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AEP Texas Seeks Recovery Of Over $400 Million For Hurricane Restoration Costs, Costs Would Be Collected From Retail Providers

August 7, 2018

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

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AEP Texas Inc. filed a petition with the Public Utility Commission of Texas for a determination by the Commission that AEP Texas's system restoration costs, incurred in connection with Hurricane Harvey and other previous weather-related events within the Central Division of its service area, are reasonable and necessary and eligible for recovery.

The system restoration costs presented in the newly filed case total approximately $415 million (including actual costs incurred through April 30, 2018, additional estimated system restoration costs, estimated carrying costs, estimated litigation expenses, and net of actual insurance proceeds and estimated employee tax retention credits). The application only affects the Central Division of AEP Texas.

In its application, AEP Texas states that it proposes to recover transmission-related and distribution-related system restoration costs through separate mechanisms. AEP did not seek approval in the instant case for the specific mechanism or specific volumetric amounts to be charged to REPs, but will do so in a future case. AEP did, however, state what mechanism it intends to propose in a future filing for such recovery

For distribution-related system restoration costs, the company proposes to obtain a Commission order to support securitization of the Commission-approved amount in a separate proceeding. The revenue necessary to service the securitization bonds will be recovered from Retail Electric Providers (REPs) through a separate charge added to the Tariff for Retail Delivery Service.

AEP Texas said in its application that it plans to file for a financing order in a separate proceeding in order to obtain Commission approval to issue bonds to securitize the distribution costs consistent with PURA Chapter 36, subchapter I, and Chapter 39, Subchapter G. Upon issuance of a financing order in the securitization docket and issuance of bonds securitizing distribution-related system restoration costs, the company will implement a separate rate schedule in the Tariff for Retail Delivery Service to recover from Retail Electric Providers (REPs) revenues sufficient to repay the bonds. That rate schedule will be presented for review in the securitization approval proceeding. Pursuant to PURA section 36.403(j), if securitization proves not to be beneficial for ratepayers, AEP Texas would propose in the alternative to implement an appropriate surcharge mechanism to recover the costs.

In a news release, AEP said that its subsequent filing, seeking actual recovery of the distribution-related costs, will likely be filed early 2019

The company proposes to recover system restoration costs related to the transmission function from distribution service providers (DSPs) through the company's Transmission Cost of Service (TCOS) charges in the AEP Texas-Central Division Tariff for Wholesale Transmission Service. The request to include Commission-approved system restoration costs in TCOS rates will be made in a subsequent separate proceeding, although certain capitalized transmission-related costs were previously requested in an interim TCOS filing.

Docket 48577

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