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The following report summarizes the January 14, 2021 meeting of the Public Utility Commission of Texas (PUC), covering various water certificate amendments, applications for temporary rates, changes in wholesale electricity rates, complaints and appeals, technology changes and updates, and various waivers and other applications. A recording of the meeting and full agenda can be found here.

The HillCo report below is a summary of remarks intended to give you an overview and highlight of the discussions on the various topics discussed. This report is not a verbatim transcript; it 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.

Item 1: Ratepayers Appeal of the Decision by South Central Calhoun County Water Control and Improvement District No. 1 to Change Rates. (Final Order) Austin Spraetz

  • Motion and second to adopt an order consistent with the memo

Item 2: Docket No. 48746 – Application of the City of Marshall to Amend Its Water Certificate of Convenience and Necessity in Harrison County. (Final Order) Lorenzo Garcia

  • Motion and second to adopt an order consistent with the memo

Item 3, 4, & 5: Application of Mark Patterson for Temporary Rates for a Nonfunctioning Utility. (Final Order) Alex Scheifler

  • Memos were filed with each docket item
  • Directives led to confusion on this item
  • These nonfunctioning utilities need money infused into them to become functioning utilities
  • Need to be more open to giving them the temporary rates they request
  • Not traditional method, but need to be open to it and rethink approach to these applications/cases
  • Filed compliance plan with TCEQ
  • Before end of that process, we need to develop some more rules to prevent recurrence of current situation
  • Until we get to a good place, hope the memos can serve as a set of guidelines until official rulemaking can happen
  • When memos were written, was unaware of compliance plans with TCEQ. Recommendations in the memos need to be tied to TCEQ recommendations and plans in order to streamline the process and be fair
  • Disagreement between company and Commission on how long the temporary rates would last before reverting to a new
  • Item 3 motion and second to adopt an order consistent with memo
  • Item 4 motion and second to adopt an order consistent with memo
  • Item 5 motion and second to adopt an order consistent with memo and discussion

Item 6: Petition of Alamo Mission LLC to Amend Rockett Special Utility District’s Water Certificate of Convenience and Necessity in Ellis County by Expedited Release. (Final Order) Lorenzo Garcia

  • Motion and second to adopt an order consistent with the memo

Item 7: Application of the City of Midland to Amend Its Certificates of Convenience and Necessity in Martin and Midland Counties. (Final Order) Connor Kilgallen

  • Motion and second to adopt an order consistent with the memo

Item 8: Petition of Colorado River Project, LLC to Amend SWWC Utilities, Inc. dba Hornsby Bent Utility Company Inc.’s Certificate of Convenience and Necessity in Travis County by Expedited Release. (Final Order) Lorenzo Garcia

  • Motion and second to adopt an order consistent with the memo

Items 9 and 10 were not considered.

Item 11: Application of East Texas Electric Cooperative, Inc. to Change Wholesale Transmission Service Rates. (Final Order) John Kelly

  • Motion and second to adopt an order consistent with the memo

Item 12: Joint Report and Application of Entergy Texas, Inc. and East Texas Electric Cooperative, Inc. for Regulatory Approvals Related to Transfers of the Hardin County Peaking Facility and a Partial Interest in Montgomery County Power Station. (Final Order) David Hrncir

  • Having a difficult time “crossing the finish line” on the settlement
  • Nothing in the settlement or testimony supporting explained why the parties that felt so strongly this was not in the public interest agreed to the settlement
  • Don’t understand how this is in the public interest
  • Is this a mutually beneficial exchange, or is it an exchange of wealth? That drives the public interest question
  • Parties are contractually obligated to say this is a mutually beneficial agreement, making it hard to determine if the settlement is in the public interest
  • All 3 commissioners struggle with the question of whether or not the proposed settlement is in the public interest – no clear answer either way due to questions of side deals and conflicting testimony
  • Staff – perhaps additional testimony from settling parties may help clarify the question. Recommends issuing an order asking the parties what further proceedings the Commission undertakes so that settling parties can contribute more details to the Commission to allow Commissioners to make a clear and well-informed decision. Let the parties tell us how to go forward

Item 13: Complaints and Appeals of DC Energy Texas, LLC and Monterey TX, LLC Against the Electric Reliability Council of Texas, Inc. (Final Order) Lorenzo Garcia

Public Utility Commission

  • Oral argument was granted. Instructions given for oral argument/public comment on this item

