2 - Docket No. 54662 – Petition of Highlander SM One, LLC to Amend Crystal Clear Special Utility District’s Certificate of Convenience and Necessity in Hays County by Streamlined Expedited Release. (Final Order) Lori Patrick
The petitioner has requested to withdraw the application.
No responses were filed to the motion.
The petitioner conferred with Crystal Clear, and Crystal Clear does not oppose the withdrawal.
Chairman Gleason recommended that the commission find good cause to allow the withdrawal of the petition.
The motion to find good cause and dismiss the petition without prejudice was entertained, seconded, and approved unanimously.
15 - Docket No. 56328 – Ratepayers’ Appeal of the Decision by Crossroads Utility Services and South Buda Water Control and Improvement District No. 1 to Change Rates. (Final Order) David Grimson
Proposal for decision (PFD) recommends dismissal of the appeal.
No corrections or exceptions were filed concerning the PFD.
Memo from Chairman Gleason to adopt the PFD was consistent with Commission Council's memo.
Motion to adopt the PFD was made, seconded, and approved unanimously.
16 - Docket No. 56354 – Application of Undine, LLC for Authority to Change Rates. (Order on Appeal of Order No. 3) Alex Scheifler
Commission staff appealed order number three.
Previous oral arguments were heard on June 13, no action taken then.
Commission requires test year to be a calendar or fiscal year quarter.
Mayor argued that Undine's test year does not meet requirements.
Commission staff recommended using January 1 to December 31, 2023, and argued operating data was available.
Mayor asked for Undine's application to be denied.
Anders Dimitri Moomilitas, Beach City resident, raised historical issues with utilities.
Complaints about lack of capital improvements despite prior rate increases.
Allegations of intimidation tactics by previous utility company, Niro.
Concerns over discrepancies in Undine's financial data and notices to residents.
Statement by Rick Melcher from Undine minimized the rate increase impact.
Chairman Gleason emphasized burden of proof on Undine.
Consensus among commissioners on memo recommendations.
Motion to grant in part staff's appeal of order number three, consistent with Chairman Gleason’s memo, prevailed.
18 - Docket No. 52728; SOAH Docket No. 473-22-2464 – Application of the City of College Station to Change Rates for Wholesale Transmission Service. (Order on Rehearing) Grace Lager
Discussion on application of the city of College Station to change rates for wholesale transmission service.
Commission's order on rehearing filed on May 23.
City of College Station filed a timely second motion for rehearing.
Commissioner Cobos filed a memo supporting the second motion for rehearing for limited purposes.
Consensus that the clarifications in the memo are appropriate.
Motion to grant the second motion for rehearing and issue an order on rehearing was passed unanimously.
19 - Docket No. 54657; SOAH Docket No. 473-24-04313 – Application of the City of Lubbock Acting By and Through Lubbock Power & Light (LP&L) to Change Rates for Wholesale Transmission Service. (Final Order) Grace Lager
SOA proposal for decision (PFD) was reviewed, with exceptions filed by Lubbock Power and Light, the Office of Public Utility Counsel, and commission staff.
SOA ALJ responded to the exceptions without recommending changes to the PFD.
Commission voted to grant oral argument in this docket.
Commissioner Cobos filed a memo related to the docket.
Chairman proposed giving each party ten minutes for oral arguments.
Ultimate decision on the case deferred to a future open meeting.
Parties involved in the oral arguments: OPUC, LP&L, and commission staff.
Procedural rules were clarified for order of oral argument, with the party bearing the burden of proof allowed to open and close arguments.
Agreement with ALJ that a DSC of 1.25 is appropriate.
LP&L's request for a DSC of 1.5 is contested.
Hold Harmless Payment:
Payment is categorized as debt.
Inclusion of hold harmless payment as basis for debt considered inappropriate.
ALJ's recommendation should uphold previous settlement in docket number 47576.
Short Term Debt Use:
ALJ's recommendation will not cause misuse of short term debt.
LP&L's position could undercut policy changes regarding DSC ratio.
