The Public Utility Commission of Texas met to take up items for discussion regarding water, communications, and electric utilities. An archive of the meeting can be found here.

This report is intended to give you an overview and highlight of the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

Motion to approve Commissioner Lake’s absence

Items to be taken up without discussion: 2, 3, 4, 5, 7, 11, 14, 15, 18, 19, 20, 22, 23, 28, 31, 33, 39

Items that will not be taken up: 12 , 30

Items not discussed: 8, 9, 25, 26, 27, 29, 30, 34, 35, 36, 38, 40, 41, 42, 43, 44

Item 1- Public Comment

  • No public comment

Item 6- Docket No. 53744 – Request of Paul and Linda Royall for Appointment of a Temporary Manager for the Lago Vista Water System

  • Cobos- Should adopt PFD but modify to dismiss for mootness because temporary manager already appointed by TCQ; appreciate their help with the water system
  • Motion to dismiss but modify to reflect on dismissal for mootness, passes

 

Item 10: Docket No. 52195; SOAH Docket No. 473-21-2606 – Application of El Paso Electric Company to Change Rates

  • Cobos- Should deny for rehearing; already approved settlement and El Paso hasn’t supplied any evidence to support argument
  • Glotfelty- Blackbox agreements don’t allow us to see what’s in them so agree and deny request
  • McAdams- Unfortunate; but we are somewhat constrained here, have to go with what is on record
  • Motion to deny the motion for rehearing, passes

 

Item 13: Docket No. 52715; SOAH Docket No. 473-22-07689 – Application of Denton Municipal Electric to Change Rates for Wholesale Transmission Service

  • Cobos- Believe we should deny appeal in part regarding commission authority to set interim rates for municipal owned utility wholesale rates; in part because they didn’t follow commissions procedural rules; case law to support our position namely PUC v. Corpus Christi
  • Cobos- Find that we have authority, however, they weren’t provided noticed and opportunity for hearing and there was language to allow for this; grant appeal in that respect
  • McAdams- So there would be a limiting effect to grant of appeal with SOAH taking it up and providing notice?
    • Cobos- Yes
  • McAdams- Agree with that especially while we are trying to make all utilities in the state work together for reliability
  • Glotfelty- Has been in front of us for a little while, Denton’s last T-cost rate was approved in 2005; support staff’s efforts to get them in with these challenges; will be subject to a true up once rates go into effect
  • Motion to grant appeal with motion to instruct OPDM to prepare an order consistent with our discussion at the dais
  • Cobos- Modify motion to deny the appeal in part with respect to finding that commission has authority to set interim rates for wholesale service rate cases for municipally owned utilities and grant appeal in part due to the ALJ not following commissions procedural rules
  • McAdams- Makes senses, motion passes

 

Item 16: Docket No. 53354 – Tariff Filing for Texas-New Mexico Power Company Related to the Change in Deployed Meter Technology Approved in Docket No. 51387

  • Cobos- Unfortunate situation; meters based on 3G service that AT&T cancelled and vendors are having supply issues; seeking tariff revision to use certain charges to charge for the standard meters and apply these fees to charge the customers for standard meters across board; confusion between standard and non-standard meters
  • Cobos- Should deny because we can’t cut and paste one section of tariff and apply across board; let them continue to charge customers for standard meters which are lower cost anyways; need to keep track of replacement of the AT&T meters
  • McAdams- Two years notice lead time given to provider from AT&T; this will continue to happen and technologies will continue to evolve; have to stay ahead of this and develop plans; somewhat limited in terms of actions we can take
  • Cobos- Sympathetic to supply issues but they had advanced notice
  • Thompson- What’s really the issue is the telecommunication linkage not necessarily the meter itself; ample opportunity well before time to act
  • Thompson- Need to make delineation between actual meters and ability to connect to it; falls to utilities and need to be more forward thinking
  • Stephen Journay- Character of meter hasn’t changed; non-standard metering is a service customers need to request
  • Cobos- Communication piece is required; has to be there to be an advanced meter
  • Stephen Journay- Advanced meter definition includes communication systems
  • McAdams- As old technologies make systems obsolete, utilities need to make plans to stay ahead
  • Motion to deny request with reasons stated at dais, passes

Item 17: Docket No. 53377 – Complaint of ENGIE Energy Marketing NA, Inc. and Viridity Energy Solutions, Inc. Against the Electric Reliability Council of Texas, Inc

