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Texas ALJ Would Overrule City's Finding In Customer Rate Classification Complaint At AEP Texas

April 24, 2018

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

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A proposal for decision from a Texas ALJ would grant an appeal filed by AEP Texas concerning an order from the City of McAllen (City) which had, as a city with original jurisdiction, granted a complaint from L&F Distributors LTD, a customer which had argued that AEP Texas had incorrectly placed one of its metered accounts on the Transition Charges (TC) energy rate instead of the TC demand rate

The City had ordered AEP Texas to: (1) move the Account from the TC energy rate to the TC demand rate; (2) determine and present to L&F for verification the amount of the difference in TCs L&F incurred on the TC energy rate and what L&F would have incurred on the TC demand rate dating back to July 6, 2016; and (3) upon L&F’s verification, reimburse the determined amount to L&F.

AEP appealed the City's order to the Public Utility Commission of Texas. In a proposal for decision in the PUC proceeding, an ALJ has recommended that the Commission grant AEP Texas’s appeal and reverse the City’s decision

According to the PFD, service to the Account was initiated on June 14, 2001. The rate that was initially assigned or selected for the Account was General Service and a demand meter was installed when the Account was initiated. The terms and conditions of that tariff stated that when there were two or more rates available for a certain class of service, the customer had an obligation to designate a choice of rate. Nevertheless, at the time that the Account at issue was initiated, AEP Texas’ predecessor, CPL, had two rates that were available and appropriate to serve the Account -- "General Services" and "Lighting and Power Service." The Account was placed on the General Service rate as an applicable rate. The tariff Terms and Conditions for Service applicable at the time also provided that, "[t]he Company does not assume responsibility for the selection of the customer’s rate or for any failure by the customer to select the rate which will be the lowest or most favorable rate for the customer."

According to the PFD, L&F did not contact or raise any issues of concern regarding the Account with AEP Texas or its predecessors until 2015, over 14 years after service to the Account was initiated.

L&F argues that the General Service rate class was not the appropriate rate class for the Account but rather, the Account should have been placed into AEP’s Lighting and Power Service rate class like the other, similar L&F facilities in the AEP service area. L&F contends that the Account was assigned to an incorrect pre-competition rate class by CPL (later renamed AEP) and this error has resulted in the Account being assigned to an incorrect rate class for TCs. Because the Account’s TC rate classification is based on an erroneous pre-competition rate class, the Account has been improperly classified for purposes of TCs

The ALJ would find that while L&F delves deeply into the principles governing tariff interpretation and attempts to argue that both AEP Texas and Staff have misapplied those principles, "[i]n doing this, however, L&F ignores the most salient point, that being that the Account was initially established under CPL’s tariff, which required the customer to designate the appropriate rate class when more than one was properly applicable and placed an ongoing obligation on the customer to ensure that the proper rate class was in effect for the service delivered when more than one was appropriate."

"AEP Texas argues that the Account was appropriately placed on the bundled General Services rate, prior to unbundling. The Account’s migration and classification to the TC Energy rate class occurred prior to the transition to competition," the ALJ noted

"The determination of the Account’s TC class classification was properly based on applicable law addressing securitization and consistent with the Commission’s directive through its Financing Order in Docket No. 21528," the ALJ said

"The ALJ is persuaded that the critical fact here is that when the Account was initiated, CPL’s tariff placed the burden of choosing the appropriate account on the customer and every tariff since has kept that burden in place. L&F has been in the rate class it was responsible for choosing since the inception of the Account. It had the burden of notifying AEP Texas if it felt a change was appropriate. It presented no evidence that it ever notified AEP Texas that it should be moved to a difference rate class because it was in the incorrect rate class," the PFD states

"The ALJ recommends that the Commission find that AEP Texas demonstrated that the Account, as an existing account at the time of approval of AEP Texas’ TC tariff on November 12, 2001, and its effective date of January 1, 2002, was properly migrated to the TC Energy rate class (Commercial and Small Industrial – Energy) in accordance with the TCs mapping mechanism in the Financing Order approved by the Commission in Docket No. 21528. Therefore, because the Account was properly classified for purposes of TCs to the TC Energy rate class (Commercial and Small Industrial – Energy), no remedy to L&F is warranted," the PFD states

However, to the extent the Commission disagrees with the ALJ's conclusions on the rate classification matter, the PFD does address other questions implicated by such a contrary finding.

First, if the Commission were to find that AEP Texas improperly classified the Account, the ALJ recommends that the Commission find that it has the jurisdiction to change the Account’s classification for purposes of TCs.

Additionally, if the Commission were to find that AEP Texas improperly classified the Account, the ALJ recommends that the Commission find that it has the jurisdiction to order a refund for the difference between the TCs assessed and the TCs that should have been assessed from the date L&F provided notice to AEP Texas forward through the current date.

Docket 46602

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