190 *NbTICE OF PiTBLIC HEARING ON PAGE 430G. PUBLIC IiEARING QF CITY COiJNCIL ON THE PROPOSED INDUSTRIAL GAS RATE INCRFASE BX PIONE�R I1AT[IRAL GAS COMPANY SEPTEMBER 26, 1978 In accordance with the NoCice of City Council to continue the above referenced hearing on this date, said Notice being pasCed September 13, 1978, the above referenced i�earing was called to order at 9:20 A.M. by rs�yar Pro Tem Alan Henry, presiding. Council members present were: Mayar Pro Tem �ienry, Councilman Bill McAlis[er, CounciT. woman CaroXyz� 3ordan' Councilman M. J. Aderton, City Manager Larry Cunningham, City Attorney John C. Ross, Jr., Assistant Ci.ty Attorney Don Vandfver, Deputy City Secretary Julie Dexter, Mayor Dirk West abstained from participating in this hearing. Absenti: Evelyn Gaffga, City Secretary, A1so presenC, rep��aenti.ng Pi.oneer Natural Gas Co. , were Mr. Tl�os�as Stephens, Attorney for Pio[teex Natural Gas Co., Mr. Dennis Gillmore, Senior Consultant, H, Zinder and Associates, Inc., Da�las, Texas and M. D. LaGrone, Vice President, Pioneer Natural G8s Co., David Culver, Vice President, Pi.oneer Natural Gas Co, Jack Gholston, Vfce President, Accounting Oifice, Pioneer 13aturai Gas C., ail from Amarillo, Texas. Mayor Pro Tem Henry called the me�ting to order and Mr. LaGrone introduce� two exhibits into evidence, Pioneer Exhibi.0 Na. 5 entzt�.ed: West Texas Transmission System Detail of Non-Revenue Producing Conatruction Work-in-Progress at December 31, 1977. and Pianeer Exhibit No. 6 entitled: West Texas Systeui Natural Gas Purchased fcom Af£iliated Companied March, 1978. This fnforination had been delivered to the City Statf on Friday, September 22, 1978. Mr. LaGrone briefly discussed these exhibits pointf�g out information requested earlier by the Council. At this time Mr. �avid Bulver was sworn ir► and skated that he wa� employed in Ainsrillo, Texas by Pioneex Natuxal Gas aa Vice President and Executive Assistant to the President. City Atrorney John Ross cross-examined Mr. Cu�ver with respect to prices paid for gas by affi].iaCes of Pioneer Natura� Gas Go. on long term conkracCs. Mr. Culver was alsa cross-examined by CounciZwoman Jordan on this point. At this time, Mr. ,�ack Gholston was sworn in. Mr. Gho�ston stated that he has been esaployed since 1949 and is now employed in Amarillo, Texas by Pianeer Natural G�s, currer�tly servi.ng as Vi.ce President in their account�ng office. He is also Vice Preside�zt in some of Pioneers subsidiary companies. Mr. Ghols�an� upon reques� of Mr. Ross, proceded to give a listing of these subsidiary companies. He told a little of the function af each company. He also sxplained his understanding of long term debt and interest rates for borrowing £rom their awn subsidiaries as well as other financial backers. Councilwoman Jordon cross-examined Mr. Gholston on so�ne opexational matters asking with method was used to detexmine the uti�fty portion of a shared service. Mr. Ross went into a lengthy cross�exaueinatian of this point asking questions as to how shared services affect the rate base. i� yor Pro Tem Henry questioned Mr, Gholston on certain points he felt were confusing with regards to what was figured into the cost o� service but not into the rate base. At this point, Mr. LaGrone stated that this type of breakdown would require aa allocation proc�ss. Mayor Pro Tem Henry stated it was his understanding that this ha� been done and that it was these figures they were using. Mr. LaGrone explained that on].y a portion was used today. Mr. Gillmore then took the stand and stated Chat;they had taken each detailed account and Lhen allocated it down to industrial class, Councilwoman ,7ordana�lso questioned Mr. Gillmore about this. At �Z:53, the hearing was recessed for iunch to be reconvened at Z:30. Upon reconveni.ng at 1:40, Mr. Gho�ston again took the stand and Mr. Ross continued with his cross-examination. He questioned Mr. Gholston about capital used to operate the Utility Company wit� regards to transier from subsidiaries and Che accounting procedures used to do this. � Mayor