  • McAdams- Should take up first draft preliminary order
  • Move to approve draft preliminary order, passes
  • Cobos- Should grant staff appeal in part because Engie’s commission for deposition was to depose commission or staff and we can’t be deposed and commission staff is broad term and not an entity that has to designated representative to be deposed
  • Cobos- Denial in part because staff request for protective order too broad; if request to deposed specific staff they can’t do that
  • McAdams- We should attempt where possible to discourage blanket fishing expeditions to where parties have to have some types of reasonable knowledge on who is informed on case; protective order for staff too broad; support nuance of your approval in part and rejection
  • Glotfelty- Follow that lead
  • Motion to grant in part and deny in part staffs appeal consistent with discussion on dais, passes

 

Item 21: Docket No. 53691 – Agreed Report of Violation Relating to Commission Staff’s Investigation of South Texas Electric Cooperative, Inc. Concerning Violations of PURA, ERCOT Nodal Protocols, and TAC

  • Cobos- Approve but add in conclusion of law 8 to state that STEC violated PURA and commission’s rules as a basis for the administrative penalty assessed in the proposed order
  • McAdams- Support on basis of consistency, have done this before
  • Motion to approve proposed order with modification consistent with our discussion, passes

 

Item 24: Docket No. 54225 – Investigation of Texas Excel Property Management Corporation for Violations of PURA and TAC

Barksdale English, Commissioner Staff

  • Have to come to you to seek an open investigation because haven’t been able to communicate with Texas Excel; pleased that filing of this motion has gotten their attention and have provided some info but still incomplete
  • Notice to public at large that there seems to be business in state where property management companies leasing out homes that are separately metered and having tenant select electricity provider chosen by company
  • Violates tenant that every retail customer in competitive areas are granted ability to choose their provider; when they don’t have ability to choose they are not considered customer of record to the rep and prevents them from accessing customer protection rules
  • Asking to open formal investigation to have more authority from legal and public perception standpoint to encourage or compel company to respond to request for info and participate in investigation
  • Glotfelty- Seems like the right thing to do; have to protect the public; may need to see if there are challenges in this space going forward; can’t violate PURA by telling people they don’t’ have a choice
  • McAdams- Protections for all parties by initiating a formal hearing; need transparency because of broad impact of this; benefits everyone because they have protections of law and PUC substantive rules that govern
  • Cobos- Agree; need to make sure everyone is following the law
  • Thompson- Formal investigation will provide facts for both parties and give us an idea of if there are other vulnerabilities out there that we need to address to prevent the same thing
  • We have three other investigations and rules have been sufficient enough to encourage those entities to work with us; no recommendations at this time about rule changes
  • Motion to pass staff’s request; passes

 

Item 32: Project No. 53911 – Aggregate Distributed Energy Resource (ADER) ERCOT Pilot Project

  • McAdams- Massive amount of work from staff and board; pilot will allow us to experiment and pursue a policy approach to put consumers more in control of their energy future; allows them to do that through load and resources
  • McAdams- Going to take this slow and not jeopardize system reliability; intended effect is to enhance reliability and overall resiliency
  • Thompson- Hope to get thoughts and ideas from consumers and their engagement
  • Motion to approve governing document and registration form, passes

 

Item 37: Discussion and possible action on electric reliability; electric market development; power-to-choose website; ERCOT oversight; transmission planning, construction, and cost recovery in areas outside of ERCOT; and electric reliability standards and organizations arising under federal law

Chad Seely, ERCOT

  • Filed letter and presentation dealing with Brazos settlement; presentation available on ERCOT’s website
  • Need to make sure entities pay ERCOT invoices; believe statutory objectives from last legislative session have been achieved as well; hopeful to close this issue with bankruptcy court on November 14
  • Provides overview of bankruptcy case timeline; bankruptcy judge encouraged parties to go to mediation because of complexity of this issue, agreed to mediation and were in mediation for six months working on framework presented today
  • Took legislative framework to use as part of objectives in mediation; Brazos will be reorganized to no longer have generation and will be a pure transmission distribution cooperative once transition occurs; wanted to ensure no default uplift charges were assigned to rest of the market; recognize market needs to recover the $1.9 B
  • If participants wanted to achieve full recovery, they could get all of it, but if wanted to get it faster they would have to accept a discount
  • During Winter Storm Uri paid $600 M to Brazos and needed money back to help replenish CRR funds in a timely fashion
  • Commission authorized ERCOT to use $800 M during Winter Storm Uri as part of the CRR funds to pay the market for the extraordinary costs; amount associated with Brazos’ short pay was approximately $600 M
  • Risk of ERCOT being in bankruptcy, had $350 M of collateral that Brazos had for ERCOT and applied and distributed through market; Brazos alleged these were fraudulent transfers through a pre-petition claim
  • Need appropriate senior management changes to Brazos; no longer acts as a financial Counter-Party with ERCOT in wholesale market; some market participants were able to intervene in mediation and provide value
  • In August, mediator gave parties a last proposal and able to work out a settlement; $600 M for CRR funds will be given back to ERCOT and used to pay down M Bonds and fully replenish CRR funds; remaining $1.3 B is owed to market participants

