Sempra Proposes To Offer Bill Credits As Part Of Acquisition Of Oncor (Likely Implemented Via REPs)
Offers Other Retail Market Related Commitments
October 6, 2017 Email This Story Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
In Sempra Energy's application before the Texas PUC to acquire Oncor, Sempra has offered several regulatory commitments related to the retail market, including proposed bill credits resulting from certain savings.
The retail-related commitments largely mirror those previously proposed by Berkshire Hathaway Energy, which had, at such time, led to several REPs to support approval of BHE's application to acquire Oncor
Regarding the bill credits, Sempra does not propose a specific mechanism to provide the credits to customers, but rather agrees to work with retail electric providers concerning the credits.
Specifically, under one of the commitments, Oncor will provide monthly bill credits to electric delivery rates for ultimate credits to customers in an amount equal to 90% of any interest rate savings achieved until final rates are set in the next Oncor base rate case after the Oncor base rate case which is currently before the PUCT. Savings will not be included in credits if already realized in rates. Interest Rate Savings refers to the improvement in Oncor’s borrowing costs post-close relative to those costs as of June 30, 2017 due to improvement in credit ratings and/or improvement in market spreads. Until final rates are set in the next Oncor base rate case after the Oncor base rate case that is currently filed, Oncor will file a report with the Commission every six months detailing any interest rate savings determined by the amount of debt issued by Oncor by at least 0.15% (amounts above 0.15% being based on actual interest rate savings by Oncor) and demonstrating a calculation of the credit.
Notably, Oncor agrees to work in good faith with interested parties, including TXU Energy Retail Company LLC, Texas Energy Association for Marketers, Alliance for Retail Markets, and NRG Companies, "to determine an acceptable method for implementation of any bill credit to effectuate this commitment, as approved by the Commission."
At a minimum, Oncor agrees that it shall provide retail electric providers 45-day notice of the amount of any customer credits (e.g., for each customer class, the amount per kWh or per-customer credit that would apply) prior to the effective date of the credits and shall implement updated bill credits simultaneously with other changes in Oncor’s rates.
In addition, one year after closing, Oncor will present a merger synergy savings analysis to the Commission and provide monthly bill credits to electric rates for inclusion in customer bills in an amount equal to 90% of any synergy savings until final rates are set in the next Oncor base rate proceeding, in which any total synergy savings shall be reflected in Oncor’s rates.
Other notable retail market commitments include:
• Competitive Shopping Platforms. Sempra Energy agrees that neither Oncor nor Oncor's subsidiaries will host or allow the Oncor name, trademark, brand, logo, or other identifying brand features to be used to promote a competitive retail electric shopping website.
• Name/Logo Commitment. Sempra Energy commits to maintaining a name and logo for Oncor that is separate and distinct from the names of Sempra Energy's REP and wholesale generation companies or any other current or future Texas competitive affiliate, if any. For the sake of clarity, any Sempra Energy REP, wholesale generation company, or any other current or future Texas competitive affiliate will not use the Oncor name, trademark, brand, logo, or any other brand identifying features; nor will Oncor engage in joint marketing, advertising, or promotional efforts with any Sempra Energy REP, wholesale generation company, or any other current or future Texas competitive affiliate, in a manner that is inconsistent with the Public Utility Regulatory Act and the Commission's affiliate rules.
• No Recovery of Affiliate REP Bad Debt Commitment. If any Sempra Energy REP is affiliated with Oncor, Oncor will not seek to recover from its customers any costs incurred as a result of a bankruptcy of any Sempra Energy REP.
Note that Sempra currently does not have a REP in the Texas market
Other notable commitments include:
• Texas Utility Commitment. Oncor will continue to operate solely within the state of Texas as a public utility subject to the continuing jurisdiction of the Texas PUC
• Texas PUC Jurisdiction. Oncor and Oncor Holdings will not own, operate, or construct capital assets outside of ERCOT without prior approval from the Commission [Texas PUC] or take any other action that would impair the Commission’s regulatory jurisdiction. Neither Oncor, Oncor Holdings, Sempra Energy nor their respective affiliates will take any action that would subject ERCOT assets to the jurisdiction of the Federal Energy Regulatory Commission (FERC); provided, however, that FERC continues to have jurisdiction under sections 210, 211, and 212 of the Federal Power Act (FPA) and may direct transmission and interconnection services over certain existing facilities outside of ERCOT; provided further that the existing reliability and critical infrastructure standards administered by the North American Electric Reliability Corporation (NERC), through delegation of authority from FERC, may affect the operations of assets that are deemed part of the bulk electric system.