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ARM: "Radical" Argument From CenterPoint-TDU Concerning TDU Battery Ownership Under PURA Suggests TDUs May, "In Effect," Rebundle

November 19, 2018

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

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Texas stakeholders filed reply comments with the Texas PUC concerning the PUC's review of TDU ownership of batteries and other non-traditional technologies

Stakeholders' positions were previously summarized by EnergyChoiceMatters.com in our story on their initial comments (see story here)

One notable argument from the reply comments was the Alliance for Retail Markets' warning that adopting what ARM termed a "radical" interpretation from CenterPoint Energy Houston Electric (CEHE) suggests that an electric utility or TDU may, in effect, rebundle today in contravention of PURA

In its initial comments, CEHE had stated:

"Even the way PURA defines the various entities involved in the unbundled electric industry is instructive of the legislatures intent regarding any restrictions on utility ownership of equipment and facilities post-unbundling. PURA defines 'exempt wholesale generator,' 'power generation company,' 'power marketer,' and 'retail electric provider' in terms of facilities they may not own. An exempt wholesale generator may not own 'a facility for the transmission of electricity'; a power generation company may not own 'a transmission or distribution facility in this state'; a power marketer may not own 'generation, transmission, or distribution facilities in this state'; and a retail electric provider may not own 'generation assets.' However, PURA does not define either 'electric utility' or 'transmission and distribution utility' in terms of facilities they may not own. PURA's definitions for these entities do not contain any ownership restrictions." [emphasis by CEHE]

Citing this argument from CEHE, ARM said, "CenterPoint also argues that the statutory definitions of entities operating in the post-unbundled electric industry of the ERCOT power region do not specifically impose restrictions on electric utility and TDU ownership of equipment and facilities."

"This is a radical argument if it suggests that an electric utility or TDU may, in effect, rebundle today in contravention of PURA § 39.051," ARM said

"Regardless, the definitions clearly distinguish an electric utility or TDU from other entities, such as a power generation company. A TDU cannot simultaneously act in the capacity of an electric utility and a power generation company under the exclusionary definition of 'electric utility' in PURA § 31.002(6)(C). Likewise, the exclusionary definition of 'power generation company' in PURA 31.002(10)(B)-(C) includes a person that 'does not own a transmission or distribution facility in the state' or 'does not have a certificated service area'. Because PURA § 35.152(b) states that the owner or operator of electric energy storage equipment or facilities classified as generation assets under PURA § 35.152(a) is a power generation company, the statutory definitions plainly preclude TDU ownership of such equipment or facilities serving as generation assets," ARM said

Regarding various proposals for treatment of energy related to any TDU-owned storage other than unaccounted-for-energy (UFE) (see our story here for a discussion of such alternatives), the NRG Companies said that, "Contracting with a REP to avoid UFE is beyond the scope of a utility's 'own needs' and constitutes illegal participation in the market."

The NRG Companies said, "AEP, CenterPoint, and Oncor each suggest that the use of UFE can be mitigated by requiring a utility to meter and purchase electricity used to charge the batteries from a REP. This is not a solution but is instead both self-serving and illegal. Not only would a TDU profit from the wires charges associated with the throughput to charge the batteries but this does not constitute self-use. PURA § 39.105(a) states 'a transmission and distribution utility may not sell electricity or otherwise participate in the market for electricity except for the purpose of buying electricity to serve its own needs.' The 'own needs' phrase has historically meant electricity procured to power facilities such as TDU offices, it is interpreted as energy needed for self-use by the TDU, and not for use on a TDUs distribution system. The Commission should not define the term 'own needs' in a way that would swallow the prohibition against TDUs from engaging in competitive market activity, by finding that their 'needs' can include electricity acquired to participate in wholesale electricity markets."

On this issue, Vistra Energy said, "To account for the electricity consumed and discharged from the energy storage device, the device either must be metered and the charges/discharges settled by its owner (which would result in wholesale sales), or the energy lost in the storage process must be settled as unaccounted for energy (UFE) (resulting in implicit but real sales, since the cost would be imposed on all load in ERCOT). Tellingly, in attempting to offer an alternative to the UFE approach, commenters struggled to find one that did not involve metering the facility, and one opined that without using UFE, it might not be possible for TDUs to lawfully own storage devices."

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