Sean Taylor, CFO at ERCOT

  • Ability to prepay debt without penalty for period of time it is held by the comptroller, looking at first three years in this case, so we can take Brazos money and pay down $375 M to reduce monthly rates for market participants; remaining $225 M balance will replenish CRRs; can do both of these things in the immediate future
  • Seely- Eligible market participants that have a claim through ERCOT are approximately $1.3 B; came up with four options for them to elect and completed this last week
  • Option 1 is accelerated cash recovery option at discounted rate; 65% nominal recovery received over 12 years owed in 3 different components; timeline ties to funding proposal from Brazos
  • Option 2 is deferred cash recovery they can recover the full amount paid across 30 years; three separate components weighted more heavily over last years
  • Option 3 is for those with smaller claims to get one-time payment that is 63% of the amount owed capped at $6,300. If claim greater than $10,000, can reduce a claim to collect $6300.
  • Option 4 allowed market participants to choose between option 1 and 2 and divide claim among those two options
  • Any market participant that didn’t select an option was deferred to option 2
  • Seely- Even the deferred cash recovery with a timeline of 30 years is faster than the default uplift protocols which would have taken 43 years; benefit to market participants if they chose to seek 100% recovery of the claim
  • Three primary funding sources from payments from Brazos’ member Temporary Affordability Allowance (TAA) balances; $1.15 B on effective date, $116.6 M on generation asset sale (3 units) date (any shortfall would be funded through Rural Utility Services or RUS), and $166 M over 12 years funded from the Transmission and Distribution operations; 15 of 16 members owe TAA balances
  • Seely- $600 M paid on effective date replenishes CRR funds and pays down Subchapter M Bonds; remaining allocable proportion of these amounts will be paid to ERCOT on relevant dates and funded into a designated escrow account for deferred recovery
  • Seely- Put features in settlement into how Brazos will move out; will no longer act as the qualified schedule entity scheduling the load by March of next year; have to find third party qualified in scheduling to handle that scheduling load
  • Seely- Brazos will sell all generation assets; will take some time, Brazos has retained experts to start working on that; could bleed into end of next year; backstop to even schedule generation if still retaining assets
  • Seely-Have handful of power purchase agreements that can’t be extended after certain period and can’t increase capacity
  • Sent election notice forms to eligible market participants and ended on October 21st; options 1 and 3 most popular options; 98% of notices were heard back from in election notice option; option 1 representing over 96% of dollars
  • Will file ERCOT recovery appendix with courts on payments; will serve as record of when payments are due to market participants
  • Seeley- Brazos will transition to a wires company; specific language that Brazos will never own or operate generation assets or electric energy storage facilities for entering the market
  • Brazos prohibited from distributing proceeds from T&D assets to anyone other than a valid lean holder before fulfilling the obligations under to market participants
  • Ensuring that in deferred cases they have enough cash balance to make sure 30-year payments are fulfilled
  • Put in place third party bankruptcy monitor that will look at those practices, present info to court and make sure measures are being achieved or there will be financial consequences
  • On Friday, ERCOT voted to approve Brazos plan and it was deadline for parties to file objection, where some objections to Brazos plan but none specific to ERCOT settlement; hopeful judge will confirm and can move forward with that plan
  • Brazos anticipating securitizing toward end of year or in January and would receive the first major payment then
  • McAdams- Just to confirm, in terms of ERCOT becoming whole after Uri in the Brazos situation the final decision will be made by bankruptcy judge?
    • Correct
  • McAdams- In terms of replenishment of CRR and subchapter M, pending that approval when does ERCOT staff hope to see execution of those funds?
    • Seely- By end of year will receive $600 M payment and be able to apply to replenish CRR funds and move forward on subchapter M bonds; CRR should be whole almost immediately
    • Target is Q1 for paydown of subchapter M bonds
  • McAdams- No action necessary at this time

Meeting adjourned for closed session