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Texas ALJs Recommend Rejecting CenterPoint-TDU's Proposal To Recover Flat Charges On Per "Meter" Basis, Rather Than Per "Customer"

ALJs Make Recommendation On REPs' Concerns Over Timing Of New CEHE Rates

September 17, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Three Texas ALJs have recommended that the Public Utility Commission of Texas reject the proposal from CenterPoint Energy Houston Electric, LLC ("CenterPoint" or "CEHE") to change its flat monthly charges (customer charge, metering charge) from a "per retail customer" basis to a "per meter" basis, in a proposal for decision in CEHE's rate case

As first reported by, the proposed change had been opposed by retail electric providers

The ALJs recommend that the Commission reject CenterPoint's proposal to assess the Customer and Meter charge on a per-meter rather than the current per-customer basis. "Although the ALJs understand CenterPoint's position and find that it addresses some legitimate concerns, the preponderance of the evidence presented does not support its adoption by the Commission. There is insufficient evidence to find that the alleged subsidization of the above-referenced 600 customers [currently served by multiple meters assigned to a single ESI ID] warrants such a change to the tariff," the ALJs said

The ALJs agreed that current language in CEHE's tariff, which authorizes CEHE to condition the installation of a second meter for a retail customer on the requirement that the second meter is assigned a separate and individual ESI ID, addresses concerns about any subsidization increasing, with the ALJs stating that, "CenterPoint already possesses the tools to stem, if not avoid the problem CenterPoint's proposal for a per-meter charge was meant to fix."

In the aggregate, the ALJs' proposed order would reduce CEHE's flat monthly charges (combined customer and metering) from the current $5.47 per customer per month, to $4.42 per customer per month (slightly lower than the $4.43 originally filed by CEHE)

For a full list of base rate components by customer class under the ALJs' proposal for decision, see page 91 of this link

Concerning the effective date of the new TDU rates, the ALJs said that REPs' concerns regarding timing of the effective date of the new rates, and CEHE's suggestion that the issue is better addressed in a rulemaking, are questions for the Commission

"The ALJs regard questions as to the timing of the Commissioner's final order in this case and whether to initiate a rulemaking to address the REPs' concern as issues for the Commission," the ALJs said

Regarding the allocation of transmission and distribution charges, the ALJs recommend that the Commission: (1) adopt ERCOT 4CP as CenterPoint's method to allocate transmission costs; (2) approve CenterPoint's request to use CEHE 4CP to allocate demand-related distribution costs among its customer classes; and (3) approve CenterPoint's proposed methods for billing the transmission and distribution costs to its customers

The ALJs said that CEHE did not meet its burden to support a deviation from its current allocation method (ERCOT 4CP) for transmission costs in favor of its proposal for use of the CEHE 4CP.

"The evidence shows that the driving force of CenterPoint's transmission costs, which it seeks to allocate among its retail customers, is the wholesale transmission charges it incurs in its role as a DSP. The ALJs also conclude that 16 TAC § 25.192 requires that those costs be incurred based on CenterPoint customers' demand usage in proportion to ERCOT 4CP. CenterPoint, TCPA, and HEB correctly note that 16 TAC § 25.192 controls only how CenterPoint incurs its DSP-related wholesale transmission costs; not how it allocates those costs among its retail customers. However, the ALJs find that consistently matching the allocation of those costs with how they are incurred, based on CenterPoint customers' ERCOT 4CP usage, best achieves cost causation, as compared to CEHE 4CP or an NCP method," the ALJs said

"The evidence does not support the level of concern that some parties expressed regarding customers being able to 'game' the system more easily under a 4CP method, especially ERCOT 4CP. Rather, as TIEC and Staff argued, a customer's curtailment of usage during a 4CP demand period is an example of the system functioning properly. Moreover, in the context of transmission costs incurred by a DSP, the evidence shows that such a curtailment by a DSP's customer would result in total avoidance of those costs (i.e., the DSP will be charged fewer costs due to the decreased demand usage), rather than simply shifting costs to another class," the ALJs said

Apart from the use of ERCOT 4CP discussed above, the ALJs proposed to adopt CEHE's proposal to recover transmission costs -- namely, placing a base amount of transmission costs in base rates, with incremental costs recovered via the TCRF. Industrial customers had opposed this request, favoring recovery of all transmission costs through the TCRF

The ALJs noted that, "CenterPoint proposes to: (1) recover its transmission costs (i.e., the ERCOT charges CenterPoint incurs as a DSP) from customers in base rates through the Transmission charge for each delivery rate schedule; (2) zero out its existing Transmission Cost Recovery Factor (TCRF)..."

"CenterPoint's proposal to utilize the TCRF to recover the incremental differences between CenterPoint's actual transmission charges and the amount of costs included in base rates is consistent with 16 TAC § 25.193 ... CenterPoint's proposal is reasonable except that CenterPoint's TCRF allocation factors should be updated to ERCOT 4CP," the ALJs said

Concerning REP bad debt reflected in base rates, the ALJs recommend reducing the balance of CenterPoint's regulatory asset by $1,058,255 to $511,290, including that amount in rate base, and amortizing it over three years.

The ALJ did not propose a final amount for proposed new Rider UEDIT – Unprotected Excess Deferred Income Tax, which is to refund to REPs the balance of unprotected excess deferred income taxes resulting from federal tax law changes. Parties disagree on how to dispose of $158 million not included in CEHE's proposed Rider UEDIT related to CenterPoint's stranded generation costs and securitized by CenterPoint's wholly-owned bond companies

The ALJs said that, "Issues relating to the $158 million are complicated and insufficient evidence was presented in this case to determine whether all, none, or a portion of the $158 million should be returned to customers ... Other issues relating to the $158 million warrant additional review and possible action in a separate proceeding."

"With the possible exception of the $158 million, CenterPoint correctly calculated the total amount of UEDIT, including protected EDIT that is fully amortized under ARAM, which should be returned to customers," the ALJs said

Docket 49421

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