Valerie Greene, Pierce Atwood LLP on behalf of Monterey, TX

  • Monterey relied on specific statute that defines contractual bidding, including a maximum price
  • Allows clients to plan and limit liability in auction, fundamental component of a bid
  • ERCOT previously accepted this in a previous contract
  • ERCOT want you to make Monterey and DC Energy bear the brunt of ERCOT’s mistake due to software error. Monterey could not plan for the actions
  • Two points: 1. After the fact price correction should be the exception, not norm, and 2. Monterey reasonably thought its payment liability was capped by the maximum bid price. If bidders cannot rely on maximum bid to limit exposure, they have no way to plan or limit liability in the point-to-point contract bidding process.
  • Risk ERCOT would have market participants bear is significant – DC Energy charged more than $44,000 over a promised $200 charge
  • Appropriate for summary decision
  • Commission has the authority to adopt rulemaking going forward and resolve this issue
  • Commissioner – ERCOT claims this is how they’ve always done it and that the actors were aware of the process. Do you know if this has happened before, or are there other situations?
    • At least 3 market participants were imposed with charges relating to this incident
    • In the past, North Maple energy
    • Unaware of other instances

Erica Kane, ERCOT

  • ERCOT requests PUC decline appeal
  • Actors were aware this was a potential outcome
  • In every instance, ERCOT has corrected prices to actors under protocol 3
  • Every price correction can result in previously awarded bids being charged higher than the awarded bid
  • Complainants were made aware of the risk of day ahead price corrections
  • Not reasonable to apply price cap language to this situation – price correction has no awards process so it is not the same
  • North Maple situation was very different – ERCOT software error. In this situation, the bids were awarded at or below price with no problems
  • ERCOT has followed language correctly just as they always do
  • ERCOT notes protocol interpretations and relief proposed have significant ramifications for policy and restructuring of ERCOT price and bidding system
  • Commissioner – Has this situation occurred before? Is there a record of ERCOT reporting this being a possibility to complainants?
    • This likely occurred every time we performed price correction, have specific data for September 2019
    • However, we have not had complaints from other entities before this issue. 2 possible reasons: 1. They know how it works, or 2. When bids are settled in real time, entity will still make a profit despite being charged above bid price
    • We have a link in our motion for summary decision to initial proposed bid ERCOT sponsored, clearly states in the NPRR that price corrections can result in award and price misalignments

Nick Murray, PUCT Staff

  • Staff advocates for position outlined in its proposal for submission

Valerie Greene, Pierce Atwood LLP on behalf of Monterey, TX

  • Just because ERCOT has done it one way doesn’t make it correct in protocol
  • If market actors cannot rely on the not to exceed bid policy it is hard to see how participants can limit liability
  • NPRR – the same one where ERCOT notes that even though the possibility exists, there is a process to redress that ERCOT neglected to support a finding

Public Utility Commission

  • Having a hard time deciding on the case
  • One commissioner agrees with staff to not adopt PFID
  • Two commissioners struggling with the details
  • This case “raises some questions we need to answer”
  • It may be time for the commission to make some policy decisions about how to handle these issues – price corrections are controversial and many ways to handle it
  • At least need to open a project to gather information about the issue from ERCOT and market participants
  • Not comfortable saying these price corrections should never be done right now
  • Proposal to reject the interim PFD and deny the complaint is on the table
  • Motion to adopt the proposal to reject the interim PFD and deny the complaint of DC Energy and Monterey, second; Adopted

Item 14: Application of Entergy Texas, Inc. for Approval of a Tariff Consistent with the Commission’s Accounting Order in Docket No. 50540. (Final Order) Connor Kilgallen          

  • Motion and second to adopt an order consistent with the memo

Item 15: Application of Entergy Texas, Inc. to Establish a Generation Cost Recovery Rider Related to the Montgomery County Power Station. (Discussion and possible action) David Hrncir         

  • Addition of approval of agreed-upon rate on an interim basis, return to the issue if the sale goes through to finalize the rate
  • Motion and second to adopt an order consistent with the memo and addition, plus abatement of docket item

Item 16: Application of Texas-New Mexico Power Company for Change in Deployed Advanced Meter Technology. (Final Order) Judy King 

  • Motion and second to adopt an order consistent with the memo

Item 17: Application of Cross Texas Transmission, LLC for Good Cause Waiver of Rate Filing Requirement Under 16 TAC § 25.247 and Adoption of Rate Settlement. (Final Order) John Kelly              

  • Motion and second to adopt an order consistent with the memo

Item 18: Joint Report and Application of Texas-New Mexico Power Company, NM Green Holdings, Inc., and Avangrid, Inc. for Regulatory Approvals Under PURA §§ 14.101, 39.262, and 39.915. (Preliminary Order) David Hrncir  

  • Chair voted to consent
  • Member interested in including a question relating to TDU parent owning generation and retail to elicit policy discussion, but not essential
  • Question will be included
  • Motion and second to adopt an order consistent with the discussion

Item 19: Application of Electric Transmission Texas, LLC for Good Cause Waiver of Rate Filing Requirement Under 16 TAC § 25.247. (Final Order) John Kelly  

  • Motion and second to adopt an order consistent with the memo
  • Thanks staff and parties for the work put in to the memo and background

Item 25: Joint Application on Plains Internet, LLC and AMG Technology Investment Group, LLC DBA Nextlink Internet to Revise Eligible Telecommunications Carrier Service Areas. (Final Order) Judy King      

  • Motion and second to adopt an order consistent with the memo to remand the docket item