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Texas Industrials Propose Rate Credits Mandated To Be Passed Through By Retail Electric Providers To Customers, As Condition of NextEra Acquisition of Oncor

January 12, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Texas Industrial Energy Consumers have proposed that Oncor be required to provide millions of dollars in rate credits as a condition of its acquisition by NextEra, with retail electric providers required to pass through the credits to customers

To capture certain savings realized by Oncor under the transaction that would otherwise not be seen by customers, TIEC proposed in testimony that the PUC should order, "monthly rate credits of $7.9 million, $18.5 million, $21.8 million, and $21.8 million in each of the first four years [after the merger], respectively, until rates are set following [a future] rate case for use of Oncor's credit profile, order rate credits for 90% of the interest rate savings of 0.0025% of actual debt issuances by Oncor, and order rate credits of 50% of any actual synergy savings achieved."

"All the credits would be allocated on base revenues and there would be a requirement for REPs to pass on the savings," TIEC said

TIEC said under its rate credit proposal the credits could be provided through a rate rider, with, "a requirement for REPs to flow the credit through to customers."

TIEC said that the PUC should condition the transaction on Oncor not being able to come in for a rate case until the later of three years after the merger closes, or July 1, 2020

In separately filed testimony, the Office of Public Utility Counsel also proposed that the PUC condition the transaction on the issuance of bill credits, though OPUC did not explicitly propose a mechanism for the credits.

OPUC did cite both the rate credits issued in the proceeding addressing the EFH leveraged buyout of Oncor (which REPs were only allowed to receive if they committed to pass the credits on to customers), and rate credits in the recent AEP merger proceeding, where credits reduced the revenue requirement with no explicit requirement that REPs pass the savings on to customers.

Docket 46238

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