Texas PUC Dismisses AEP Texas Battery Proposal Without Prejudice, Will Initiate Rulemaking

During today's open meeting, the Public Utility Commission of Texas dismissed, without prejudice, an application from AEP Texas to install a battery storage system on its distribution system, and will instead initiate a rulemaking concerning battery storage

See background on AEP Texas' proposal here

In a memo in advance of today's open meeting, Texas PUC Chairman DeAnn T. Walker had stated, "There are issues in this docket for which I have firm decision points, while there are other issues that I believe the Commission needs additional review and information before they can be ultimately decided. For that reason. I would dismiss the proceeding without prejudice and open a rulemaking project for the Commission to take a wider view of the innovative concepts raised in this docket as well as other potential technological solutions."

"I would like to extend my appreciation to AEP for bringing this case and the issues to the Commission for consideration. The utility has proposed an innovative solution to serve their distribution customers with a battery storage option that potentially could be implemented at a lesser cost to the ratepayers than traditional transmission and distribution options. In the changing environment in which we live, there are new technologies that could hold significant promise to serve Texas customers more reliably and efficiently. I believe we must take a measured review of all potential solutions to resolve infrastructure deficiencies in a reliable and cost effective manner; therefore, I believe opening a separate project will provide additional information that is necessary for the Commission to take the next step on these issues, including consideration of potential impacts on the energy-only wholesale market and competitive retail market," Walker wrote

"One of the issues argued in this proceeding that should be addressed more specifically in the rulemaking project is how to treat the energy consumed by a new technology in the current market construct. I firmly believe that it should not be treated as unaccounted for energy (UFE), which has a specific place in the ERCOT market and should not be applied to energy that can and should be metered. Therefore, the rulemaking should address a method by which any energy necessary for the implementation of a solution can be measured and accounted for within the market. I do not believe the use of UFE to support new distribution solutions is beneficial to the market; therefore, it should not be allowed by the Commission," Walker wrote

At the open meeting, Commissioner Brandy Marty Marquez largely agreed with Walker's memo. Marquez, in particular, shared the concerns regarding treatment of battery energy as UFE

Commissioner Arthur D'Andrea agreed with dismissal and opening a rulemaking, and said he has some concerns about a regulated utility operating in this space, and noted that ultimately, the battery would result in participation in the market in some form