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Deafening Silence on Retail Choice Punctuates Entergy Texas MISO Application at PUCT
May 1, 2012
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Copyright 2010-
Entergy Texas, Inc. filed its application at the PUCT (40346) to transfer operational control of its transmission assets to the Midwest Independent Transmission System Operator, Inc.
The 436-page application contains no discussion of retail choice in the territory.
While by law Entergy Texas must only show that the transaction will not adversely affect, "reliability, availability, or cost of service," in making its case Entergy Texas said that MISO membership would achieve "major Texas legislative and PUCT policy objectives," specifically regarding wholesale competition.
While not required as part of the application, the lack of any discussion of how the application will impact (and ideally benefit) retail choice is a damning silence, given Entergy saw fit to laud how much the transaction would benefit wholesale competition.
Notwithstanding any statutes specific to Entergy Texas' transition to retail competition, the overriding legislative policy of Texas is that, "[t]he legislature finds that the production and sale of electricity is not a monopoly warranting regulation of rates, operations, and services and that the public interest in competitive electric markets requires that, except for transmission and distribution services and for the recovery of stranded costs, electric services and their prices should be determined by customer choices and the normal forces of competition." (emphasis added)
Yes, Entergy Texas is subject to certain legislation, findings, milestones, and requirements with respect to the transition to competition not originally included in SB 7, but nothing has eradicated the legislature's policy favoring customer choices for the pricing and provision of electric service, and all transactions must be evaluated in that light (under the availability and cost of service metrics).
To be clear, Matters understands the MISO application would not itself be a venue to address the merits of a transition to retail choice, but the application should at least acknowledge the state's policy, and address how MISO membership would effect any future policy on retail choice. After all, there is no explicit requirement that the application address PURA's preference for wholesale competition, but a significant portion of testimony describes how the MISO transition would be in harmony with such sections of PURA. The fact that retail choice did not receive the same attention means, at best, that retail choice is not a concern for the company, or more likely, as Matters will make the case in the coming days, that MISO membership, when compared to other viable alternatives, will actually impede any future transition to retail competition at Entergy Texas, and accordingly there was nothing that could be offered in testimony in support of the state's major policy objective that consumer choice should determine the provision and pricing of electric service.
Entergy Texas' own witness concedes that Section 39.915(a) of PURA, which sets forth the criteria for evaluating the MISO application, "specifically emphasizes that the objective is 'to protect retail customers.'"
However, the application lacks much in the way of concrete retail market impacts; largely because the MISO market design is a moving target.
First, although the application makes much of MISO's proposed capacity market modifications allowing utilities such as Entergy Texas to self-supply capacity, MISO's proposal is simply that, a proposal. Given FERC's hostility to self-provided capacity, it would be premature to assume away any costs from a revised MISO capacity market. This is even more true to the extent Entergy Texas is capacity short and requires supplemental capacity.
Second, much of the benefits of MISO membership depend on the allocation auction revenue rights, however, Entergy Texas' witness, "cannot say with certainty that the ARRs allocated to the Company will exactly match its historical use of the grid" under the current ARR rules. While Entergy Texas tries to downplay any risk by noting that MISO is studying changes to address this problem (which results from ETI not having baseload resources equal to 50 percent of forecasted peak load which potentially limits the number of ARRs that can be nominated in Stage 1A), there is no definitive assurance that congestion risk will be eliminated.
These issues beg the question of how the PUCT can evaluate the transaction's impact on Entergy Texas' cost of service as required, especially in the vacuum of the case where there is testimony and analysis on scenarios where Entergy Texas joins MISO or SPP, but no analysis of what may be the best alternative for Texas customers, which is ERCOT membership.
Matters will have additional analysis of the sought MISO transition and retail choice at Entergy Texas in the coming days.
Copyright 2010-
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