The committee met to take up and consider bills. This report focuses only on HB 1535.
HB 1535 – Relating to rates of and certificates of convenience and necessity for certain non-ERCOT electric utilities.
- Addresses inefficiencies in rate making process of non-ERCOT utilities
- Working with stakeholders to address concerns and will be putting forward a committee substitute at a later date to address these issues
David Hudson, Southwestern Public Service Company, for the bill
- Much get permission from each regulator when changing rates or multiples at the same time
- Bill is limited to just 4 providers, including his company
- The bill does not reduce the oversight from the PUC
- Rate making process takes too much time – regulatory lag before company can begin to collect rates
- Bill will better match and synchronize rate making
- Bill proposes 5 tweaks to the process
- Giddings – what is the average cost of a rate case
- $3.5 million on a case
Patrick Tarlton, Texas Chemical Council, against the bill
- The bill would cause little PUC oversight of changing electric rates
- The ability to forecast electrical rates is critical for businesses when deciding to invest in Texas
- Will continue to work with bill author to come to resolution
John W. Fainter, Association of Electric Companies of Texas, for the bill
- Companies are obligated to serve every customer who shows up and they need to invest in operations
- Bills allows movement away from 40 year old process
- Need for change is highlighted by tremendous growth in industry and population
Katie Coleman, Texas Association of Manufacturers, against the bill as filed
- Electricity is a large products if not the single largest cost
- Appreciates progress that has been made on bill discussion and still working on the bill
- 2 concerns in bill that was filed
- Need to know electric rates, problem if utility can go back and charge new rates for previous time periods
- Need examination to make sure customers are not overpaying
- Rep. Huberty – is industry benefiting from lower fuel prices currently?
- Fuel prices are very volatile so paying lower rate now and possibly higher in the future
- Rep. Huberty – sprawl means more people living out in those non-ERCOT areas
- Want healthy facilities and for them to be able to build out
Mike Harris, Mount Pleasant City Manager, for the bill
- No limit to size of surcharges in bill
- Pleases with recent changes to bill and will continue working with bill author
- Favor of reduce regulatory process and reduce cost of rate case but not at expense of through review
- Rep. Giddings – are other states they doing what these non-ERCOT utilities are already doing/ more favorable for business there
- Feel Texas is at an advantage because of its rate making process and feels like some suggested changes could put us at a disadvantage
Norman Gordon, El Paso City Attorney, for the bill
- Opposes bill as introduced
- Bill as filed would impinge on the cities original jurisdiction
- El Paso has unique circumstances, city requests to be excluded from the bill
- Rep. Kuempel – have you been involved in stakeholder meetings? Encourages participation
- Yes they have been there
Chris Brewster, representing cities served by SWEPCO and cities served by Oncor, against the bill
- Have been involved in stakeholder meetings but still overall concerns of direction of bill
- Bill needs to preserve principle that rate setting should look at the entirety of costs, investments, and revenues of energy companies
- Believes PUC can set rates most accurately when they can review entirety of company
- Will continue to work with stakeholders
Tom Schokley, CEO of El Paso Electric, for bill
- Believes bill is a needed improvement
- Thinks it would be terrible to El Paso Electric out of the process
- Rep. Huberty – is it fair to say you are asking in a non-ERCOT area for same thing in ERCOT – being treated differently than others
- Right
Eddie Edwards, City of Borger City Manager and represent AXM cities, Texas, against the bill
- Have participated in stakeholder discussions and will continue to do so
- Open to limited legislative relief for regulatory lag
- AXM is not interested in cutting rates to the bones but in establishing reasonable rates
Sallie Rainer, President and CEO of Entergy Texas, for bill
- Regulatory lag resulting in lower credit rating which impacts bond ratings which will result in rise in cost
- $6-8 million for each rate – costs that customers will ultimately bear
- The bill will not result in reduced oversight and consumer protections
- Rep. Huberty – you want to be treated same as ERCOT companies?
- Yes sir so they can reinvest the cost
- Fewer rate cases doesn’t mean less oversight
- Rep. Smithee clarified that he was in the Excel area not sure if he can even vote on the bill
Rep. Frullo, closing
- Bill does not intend to take away the original jurisdiction of any city, nor does it affect the PUC oversight
- Bill has 5 parts – of note the transition and new generation rider will be removed from the substitute
- Bill gets back to 2 points: help reduce rate cases and interim or relate back rate
- Still working on final language
- Rep. Giddings – is it your position that bordering states have better bond-debt rates and if that is due to our state's lag in rate making
- Higher bond rates will have a huge impact on the rates and will hurt the consumer
- Rate-making process would be extended from 12 to 18 months to allow the companies to have some time between rate-making cases
Bill left pending