Recovery of PILOT Fees:
Disagreement with ALJ's recommendations on PILOT recovery.
Specific conditions apply for municipalities (MOUs) to recover PILOT fees.
Public Utility Regulatory Act section 35.009 relevant for this case.
LP&L's governing body and its implications discussed.
Absurdity Doctrine and Statute Interpretation:
Disagreement with applying absurdity doctrine in this case.
High bar for applying absurdity doctrine according to case law.
No ambiguity found in the statute related to PILOT recovery.
Conclusion: Julie Davis concluded by urging the commission to find that the PILOT fees should not be recovered and removed from the cash working capital, and offered to take any questions.
Commission staff's opposition to LP&L and Lubbock regarding key issues.
Hold Harmless Payment: Staff argues it should not justify LP&L rate increases.
Short Term Debt Issue: Staff supports ALJ’s decision on short term debt treatment and opposes exceptions proposed by LP&L.
Debt Service Coverage Ratio: Staff supports 1.25x ratio and argues it provides adequate financial cushion.
Assignment of Debt: Staff opposes ALJ’s decision allowing LP&L to assign higher cost debt to transmission function.
Various regulatory and economic arguments against ALJ’s proposal on debt assignment.
Call for deferment of decision to future meeting.
20 - Docket No. 54812; SOAH Docket No. 473-24-00830 – Application of El Paso Electric Company to Update Schedule No. COVID-19 in Compliance with Docket No. 52195. (Final Order) John Kelly
El Paso Electric's application to update schedule number Covid-19 in compliance with docket number 52195
SOA ALJ's letter indicating no recommended changes to the PFD
Concerns discussed about the continued booking of Covid-19 expenses and the lack of an end date in the current order
Need for commission, council, and staff to review the duration of Covid-19 expense bookings
Agreement on approving the application but with a directive to review the appropriateness of the expense moving forward
Discussion on posting project number 50664 for future open meeting
Clarification on taking action on the PFD at this point
Motion to adopt the PFD with recommended changes to the order, which was passed
21 - Docket No. 55255 – Application of Southwestern Public Service Company to Amend Its Certificate of Convenience and Necessity to Construct Generation Facilities in Lamb County, Texas and Lea County, New Mexico; for Good-Cause Exceptions; and for Related Relief. (Final Order) Alex Scheifler
SOA proposal for decision was presented.
All parties filed exceptions, and SOA ALJ responded with a recommendation to add one ordering paragraph to the PFD.
Commission voted to hear oral arguments in this docket.
Andrea Stover represents SPS, with Adrian Rodriguez and Brooke Trammell present.
SPS addresses its CCN application in docket 55255.
SPS is experiencing significant load growth and must meet Southwest Power Pool requirements.
SPS issued an RFP for generation capacity in response to increased load projections and reserve margin requirements.
The RFP, overseen by an independent evaluator, included various generation resources.
SPS selected the best options based on quantitative and qualitative criteria using the Encompass planning model.
Recommended portfolio: life extension of two gas plants, three self-build solar projects, one self-build battery project, and two PPAs.
Benefits of the recommended portfolio: dispatchability, zero fuel costs, and significant tax credits for customers.
SPS supports the PFD's recommendation to approve the solar projects and grant a good cause exception for tax credits.
Three disagreements with the PFD's conclusions: approval of the self-build battery project, rejection of performance guarantees for solar projects, and timing of tax credits to customers.
SPS argues the self-build battery project is critical for dispatchable energy.
Performance guarantees for solar projects are deemed unprecedented and unnecessary.
SPS proposes to flow tax credits through its fuel clause for quicker customer benefits.
Key issue: The necessity of a 36 megawatt battery purchase and its lack of cost-effectiveness and utility compared to a combined cycle gas turbine (CT).
The battery can only provide 24 megawatts of accredited capacity and costs significantly more per kilowatt than a CT, with a shorter useful life (20 years vs. 40 years for a CT).
