Entergy Texas, Inc.// Office of Public Utility Counsel and Public Utility Commission of Texas v. Public Utility Commission of Texas and Texas Industrial Energy Consumers// Office of Public Utility Counsel and Entergy Texas, Inc.
03-14-00735-CV
| Tex. App. | Jun 2, 2015Background
- Entergy Texas sought reconciliation of fuel costs for June 1, 2009–July 31, 2011 (the reconciliation period) under the Commission’s two-step fuel-factor-and-reconciliation process.
- The interim fuel factor used an older (1997) line-loss study to estimate losses; a concurrent 2010 Commission-approved line-loss study (performed during the reconciliation period) showed different actual losses by customer type.
- The 2010 study indicated approximately $3,981,271 (rounded to $4 million) of fuel expense was attributable to line losses serving wholesale customers rather than retail customers.
- The Public Utility Commission of Texas (Commission) excluded that ~$4 million from amounts Entergy could recover from retail customers in the final fuel reconciliation, because the Commission sets only retail rates while FERC sets wholesale rates.
- Entergy challenged the Commission’s deduction, arguing among other things that applicable Commission rules (e.g., Rule 25.236(e)(3)) and the fuel-factor framework barred the adjustment and that the adjustment caused harm.
- The Commission responded that (1) removing wholesale-related fuel costs from retail recovery is required by the jurisdictional separation between retail (state) and wholesale (FERC) ratemaking, (2) the Commission reasonably relied on the contemporaneous line-loss study, and (3) the order complied with its rules and produced just and reasonable final rates.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Commission reasonably excluded ~$4M of fuel expense from retail recovery because line losses served wholesale customers | Entergy: The exclusion improperly alters allocations/refunds and conflicts with fuel-reconciliation rules; Entergy was harmed | Commission: Fuel costs to serve wholesale customers are not retail costs; Commission may exclude them in reconciliation using current line-loss study | Commission’s approach upheld: exclusion reasonable given jurisdictional separation and reconciliation purpose |
| Whether Rule 25.236(e)(3) (interclass allocation of refunds/surcharges) required including the wholesale losses in retail allocations | Entergy: Rule applies and limits the Commission’s action on interclass allocations/refunds | Commission: Rule governs allocations among retail classes only; it does not authorize imposing wholesale costs on retail customers because Commission lacks wholesale ratemaking jurisdiction | Rule 25.236(e)(3) inapplicable to wholesale costs; Commission decision stands |
| Whether Entergy demonstrated harm or entitlement to recovery from other customers (e.g., wholesale) | Entergy: Adjustment prevents recovery and causes harm because allocation was retroactively changed | Commission: FERC sets wholesale rates; record lacks evidence of recovery at FERC; Commission’s reconciliation does not determine wholesale recovery | No demonstrated harm; Commission’s exclusion did not violate rights absent proof of FERC recovery or entitlement |
Key Cases Cited
- Entergy Gulf States, Inc. v. Pub. Util. Comm’n, 173 S.W.3d 199 (Tex. App.—Austin 2005) (explaining that FERC regulates wholesale rates while the Texas Commission regulates retail rates)