Entergy Texas Competitive Generation Service Proposal is a "Long Way" from Statute, Anderson Says

The stipulated design for Entergy Texas' Competitive Generation Service (CGS) tariff has come a "long way" from the intent of the statute, PUCT Commissioner Kenneth Anderson said during a hearing yesterday, expressing disappointment concerning certain eligibility limits (38951).

As only reported by Matters, the stipulated Competitive Generation Service tariff would only be available to Large Industrial Power Service (LIPS) customers with a minimum load of 5 MW, with no aggregation of load to reach that threshold.

While Anderson commended the parties for their hard work on the CGS issue that has been before the Commission for several years, Anderson said that it appears that, "everybody has labored mightily to produce a mouse."

"We've come a long way from what I think the intent of the statute was, and where we are today, and I'm not very satisfied with it," Anderson said.

While Anderson did not expound on what he believed the intent of the statute was, the Competitive Generation Service mandate was most recently addressed by the legislature in 2009 in concert with a statutory prohibition on continuing work on the then-current Entergy transition to retail competition (until certain criteria were met). In describing the impetus of the statutory revisions in the 2009 session during a November 2010 PUCT open meeting addressing the CGS tariff, Barry Smitherman, PUCT Chair at the time and who was intimately involved with developing the legislation, said, "in return for Entergy stopping their progress to retail competition, the industrial and large commercial customers wanted the opportunity to be able to shop for power ... and that's reflected in the bill as it was introduced, and as it made its way through committees and both houses."

Earlier in the proceeding there had been interest among non-LIPS large commercial customers, and municipalities, in taking service under the competitive generation service tariff; however, as the proposed design transitioned from an energy to capacity program, such parties lost interest due to their load profile or size.

Anderson sought assurances during the hearing that the Commission would have the ability to expand the program in the future, including the expansion to non-LIPS customers meeting a certain size threshold.

Additionally, a stipulation concerning customer eligibility states that there will be a cap of "10 CGS Purchase Agreements." During the hearing, while parties agreed that the purchase agreement referred to the agreement between a CGS supplier and Entergy, stipulating parties were not of accord if this necessarily meant that the CGS program was limited to 10 customers, or whether a CGS supplier could serve multiple customers under a single CGS purchase agreement. Parties were to further disuses this issue and file a supplement with the Commission.

Regarding the only unresolved issue, which is whether the CGS program results in unrecovered costs to Entergy which Entergy would collect from CGS customers, PUCT Chairman Donna Nelson, while stressing that her opinion was not final, said that, "it would seem to me, that if you follow Entergy's logic in this case, you would end up with an absurd result, and a program that doesn't work."

While Nelson did not address specifics of Entergy's arguments, Entergy has argued that the unrecovered costs which it is authorized to collect under PURA include the test year fixed production costs that would be assigned to a customer in a base rate case if such customer had not switched to competitive generation service (other parties argue these amounts are actually lost revenues which are ineligible for recovery, see 3/27 story). An unopposed stipulation in the case provides that any unrecovered costs would be recovered from customers on the CGS tariff, though Entergy was not a signatory to the stipulation (though Entergy did not oppose it).

Anderson also expressed reservations that even after the Commission addressed the unresolved issues in the case and gave final approval to a CGS tariff, there would still be unresolved issues at the Entergy system operating committee concerning approval of specific CGS suppliers or contracts (which must be Qualifying Facilities connected to the Entergy system).