No energy savings analysis was provided by SPS despite claims that the battery would provide energy arbitrage savings.
Hallmark argued that the solar project also had flaws, including failure to consider new thermal resources, resulting in a high cost per kilowatt hour.
Three solar facilities could offer production tax credits and avoided energy costs but need ratepayer protections such as a cost cap and minimum production guarantee.
Hallmark emphasized that it would be unprecedented to approve a capital-intensive renewable project without such protections.
Hallmark refuted a claim in a letter regarding a partial stipulation in a parallel case, clarifying that retail ratepayer interveners opposed the battery.
Highlighted the broad opposition to the battery across various stakeholders including OPUC, AXM, and TIEC.
Stressed the need for comparing proposed facilities to viable alternatives for cost-effective reliability, which SPS failed to do.
SPS's only considered solar and batteries, not new thermal options like natural gas.
The risk of underperformance and cost overruns for the solar facilities would primarily affect ratepayers; hence, a cost cap is deemed necessary.
The battery was added late in the process and evaluated against other batteries, not alternative resources.
The battery was justified by an outdated load forecast, making it an ill-fit for current needs.
Final argument: Batteries should be reconsidered in future RFP processes with proper analysis.
Staff presented five major issues related to the document.
Weatherization Standard: Staff recommends using ERCOT weatherization standards for Plant X, contrary to SPS’s proposal to follow NERC standards.
Cost Cap: Staff disagrees with PFD and suggests a 100% cost cap of the total estimated costs for the four projects, to prevent overspending.
Prudence Review: Staff agrees with PFD and supports the selection of a third-party consultant to conduct a prudence review.
Production Tax Credits (PTCs): Staff agrees with PFD on treating PTCs as fuel expenses for ratepayers' immediate benefit and recommends preserving credits earned before cost recovery.
Rate Making Issues: Staff supports addressing most rate-making issues in rate proceedings where actual costs are known, except for ensuring ratepayers receive full benefits of PTCs and renewable energy credits in a timely fashion.
Conclusion: Commission staff appreciates the opportunity to present these issues and recommends appropriate measures for the commission's consideration.
Discussion on costs of solar facilities versus Combined Cycle Turbines (CT).
CT may be cheaper in capital costs, but no definitive analysis is available.
Potential for Production Tax Credits (PTCs) and energy savings could make solar a feasible option.
Acceptance of solar facility with adequate cost caps and protections proposed.
SPS's load growth discussed, occurring across systems with significant increase in New Mexico.
SPS's planning reserve margins are considered on a system-wide basis, not jurisdictional.
Concerns raised about cost caps potentially hindering necessary capacity projects.
SPS's projections suggest minimal cost impact to customers until 2036.
Weatherization standards discussion; ERCOT standards considered, but NERC standards deemed sufficient by SP.
Clarification that ERCOT weatherization standards only apply to Texas plant (Plant X) and not those in New Mexico.
22 - Docket No. 55995 – Compliance Filing for CenterPoint Energy Houston Electric, LLC Concerning Rider SRC and ADFIT-Refund of System Restoration Charges. (Final Order) Abbey Jones
Proposed order presented with no corrections or exceptions filed.
Chairman Gleason filed a supportive memo in this docket.
Agreement and support expressed by members for Chairman's memo recommendations.
Motion to modify the proposed order consistent with the memo was entertained and approved.
Motion prevailed unanimously.
25 - Docket No. 56225 – Application of El Paso Electric Company to Update Its Generation Cost Recovery Rider Related to Newman Unit 6. (Preliminary Order) Grace Lager
Presentation of a draft preliminary order.
Chairman Gleason filed a supportive memo in this docket.
All participants agreed with the findings on the briefing issues.
General support for the memo and its consistency with the number of recusals.
Motion to approve the preliminary order consistent with Chairman Gleason's memo was made and seconded.
Approval of the preliminary order was unanimous.
27 - Docket No. 56693 – Application of Entergy Texas, Inc. to Amend Its Certificate of Convenience and Necessity to Construct a Portfolio of Dispatchable Generation Resources. (Preliminary Order) Alex Scheifler
Draft preliminary order was presented for approval.
