PUCT Staff Says Transition to Retail Choice at Sharyland's Cap Rock Areas Not Dependent on Resolving Pioneer Driver Unit Configuration

The issue of whether Pioneer Natural Resources USA, Inc.'s Spraberry Driver Unit should be reconfigured from secondary meters to one or more primary meters should not be addressed as part of the transition to retail competition for the former Cap Rock service areas now part of Sharyland Utilities, PUCT Staff and several other parties said in briefs on a certified issue (39592).

Pioneer's Driver Unit load, associated with oil and gas wells, is currently metered with over 660 individual secondary meters. Pioneer says that other oil and gas customers in ERCOT are metered with a single or at most several primary meters.

As only reported by Matters, a non-unanimous stipulation (NUS) would approve a plan to open the former Cap Rock territories to retail choice in 2014. See prior story for background on terms of the NUS and transition to competition

The only party opposing the stipulation is Pioneer, which opposes the NUS on several grounds, but most notably because the NUS would not address reconfiguration of its Driver Unit.

Staff said that the configuration of the Driver Unit, "is an issue between a single customer and the utility, and should not be addressed in this proceeding."

"[W]hile Pioneer makes many claims about the necessity to change the current configuration of the Driver Unit for the transition to competition, the reconfiguration is not dependent on the transition to competition, and the transition can go forward without addressing the reconfiguration," Staff said.

Staff said that the final order in Docket No. 39070, which authorized the transition of two of the former Cap Rock territories into ERCOT, does not require that the retail competition plan proceeding address the Driver Unit configuration issue.

The final order in Docket No. 39070 states: "The Parties agree that issues relating to eligibility of service under the retail delivery tariffs referred to in this finding of fact may be considered in the proceeding in which Sharyland files its Retail Plan to determine whether Sharyland's customers that are ultimately located in ERCOT should be moved to retail competition."

"Staff disagrees with Pioneer's assertion that this requires the issue of 'reconfiguration' to be addressed. Rather, this section refers to an examination of the different tariffs under which Sharyland would provide service. In agreeing to the stipulation in Docket no. 39070, it was Staff s understanding that in the transition to retail competition in ERCOT, the parties may need to 'fit' the current Sharyland tariffs into the pro forma tariff for ERCOT utilities, if Sharyland's current tariffs needed to be changed. In this examination, the parties could determine which customers would be eligible for which tariff, if the tariffs were changed. The NUS addresses this issue through Sharyland's commitment to file an unbundled rate proceeding prior to the transition to competition. In the future rate case, the Commission can determine the proper tariffs and the eligibility for service under the tariffs. However, the final order in Docket No. 39070 does not allow any party to force an examination of the physical configuration of service to a single customer under Cap Rock's existing, pre-competition tariff," Staff said.

Texas Industrial Energy Consumers and the Texas Energy Association for Marketers also said that the Driver Unit configuration issue should not be addressed in the retail competition transition proceeding.

Pioneer said that, "reconfiguration of the Driver Unit is part and parcel of the reconfiguration of Sharyland's System, its metering, and its tariffs in preparation for the transition from SPP to ERCOT and from bundled to unbundled service."

"[R]econfiguration is necessary to remove the competitive barriers imposed by Sharyland's current antiquated metering configuration, to put Pioneer's Unit on a level playing field with other large oil and gas units the Unit will compete with when Sharyland makes the move to ERCOT," Pioneer said.

Staff noted, however, that the service Pioneer receives in Sharyland reflects manner in which service was initiated in the early 1990s when Cap Rock Electric Cooperative established the service. "This important point reflects the fact that this is the intended configuration of the Driver Unit and the configuration through which the unit originally received service. If Pioneer, or Pioneer's predecessor had wanted a different configuration, service could have been configured differently when it was initiated. Now that the configuration is no longer beneficial to Pioneer, Pioneer seeks to have the Commission change the configuration," Staff said.

Pioneer said that the language in Docket No. 39070 stating that "eligibility for service under the retail delivery tariffs" shall be addressed in the retail transition proceeding refers to the Driver Unit's eligibility to take service under the new ERCOT-based primary service tariffs that Sharyland is required to propose.

"Though the language does not expressly refer to the 'Driver Unit' or to 'reconfiguration,' the parties in Docket No. 39070 understood that this language referred to Pioneer's Driver Unit reconfiguration," Pioneer said.

Pioneer further said that waiting to address the reconfiguration in the forthcoming rate case to unbundle Sharyland's tariffs would be too late. "The physical reconfiguration Pioneer seeks must be approved before the 2013 rate case begins to allow Sharyland, Pioneer, and the parties to collect and properly assign in the rate case cost data that includes Pioneer's reconfigured Driver Unit load," Pioneer said.

Opponents of including the reconfiguration issue in the retail transition docket noted that Pioneer had not explicitly addressed costs resulting from reconfiguration, and noted the possibility that these costs would be assigned to other customers. Pioneer said that its proposal for reconfiguration, "contemplates that Pioneer would pay for any costs of reconfiguration Pioneer has not already paid. Thus, there would be no impact on other customers."