Energy Choice
                            

Matters

Texas PUC's Anderson Questions Whether PURA Gives PUC Authority To Approve Oncor Purchasers' Unique Proposed Structure

January 8, 2016

Email This Story
Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Texas Public Utility Commissioner Kenneth Anderson questioned during yesterday's open meeting whether the Commission has authority under PURA to approve one of the unique aspects of the proposed structure under which various Hunt Consolidated companies would acquire Oncor.

The Hunt companies propose creating two companies -- one which would own the Ocnor assets, and another which would operate the assets. Anderson questioned whether PURA allows the PUC to treat such separate companies, or utilities, as a single utility for ratemaking purposes.

While the issue was put before parties in the preliminary order, Anderson said that parties have not been squarely addressing the issue in the case. Commissioners agreed to accept briefs on the issue, which Commissioners see as a purely legal question.

Specifically, Anderson said, "there is a fundamental component of the applicant's application that really is not being adequately addressed by the parties, and [that] fundamental component of the application is their proposal to separate Oncor into two distinct companies, an asset company and an operating company -- each with very different equity owners, but with affiliated management."

"Both will be utilities under PURA, but it appears only the operating company is to have a CCN," Anderson continued. "The applicants propose that these two companies are to be treated, for ratemaking and other regulatory purposes, as a single utility."

"This proposal raises the question of whether PURA even allows the Commission to treat two completely separate companies as one utility for ratemaking and regulatory purposes," Anderson said. "Where in PURA is such authority? The preliminary order, Item Number 10, made this an issue, although perhaps not clearly enough, but as I said the applicants really have not addressed this question adequately. Merely citing to the Sharyland orders is not support, as these orders all resulted from settlements that explicitly stated that they were not to be precedent. Some of the parties have touched on this issue indirectly by presenting testimony or statements of position asserting that both Oncor Asset Company and Oncor Operating Company should have to obtain a CCN, or that the lease between Oncor Asset Company and Oncor Operating Company actually constitutes a tariff under PURA."

"As an aside, this latter suggestion has, at least to this Commissioner, some interesting complications, but also possible benefits," Anderson said. "If a lease between Oncor Asset Company and Oncor Operating Company is a tariff, then the economic terms of the lease will not be effective unless and until the lease terms are finalized and approved by this Commission in a subsequent proceeding. From my perspective, one of the advantages of determining that the lease is a tariff is to remove the issue of who controls the terms of the lease, including issues around expiration and renewal, because the Commission would have to approve those terms in a contested case before they went into effect. Modifications to the lease would also require the Commission's approval before becoming effective. In addition, while a contract, which is what a lease is, can be voided in a bankruptcy proceeding, a Commission approved tariff may not be."

"However, getting back to the main point, the issue of the nature of the leases presuppose[s] the more fundamental question of whether PURA actually allows the applicants' proposed structure and ratemaking treatment. I believe this is a question of law; it's a question of law for the Commission to answer in the first instance, and it's fundamental to the application," Anderson said

"[T]o me ... these issues present purely legal questions that the Commission has the power to decide. Accordingly, I'd like to ask that the parties brief: 1) whether, and if so how, PURA allows the Commission to treat these two separate utilities as a single utility for ratemaking purposes, and 2) whether the applicants' proposed lease between the Asset Company and the Operating Company constitutes a tariff that is subject to our approval in a subsequent proceeding," Anderson said

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Financial Controller -- Retail Supplier -- Houston
• NEW! -- Channel Marketing Manager -- Retail Supplier -- Houston
• NEW! -- Marketing Assistant -- Retail Provider -- Houston
• NEW! -- Sr. Energy Analyst -- Texas
• NEW! -- Structuring Analyst -- Retail Supplier -- Houston
• NEW! -- Manager, Commercial Client Services -- Retail Supplier -- Houston/DFW
• NEW! -- Account Coordinator
• NEW! -- Customer Account Manager -- Retail Supplier