Texas Retail Providers Oppose New Inadvertent Gain Fee Sought By AEP Texas

In a statement of position in AEP Texas' current rate case, the Alliance for Retail Markets opposed a proposed new inadvertent gain fee sought by AEP Texas

As exclusively first reported by EnergyChoiceMatters.com, AEP Texas proposed in its initial filing to institute an Inadvertent Gain Fee of $27, which would be applicable to REPs

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 had said

ARM said, "AEP Texas Inc. (AEP Texas) witness Mr. David A. Hawk requests approval of a new, nonuniform discretionary service fee to recover the cost of resolving the inadvertent gain of a retail customer resulting from an incorrectly submitted move-in or switch transaction. Currently, AEP Texas recovers the cost of resolving inadvertent gains through operating and maintenance (O&M) expenses recovered through base rates, similar to the manner in which it recovers the cost of processing any retail market transaction, including move-in and switch transactions. ARM opposes the adoption of the new inadvertent gain discretionary service fee proposed by Mr. Hawk on the grounds AEP Texas has failed to meet its burden of proving the reasonableness and necessity of the fee."

ARM also addressed the following issues:

Rate Rider Matrix

"While AEP Texas seeks the approval of system-wide transmission and distribution (T&D) rates for the Central and North Divisions in its certificated service territory, certain rate riders will apply only to the Central Division. These include three existing riders—Transition Charge-2 (TC- 2), Transition Charge-3 (TC-3), and Nuclear Decommissioning Charge (NDC) -- and two future riders, System Restoration Charge (SRC) and the associated Accumulated Deferred Federal Income Tax (ADFIT) Credit. Furthermore, certain Intervenor proposals would differentiate rates/credits between the two divisions, such as the Office of Public Utility Counsel witness Mr. William Perea Marcus's recommendation to maintain separate Income Tax Refund riders for each division," ARM said

"To ensure transparency and clarity with respect to the applicability or inapplicability of AEP Texas's rate riders to specific areas within its certificated service territory, including the McAllen/Mission area subject to the proposed transaction in pending Docket No. 49402, ARM requests that the Final Order require AEP Texas to include a matrix in the appropriate section of its Retail Delivery Tariff that communicates any differentiation in the assessment of rates and charges within its service territory. ARM likewise requests that the Final Order require AEP Texas to post this matrix on an easily accessible page on its website," ARM said

Notice Period for and Effective Date of Approved Rates

Noting various requirements for REPs to reflect pricing in EFLs, ARM requested that the effective date of all rates approved in the proceeding be, at a minimum, the 45th day following the issuance date of the final order in the docket. "This notice period takes into consideration the period of time in which compliance tariffs are filed, reviewed, and approved. Ideally, the same effective date should apply to all rates and charges approved in this docket, including rates and credits assessed pursuant to a rider," ARM said

"Furthermore, ARM requests that the effective date coincide with the first day of an AEP Texas monthly billing cycle. Aligning the effective date in this manner will result in each customer in a rate class being assessed the same approved rates during the billing month. Finally, ARM requests that the effective date align with another AEP Texas rate change, if possible, to facilitate greater efficiency in the recalculation of EFL pricing disclosures," ARM said

Customer Concentration Business Risk - Return on Equity

ARM said that, "AEP Texas witness Robert B. Hevert identifies the high degree of concentration of AEP Texas's revenue from retail electric providers (REPs) as a business risk that, in part, justifies his proposed 10.5 percent return on equity (ROE). In view of the financial safeguards in 16 TAC § 25.107, including the ability of a transmission and distribution utility (TDU) such as AEP Texas to mitigate the risk of REP default through the creation of a regulatory asset for future recovery in a rate case, ARM contends this particular argument is not relevant in the determination of AEP Texas's ROE."

Docket 49494