Pro xem Henry asked if thi.s concluded the evidence to bc presented by Pioneer NaCural Gas Co. Pioneer cancurred. M�ayor Pro Tem Henry then asked the City Staff to present their case. At this time, Mr. E. E. Loaney, Uti�.ity Rate Anaiyst for the City o£ Lubbock was sworn in. Mr. Don Var�diver, Assistant City Atto�ney taok over examinati.on of this witness and asiced Mr. Looney to state his credentials. After doing thi.s, Mr. Looney introduced City Exhibi.t No. 4 entitled: City of Lubbock Staff Analysis o� Pioneer Natural Gas Company Industrial Rate Case. Mr. Vandiver �uestioned Mr. Looney about replacement cosCs and methods �sed to deteruei.ne these. Mr. Looney staCed Chat he felt Pioneer Natural Gas Co. hsd vialated historicai and ususl methods in determining classes. At this time, Mr. Ross took avex the examination of Mr. Looney as he continued to explain his methoda of figuring a rate base. He explaireed his concept of "test" year and his disagreement wirh Pioneer on the "teat" year used to €igure the rate base sttown in their exhibits. Mr. Looney poireted out that in his opiaion, there was no authority for Pioneer tio use the time and method they had chosen. He stated that they had used the highest possible method of arriving aC their figures. Reference was made to former hearings on utility cases called the "Alvin" case and the "Bell" case. Mx. Looney explained their relevance to the issue naw before the co�ncil. Mr. Ross made the poink that great flexibility is a�.lawed in determining a rate case. Mr. Ross questior�ed Mr. Looney about the inflakion and defla�ion factar and its effect on figuring a rate base. Mr. Ross asiced Mr. Loonay to explain how both age and condition �ust be used when figuring depreci.ation of any item. Mr. Looney indicated that Pioneer had not been consistant in their Chaice of inethods used. He stated t�at a"straight l�.ne adjustmenC" was used for �� ,� 430F S�P26�918 the rate base buC an "accelerated adjusCment" was used for incocue tax purposes. More testimony was given on thzs subject by Mr. Looney showing how much separation can exist in deCermining a raCe base de�endzng on which method is used to arrive at that base. Mr. Ross continued asking Mr. Looney different ways of reducing or raisa.�g a rate hase. After severa], vi.sua� displays on the blackboard su�porting these facts, Mr. Ross stated tttat it becomes very important for a regulating authority to know these procedures when it comes to considering the rate base. AC t�is� point, Mr. Stephens stood and stated t�e did not wish to get into an argament nf legai council, but he fel� khere was some miscancepkio�a on certain matters. Mx'. ltoss Countexed that he would be ha�py to submit documentation for his facts. At this point, Mayor Pro Tem Henry stated it was getting late and since ticne would not permit completion of the case today, it being determined that the City had a�proximately another half- days' testimony plus cross-examination the meeting was adjourned until Tuesdaq pctober �7, 197$ at $:30 A.M. in the Council. chambers. A verbaCim record of this portion a£ the hearing is on tape, which is on file in the Office of the City Secretary-Treasurer. The hearing ad3ourned at 3:30. r��f .' �~ � .�`� 1'_ Tem A�an' Henry A[ st: 1/Z.C.t� � 3ULIE AEXT , Deputy Cit Secretary � � � 30 G � � 78-37-43�G-1190 NOTICE OF PUBLfC HEARING � CITY COUNCIL NO�ICE is hereby gi�en that on September 26, 1978 at 9:00 A.t�l. in the City Gouncil Chamber on the Second Floor of the City Hall, L�bbock, � 'iexas, a public hearing will be continued, allowing appearances by ' any interested or affacted parties, and receiving testimony and evidence ; from company officials of Pioneer iJatural Gas Company and City Staff � inembers, concerning rates for industrial natural gas service to determine � if existi�g rates are just and reasonable, and to determine if such rates should be increased or decreased. I N�REBY CER�fFY that this Notice was posted this 13th day of September, 19%8 at 5:00 P.M. � �. ��.1 EV LYN GAFFGA City Secretary-Treasurer , ,3ox