General consensus among members to approve the draft preliminary order.
Acknowledgement of the necessity for new generation and requirement for competitors to justify costs and need.
Motion to approve the preliminary order was made, seconded, and passed unanimously.
28 - Public comment for matters under the Commission’s jurisdiction but not specifically posted on this agenda.
Speaker: Camille Cook Affiliation: Public Citizen Texas office Main Concerns:
Hurricane Barrel and Centerpoint's response inadequacies.
Recurring storms causing loss of confidence in Centerpoint.
Lack of communication from Centerpoint.
Inadequate reliance on social media for communication.
Calls for improved reliability and resiliency standards.
Speaker: Michelle Christensen Affiliation: Windermere Oaks Water Supply Corporation Main Concerns:
Ongoing mismanagement leading to potential bankruptcy.
Significant legal expenses outweighing budget.
Neglect of crucial utility upgrades.
Non-compliance in filing required reports.
Specific Issues:
Use of funds for legal costs instead of maintenance.
Unaddressed infrastructure issues causing frequent water disruptions.
Speaker: Jamette Rosas Main Concerns:
Utility abandonment by Windermere Oaks Water Supply Corporation.
Failure to maintain and provide adequate facilities.
Neglecting fiduciary responsibilities.
Specific Issues:
Demand for appointment of a temporary manager.
Speaker: Danny Flunker Affiliation: Windermere Oaks Water Supply Corporation Main Concerns:
Unjust and unreasonable rate hikes.
Violation of Texas Public Information Act by board members.
High legal fees expenditures.
Specific Issues:
Lack of financial transparency.
Request for emergency manager appointment.
Speaker: Bruce Sorgen Affiliation: Windermere Oaks Water Supply Corporation Main Concerns:
Mismanagement of land assets.
Lack of proper agenda and transparency in transactions.
High legal costs and improper financial management.
Specific Issues:
Failure to market valuable community assets properly.
Manipulative and non-transparent board decisions.
Call for commission intervention and oversight.
Speaker: Norma Cortez Comment: No additional details provided.
32 - Project No. 55999 – Reports of the Electric Reliability Council of Texas. (Discussion and possible action)
ERCOT issued a market notice on June 21 announcing the cancellation of the summer contract for capacity due to insufficient submissions (21.5 MW).
ERCOT was seeking up to 500 MW of demand response capacity to alleviate transmission constraints.
The decision to cancel was based on the low level of response and the operational complexity and expense.
ERCOT plans to work with stakeholders to create a framework based on lessons learned from prior demand response RFPs.
ERCOT intends to incorporate these lessons into protocols for better understanding and improved processes moving forward.
ERCOT filed an update regarding the good cause exception related to the must-run alternatives for the CPS Bronag units 1 through 3, which are to be retired in March next year.
ERCOT will issue a market notice and follow up with stakeholders regarding the updated timeline.
33 - Project No. 54445 – Review of Protocols Adopted by the Independent Organization. (Discussion and possible action)
Mention that there are no protocols to adopt at this moment.
IMM filed comments earlier in the week in response to the board adopting NPRR1224.
ERCOT given the opportunity to respond to IMM’s comments if deemed appropriate.
ERCOT's response to IMM's comments should ideally be filed a week before the next open meeting, though some leniency is allowed.
Discussion on whether stakeholders should be allowed to respond to the IMM or provide additional comments before considering the NPRR at the July 25 meeting.
General agreement to let ERCOT respond to the IMM and leave it at that.
Confirmation that ERCOT will file comments in response to IMM's filing.
34 - Project No. 54584 – Reliability Standard for the ERCOT Market. (Discussion and possible action) Werner Roth and Chris Brown
Discussion on cost of new entry (CONE) for ERCOT market.
Brattle used reveal preference methodology to assess generation resource technologies.
Recommended reference technology: Aero derivative combustion turbine in Harris County.
