Texas PUC Requires Study of Consolidated Rates At AEP Texas Central, North Divisions, In Approving Merger

The Public Utility Commission of Texas ordered that AEP Texas file a study concerning the potential introduction of consolidated rates for its AEP Texas Central and AEP Texas North division, which, as adopted by the PUCT yesterday, will be merged into a single entity

As previously reported, the merger itself does not consolidate the rates or tariffs of the AEP Texas divisions. Under the merger, AEP Texas will maintain two distinct divisions -- AEP Texas-Central Division and AEP Texas-North Division, which will maintain their current rates and tariffs. AEP Texas has not proposed, at this time, adopting uniform delivery rates across the merged service areas. Under the merger, the current base rates, surcharges, and discretionary fees charged within TCC's and TNC's certificated territories will remain in effect, with each division maintaining a separate tariff

However, in its final order, the PUCT directed that AEP Texas prepare a study of consolidated rates, and to share it and associated information with parties. This study shall be produced four months prior to the filing of AEP Texas' next base rate case proceeding.

The PUCT's final order rejected, as sought by Staff, a new system-wide System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI) performance standard, which would have required a payment to customers via rebate if the performance standards were not met. PUC Staff had proposed the SAIDI-SAIFI performance standard rebate, and had proposed that the rebate be accomplished by having retail electric providers pass-through the rebate to customers

The final order will not require AEP Texas to seek from FERC an order disclaiming jurisdiction over the merged AEP Texas's wholesale transmission rates for service wholly within ERCOT. Instead, AEP Texas will continue to file rates for transmission services at FERC in accordance with ERCOT regional pricing and terms and conditions as established by the PUCT so long as AEP Texas is a member of ERCOT or until such time as ERCOT is no longer subject to the jurisdiction of the PUCT. The PUCT will determine AEP Texas transmission cost of service in accordance with PURA and its rules.

The final order also finds that the merged AEP Texas will continue to qualify for certain exemption that AEP Texas North had received to retain an ownership interest in the Oklaunion generating facility and certain mothballed power plants.