CenterPoint-TDU Reaches Agreement With Stakeholders For Alternative To Immediate Base Rate Proceeding; Rates Charged To REPs To Be Cut Via DCRF Filing

CenterPoint Energy Houston Electric, LLC ("CenterPoint Energy") said in a Texas PUC filing that discussions with stakeholders regarding recent federal tax law changes and the potential for a directive for the TDU to file, within 120 days, a base rate proceeding have resulted in an alternative proposal for the Commission's consideration.

The alternative proposal includes a series of filings to be made by the TDU beginning this month and culminating in the filing of a base rate application in April 2019.

Those filings include:

• A proposed revision to the interim Transmission Cost of Service (TCOS) approved in Docket No. 47610 to be filed no later than February 20, 2018. This filing will: (1) include no incremental capital additions; (2) reflect the change in the federal income tax rate in the determination of the revenue requirement; (3) reduce the company's transmission rate base by the estimated amount of Excess Deferred Federal Income Tax (EDFIT) attributable to the change in Accumulated Deferred Federal Income Tax related to new transmission plant for the period from the last rate case through July 31, 2017; and (4) amortize estimated transmission plant EDFIT related to protected property, plant, and equipment using the Average Rate Assumption Method (ARAM). The company currently estimates that this filing will reduce the company's transmission revenue requirement by approximately $41.6M.

• A Distribution Cost Recovery Factor (DCRF) application to be filed in April 2018. This filing will reflect the change in the federal income tax rate for the company's distribution rate base through December 31, 2017. When the rates associated with this filing become effective, the company currently estimates the revenue requirement will be approximately $20M less than the rates that will otherwise go into effect on September 1, 2018 pursuant to the settlements of the company's 2017 DCRF application and Advanced Metering System (AMS) reconciliation, and approximately $40M less than the revenue requirement that would have been implemented on September 1, 2018 with capital additions through December 2017 at a 35% federal income tax rate.

• A base rate application to be filed no later than April 30, 2019. The test year for this filing will be calendar year 2018, which will avoid the Hurricane Harvey impacts associated with a 2017 test year. "CenterPoint Energy does not intend to and will not request that the Commission extend this filing deadline without the prior agreement or absence of objection from Commission Staff, the Alliance for Retail Markets, the City of Houston and Houston Coalition of Cities, the Gulf Coast Coalition of Cities, the Office of Public Utility Counsel, the Texas Coast Utilities Coalition, and Texas Industrial Energy Consumers," the TDU said

CenterPoint Energy said that it is authorized to represent that Commission Staff, the Office of Public Utility Counsel, the Alliance for Retail Markets, the City of Houston and Houston Coalition of Cities, the Gulf Coast Coalition of Cities, the Texas Coast Utilities Coalition, and the Texas Industrial Energy Consumers support the alternative proposal.

Project 47945