Wednesday, December 19, 2018

PUCT Briefs: Regulators Begin Addressing Utility Tax Savings

AUSTIN, Texas — Taking a cue from other state regulators, the Public Utility Commission on Thursday took its first steps in determining how to share federal corporate tax cuts with ratepayers.

PUC Chair DeAnn Walker directed staff to begin gathering information from utilities and considering legal options to recover the savings. She referred to 1987, “when similar things were done” following tax cuts under President Ronald Reagan.

Southwestern Electric Power Co., Oncor and El Paso Electric have already agreed to claw back tax savings during recent rate-case settlements. Two additional utilities are scheduled to undergo rate reviews in May.

The commission, which hopes to avoid a rulemaking, will take up the issue again during its Jan. 25 open meeting.

Commission to Strengthen Education Efforts with Legislature

The commission agreed with Commissioner Brandy Marty Marquez’ suggestion to “re-up” its efforts to educate state legislators and others about potential price spikes this summer in the wake of recent plant retirements.

“To quote someone else, this is an opportunity for our market’s finest hour,” Marquez said, referring to Winston Churchill. “I think we’re going to be fine … we just need to make sure people are educated about how our market works. People need to know what’s going on and prepare for it, because this is part of a natural cycle.”

Cheaper renewable and gas-fired energy has reduced coal generation’s share of ERCOT’s production to less than a third and led to a wave of coal-fired retirements last year. That, in turn, sliced the ISO’s planning reserve margin to 9.3% for this summer. (See Wind Nearing Coal as ERCOT Ponders Thinning Reserves.)

Walker said she has already briefed Gov. Greg Abbott on possible “price elevations” this summer. She decried comments made last year during PUC-led workshops on scarcity pricing and other price-formation issues in ERCOT’s energy-only market (47199). (See ERCOT, Regulators Discuss Need for Pricing Rule Changes.)

“A lot of people used 47199 as rhetoric to scare people, including us,” Walker said. “We need to say we think we have this.”

Staff Publishes Revisions to IOU Earnings Reports

PUC staff on Friday published its proposal for revising the earnings monitoring reports that investor-owned utilities must file. The reports reflect the 12-month period ending Dec. 31 and are due by May 15.

Staff originally intended to make only minor revisions but added other modifications reflecting recent changes to federal income tax law and eliminating two schedules because of recent legislation.

Invenergy-CSW Energy Joint Venture Approved

The PUC approved a joint venture between Invenergy Renewables and CSW Energy to repower a pair of West Texas wind farms. Invenergy will become a 20.1% owner of the Trent Wind Farm and Desert Sky Wind Farm, with CSW holding on to the remaining 79.9% (47637).

PUCT corporate tax cuts ratepayers

Desert Sky Wind Farm | AEP

The wind farms currently have 207 1.5-MW turbines for a capacity of 310.5 MW.

CSW is a wholly owned subsidiary of American Electric Power, retaining its name following the 2000 merger between AEP and Central and South West.

— Tom Kleckner