Brattle calculated CONE for this turbine at approximately $293 per kilowatt year.
Staff recommends using $162 per kilowatt year value for a conventional combustion turbine.
Current CONE usage tied to peak net margin; formula needs thorough review if reference technology changes.
Reference technology impacts market design discussions on reliability standard and performance credit mechanism (PCM).
Staff provided considerations for future CONE studies, including geographic diversity.
Recommendation: Conduct a CONE study every five years.
Discussion on the useful life of facilities, with consideration for amortization period of 20 vs. 30 years.
Interest in the impacts of levelized real vs. nominal dollar analysis.
Commission to consult with stakeholders and consider further discussions on this topic.
35 - Project No. 55826 – Texas Energy Fund In-ERCOT Generation Loan Program. (Proposal for Publication) David Smeltzer and Allison Fink
Administrative error: The previously adopted rule was incorrectly published on the Secretary of State's website.
Staff proposes re-adopting the rule without changes to correct the administrative error.
Assurance that the correction process affects no ongoing applications or processes.
Clarification for stakeholders: The correct rule is already posted on the commission's website; the Secretary's website will be updated to match.
Motion for publication approval was unanimously passed.
40 - Project No. 55718 – Reliability Plan for the Permian Basin under PURA §39.167. (Discussion and possible action)
Christy Hobbs from ERCOT presented the July monthly report on the Permian Basin transmission reliability study.
The project stems from HB5066 directive to conduct a transmission reliability study for the Permian Basin.
Previous load forecast was over 16,000 MW; new study indicates load growth to nearly 24,000 MW by 2030 and over 26,000 MW by 2038.
The Permian Basin's load will be comparable to major regions like Houston and Dallas-Fort Worth.
The region lacks significant conventional generation requiring both local system improvements and import paths.
Numerous meetings with Transmission Service Providers (TSPs) and a stakeholder process culminated in a final comment period that just closed.
The final report is on track for filing by July 25.
Higher voltage options (500 kV and 765 kV) were studied, including cost estimates and benefits like reduced right-of-ways.
Additional dynamic reactive devices may be required for higher voltage lines; costs will be detailed in the report.
The report will provide options for transmission upgrades, including 345 kV and higher voltage solutions.
The 345 kV solution will be included for the Permian Basin; options will be laid out for commission review rather than a final recommendation.
Other benefits of higher voltage lines, such as system stability and reduced line loss, will be quantified as much as possible.
Supply chain considerations for higher voltage auto transformers are part of the study, including outreach to vendors and utilities.
41 - Project No. 56000 – Firm Fuel Supply Service. (Discussion and possible action) Harika Basaran and Tyler Nicholson
Staff recommended maintaining the status quo from the last two contract periods with certain key parameters unchanged.
Proposal to increase the offer cap price to $12,240/MW based on current fuel oil prices.
Consideration of conducting a new survey to explore market competitiveness and potential new solutions.
Debate over the necessity and value of conducting the survey, with differing opinions on whether it would provide new insights or repeat known information.
Concern over potential risks and practical challenges of expanding firm fuel supply arrangements.
Discussion of possible adjustments to the existing program, including moving towards a cost-based program for certain units.
Clarification that the potential survey is aimed at future contract periods, not the imminent winter season.
Agreement to proceed with the survey while considering potential adjustments based on feedback and additional data points.
53 - Discussion and possible action regarding agency review by Sunset Advisory Commission, operating budget, strategic plan, appropriations request, project assignments, correspondence, staff reports, agency administrative issues, agency organization, fiscal matters and personnel policy.
Staff will host a workshop on the performance credit mechanism parameters based on recent comments received.
The workshop will be on July 25 after the next open meeting.
Additional meetings have been scheduled this year for maximum flexibility due to numerous rules and projects before the commission.
Currently, there are two meetings in July and three scheduled for August (1st, 15th, and 29th).
Agreed to reduce the number of meetings in August to two (15th and 29th) instead of three, canceling the August 1st meeting.