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TXU, OPC Oppose Redesign of TNMP Customer Charge

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November 9, 2010

TXU Energy and the Office of Public Utility Counsel separately opposed Texas-New Mexico Power's proposal to cover 50% of the revenue requirement for residential and Secondary < 5 kW customers through a fixed customer charge (38480).

TNMP's proposal, part of its current rate case, was first reported in Matters (8/30).

Currently, the TNMP fixed residential Customer Charge is $1.40 per month and the fixed residential Metering Charge is $2.20 for a combined fixed charge of $3.60. TNMP has proposed a fixed residential charge of $19.93 which will cover 50% of the entire revenue requirement for this customer class. The same structure is proposed for the Secondary < 5 kW rate class, with a new fixed customer charge of $9.46 replacing the current combined fixed charge of $4.70.

"Customers who use the least amount of electricity, many of which are low income, will be the ones hit hardest by this change," TXU said.

"The basis for comparing electric prices in Texas is largely based on the cost per kWh and implementing such a large fixed charge is contrary to this basis. To stay in business, REPs will have to include the $19.93 charge in their cost of goods sold. To help ensure recovery of costs, REPs are likely to include a similar large fixed charge in their rate design. Consequently, customers will likely bear the impact of this significant change in rate design. TXU Energy believes that a large and significant change in rate design, such as going from a combined residential fixed charge of $3.60 to a $19.93 fixed charge should be avoided for both Residential and Secondary < 5 kW rate classes," TXU added.

"Additionally, TXU Energy believes that the cost of providing transmission and distribution services to a single family home is higher than providing such service to an apartment unit. TXU Energy bases this assumption on the fact that single family homes are typically spread out over a larger geographic area than a single apartment and likely require more equipment and maintenance, such as tree trimming, than is required for an apartment unit. Therefore, from a fair cost allocation standpoint, it is reasonable to recover a significant portion of the revenue requirement associated with the $19.93 fixed charge on a per kilowatt hour basis, so that locations with higher usage, such as single family homes, pay more of the cost," TXU said.

OPC argued that TNMP's proposal is not cost-based, and, "gives large residential customers rate breaks, requires smaller (and on average poorer) customers to subsidize these large customers, and discourages conservation."

TXU and OPC both opposed TNMP's proposed Storm Hardening Cost Recovery Factor (SHCRF) Rider, as TXU called the rider unnecessary in light of the PUCT's decision in adopting new Subst. R. §25.95, in which the Commission deleted the requirement to separately track costs for storm hardening, stating that, "at this time it is unclear whether the benefit of such a requirement would outweigh its cost."

OPC called the storm hardening rider piecemeal ratemaking.

TXU opposed TNMP's proposal to charge the higher of $176.27 or an amount "as calculated" for tampering charges. "TXU Energy is not aware of a cost-based rationale for this minimum $176.27 fee, believes that the minimum fee should be removed, and that TNMP should simply be allowed to recover its actual costs for tampering. TXU Energy opposes the minimum fee because it is not cost-based. A minimum cost only serves as a punitive measure for the TDSP, much like a fine, and should be stricken. The TDSP is charged with serving customers, not enforcing punitive costs on them," TXU said.

TXU also objected to TNMP's attempt to collect a charge for locating its underground delivery facilities, and argued that this provision should be removed. "The Dig-Tess service provides free location and marking of underground facilities. The language in TNMP's tariff would allow it to assess a facilities location charge to REPs for locates requested by the REP's customers. This discretionary charge should be stricken since this is now a free service provided through Dig-Tess. In any event, the charge should not be made against the REP because REPs do not request these locates. The person or entity that is performing an excavation, not the REP, must make the request for facilities location," TXU said.

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