AEP Texas Files To Consolidate Central, North Division Rates Into Single Rate Applicable To Both Territories

Proposes To Refund Tax Savings To REPs Via Percent Discount Rather Than Per-Unit Refund

Seeks Authorization To Continue Offering Facilities Rental Service, A Competitive Energy Service

AEP Texas has filed at the Public Utility Commission of Texas a rate case to establish new base rates and make other changes, which would include the consolidation of the Central and North division revenue requirements into a single requirement, resulting in a single rate applicable to both service areas.

AEP Texas proposed to institute an Inadvertent Gain Fee applicable to REPs.

The Inadvertent Gain Fee would be $27.

The Inadvertent Gain Fee, "will recover the costs associated with resolving an inadvertent gain and should reduce the number of occurrences of this issue. The Company currently has to resolve over 700 inadvertent gain issues per month," a witness for AEP Texas said

"An inadvertent gain is when a REP selects an incorrect premises (ESID) from ERCOT when they perform a switch or move in request from a customer. If this action occurs in conjunction with a move in request, it puts an incorrect customer at the premises and incorrectly forces the existing customer out of the premises. If it occurs in conjunction with a switch request, it incorrectly switches the existing customer to the wrong REP," a witness for AEP Texas said

"The Inadvertent Gain fee will be charged to a REP that has selected an incorrect premises from the ERCOT portal for a switch or move-in and the Company is required to correct the inadvertent gain," a witness for AEP Texas said

AEP Texas also filed revisions to various discretionary service charges. Generally, there was no change to the fee for various DSCs (move-in, DNP, etc.) for standard meters. However, some DSCs for premium locations would increase. For example, a Disconnect for Non-payment at a premium location would be $72 under the proposal, versus the current fee of about $57 (varies by service area)

A full list of the revised DSCs, versus the current DSCs, can be found here

As part of the rate case, AEP Texas is proposing to eliminate the 80% demand ratchet provision for Distribution System Charges, including the DCRF charges for the Secondary > 10 kW class consistent with the alternative approaches contemplated by 16 TAC § 25.244, Billing Demand for Certain Utility Customers. Billing kW applicable to Riders TC2, TC3, and NDC will continue to be the higher of the customers NCP kW for their current billing month or 80% of the highest monthly NCP kW established in the 11 months preceding the current billing month

AEP Texas under the filing would consolidate its Central and North divisions into a single rate zone such that a single tariff and set of rates would apply to all customers. Customers would pay the same rates regardless of service area, except that, AEP Central customers alone would continue to be subject to the current Central Division-specific riders including the Transition Cost riders (TC2 and TC3) and the Nuclear Decommissioning Rider (NDC).

AEP Texas proposes to recover all transmission costs through the TCRF, ending the current transmission charge set in base rates

AEP Texas is proposing a clarification that specifies that the Transmission Service charge, including the charges associated with the TCRF Rider, will be based on the customer’s ERCOT average 4CP demand for all new customers with maximum loads over 700 kW taking service under the Secondary Voltage > 10 kW Service and Primary Voltage Service and for all existing customers that were previously billed Transmission Service and TCRF charges based on their 4CP demand. All Transmission Voltage Service customers will be billed under the 4CP designation.

Base rates would include a Customer Charge, Metering Charge and Distribution Service Charge

The following riders would also apply to all customers taking distribution service: TCRF, EECRF (Energy Efficiency Cost Recovery Factor), DCRF (Distribution Cost Recovery Factor, reset to zero under the rate case), MSC (Merger Savings Credit), and a new rider to reflect refunds related to federal tax cuts, ITR (Income Tax Refund Rider). As noted above, Central customers would still be subject to Rider TC-2, TC-3, and NDC

Rather than a volumetric charge, the Income Tax Refund Rider (ITR) would be applied as a percent of a REP's distribution charges.

The monthly Income Tax Refund Class Factor (ITR) provides for an adjustment to the monthly Base Rate Charges of each applicable rate schedule. "The REP on behalf of the Retail Customer, will be credited the Income Tax Refund based on the monthly credit factor for each rate class (ITR Factor) multiplied by the Retail Customer’s monthly base rate revenue during the effective period," the proposed tariff states

Base rate revenue includes, the Customer Charge, the Metering Charge, the Distribution System Charge, and the Facilities Charge for Lighting Customers

The ITR Factors would be:

 Rate Class ITR Factor Residential 3.35% Secondary <= 10 kW 3.35% Secondary > 10 kW 3.35% Primary 3.35% Transmission 3.35% Lighting 3.35% 

AEP Texas also proposes to move energy efficiency costs from base rates to Rider Energy Efficiency Cost Recovery Factor (EECRF)

AEP Texas proposes terminating the Advanced Metering System Cost Recovery Factor Rider (AMSCRF), which is scheduled to terminate in December 2020

For residential customers, the new consolidated base rates for residential customers include a reduction in costs recovered through flat monthly charges for both Central and North customers

For residential service, the consolidated rates would include a combined customer and metering charge of $5.94 per month. The current combined customer and metering charge for Central residential customers is $6.74 per month, with the new rate reflecting an 80¢ decrease. The current combined customer and metering charge for North residential customers is $8.18 per month, with the new rate reflecting a decrease of $2.24

A list of proposed new base rates for all classes, and comparison to prior rates, can be found here

If AEP Texas' filing is approved and implemented through the company’s proposed consolidated rates for Retail Delivery Service, the impact on a residential customer in the Company’s Central Division using 1,000 kilowatt-hours (kWh) per month would be an increase of approximately $4.75 or 9.8% per month. A customer with a retail plan that charges 12.5 cents per kWh would see their rate go to 12.97 cents per kWh, or a 3.8% increase in their total bill, AEP Texas said. The impact on a residential customer in the company’s North Division using 1,000 kWh per month would be a decrease of approximately $5.01 or -10.6 % per month. A customer with a retail plan that charges 12.5 cents per kWh would see their rate decrease to 12.0 cents per kWh, or a 4.0% decrease in their total bill, AEP Texas said These impacts include the impact of the proposed ITR Rider.

AEP Texas sought approval to continue its offering of facilities rental services, as described in tariff schedules 6.1.2.3.6, 6.1.3.3.6 and 6.1.4.3.6, for a period of three years commencing January 1, 2020.

Facilities rental service to retail customers is considered a Competitive Energy Service (CES) under 16 TAC § 25.341(3). 16 TAC § 25.342(d)(1) states that electric utilities may not offer CES, but allows a utility to petition under 16 TAC § 25.243(d) for authority to continue to provide such services. The Commission most recently approved AEP Texas’ request to provide facilities rental services, to existing customers only, in Docket No. 46824, for a period of three years, which expires January 1, 2020.

AEP Texas requested a further three-year continuation of its ability to offer facilities rental service to existing retail customers.

"Renewal is appropriate as the service is valuable and needed by existing customers, there is currently no adequate alternative to AEP Texas’ provision of the service, and the limited extension of the service proposed by the Company will not create or perpetuate a market barrier for new providers of the CES," AEP Texas said