*1 681 Drewery hearings,1 subsequent In the Land Bd. v. South Padre Review praisal as writing in damages evidence 201, submitted Co., (Tex.App.-Corpus 204 767 S.W.2d Aa See writ) (determination by evidence. well as testimonial 1989, of no Christi Irving In v. Tech. Texas vid Thermal liquidated demand value is not property (Tex. 707, Dist, 711 68 S.W.3d dep. was Sch. property value only evidence where 2001, (damages pet.) no App.-Dallas in conclusory allegation plain of value writing in an instrument by proven be petition). tiffs unsworn writing, of instruments absence damages). may prove if the liquidated A claim is evidence testimonial accurately cal to ascertain may be able damages The trial court was amount factual, on the itemized damages trial court from based by culated amount of id. conclusory, allegations by Drewery. See provided to the opposed statement Further, hearings, persons and the instrument plaintiffs petition at Cunningham, Drewery’s 38 account knowledge, writing. necessary Novosad (Tex. accuracy 767, App.-Houston [14th attested president, ant and (suit 2001, For these pet.) damages. no to recover of the amount Dist.] was professional reasons, services was that the evidence amount due we conclude instru for the proven factually claim written sufficient liquidated legally both 388, Resz, Drewery. ments); damages Mantis v. 5 S.W.3d trial court’s award denied), 1999, pet. Appellant’s (Tex.App.-Fort we overrule Consequently, Worth grounds, rev’d on other third issue. 2001, no (Tex.App.-Fort
702-03 Worth (in account, the on a sworn pet.) a suit Disposition an attached sworn account petition with is- Appellant’s each of Having overruled of the sworn account and verified affidavit judgment. sues, the trial court’s we affirm proved by claim written liquidated was a Scholl, instruments); & v.Co. Sheshunoff (Tex.Civ.App.-Hous- 1977), rev’d on other Dist.]
ton [1st (Tex.1978) (no
grounds, 564 S.W.2d required was in suit to recov proof
further con employment for breach of damages
er was damages the claim for
tract because proved by employment
liquidated dis petition). attached to the We
contract Fidelity’s conclusion
agree with We unliquidated. here are
damages however, evidence of that sufficient
agree, CHRISTI, CITIES OF CORPUS originally damages was liquidated al.,1 Appellants, et petitions. file with the Thus, the trial court Id. at 694. a new trial. judgments presumed are not 1. Default Clubs, considering admitted evidence did not err in Inc. v. First Health final. Houston juris hearing (Tex. since it retained second at the Appeals, 722 S.W.2d Court of rendering judgment. prior final 1986) (default addressing diction dam judgment not final). rendering court age was not A claim appeal are participating in this ju cities judgment 1. The interlocutory default retains Texas Central municipalities AEP served judgment aside and order to set the risdiction *2 Company; AEP Texas Central Public Texas;
Utility Energy, Inc.,
Constellation New
Cross-Appellants,
PUBLIC UTILITY COMMISSION OF and AEP Texas
TEXAS Central
Company, Appellees, Utility Texas;
Public Commission of Christi, al.; Corpus
Cities of et Office Utility Counsel; Public Con Inc., Cross-Ap Energy,
stellation New
pellees.
Nos. 03-03-00428-CV. Texas, Appeals
Court of
Austin.
Sept. 2005. Odem, Grove, Pearsall, Mercedes, Orange Company, the transmission and distribution Pleasanton, Aransas, Isabel, Port utility formerly Power and Port Port owned Central Lavaca, Alice, Raymondville, Light Viejo, Refu- Company, and Aransas Rancho include Roma, Benito, Hondo, Pass, Beeville, Wood, Springs, gio, Rockport, San Camp Carrizo Rio Taft, Christi, Cotulla, Juan, Sinton, Charlotte, Dilley, Smiley, Corpus San and Victoria. Ea- Pass, Edna, Ganado, George City Corpus gle Edinburg, Christi has served West, city litigation. We refer to Gregory, Harlingen, Ingleside, Karnes "lead” in this will Laredo, Feria, collectively Leakey, municipalities as "the Cit- City, Kingsville, La these Fresnos, Mathis, McAllen, Lyford, Lytle, ies.” Los *3 Porter, Pauling Kristen Steven A. Blevins, Gosselink, Doyle, LLoyd, Ro- Townsend, PC, Austin, chelle, & Baldwin Christi, al. for et Corpus Cities McCarroll, L.L.P, Reeder, Brown Chris Austin, Energy, Inc. for New Constellation Rourke, Jr., K. Office of James Public Counsel, Austin, Utility for Office Public Utility Counsel. Brewer,
Larry Rhonda Colbert W. Ricketts, Ryan, Philip Bracewell & Pat- F. terson, L.L.P., Duggins, John F. David C. PC, Williams, Clark, Thomas & Winters Lewis, Austin, Marc E. Assistant General Counsel, Compa- Electric Power American IN, Wayne, for ny Fort Corp., Service Company. AEP Texas Central Fraser, Gen., Douglas Atty. rates, Asst. ing regulation Natu- operations, and Div., Austin, ral Resources for Public Utili- public services and that interest ty Commission of Texas. that, electric requires markets except for transmission and distribution Vanmiddlesworth, Rex D. D. Karen recovery services and for the of stranded Whitt, Kurth, LLP, Austin, Andrews prices electric services and their Energy Texas Industrial Consumers. should be determined customer choices SMITH, Before Justices B.A. and the normal of competition,” forces PATTERSON and PEMBERTON. 1999 the comprehen enacted legislation commonly sive known —
OPINION
number,
bill
providing
S.B.
for an or
7—
*4
dered transition from Texas’s former
Opinion by Justice PEMBERTON.
wholly regulated electricity market
to a
presents
This case
three sets of issues
more
electricity
retail
market.
arising from Texas’s transition from a
27, 1999,
May
R.S.,
See Act of
Leg.,
76th
wholly regulated
electricity
retail
market.
405,
2543,
ch.
1999 Tex. Gen. Laws
2543-
First, we will consider the extent to which
(codified
at Tex. Util.Code Ann.
Utility
power
Public
Commission had
(West
§§
Supp.2004-05));
39.001-.910
to order electric
alleged
utilities
refund
39.001(a);
§
Tex. UtiLCode Ann.
In re
“over-mitigation”
of their stranded
Co.,
(Tex.
130,
TXU Elec.
67 S.W.3d
as determined from
computer
interim
2001)
C.J.,
(Phillips,
concurring).
In sev
models,
true-up pro-
before the final 2004
eral
prior opinions,
of our
we have de
Second,
ceedings.
we will determine
steps
scribed the basic
in this transition.
whether substantial evidence supports the
See, e.g.,
Energy,
Reliant
Inc. v. Public
Commission’s characterization of Nuclear
Comm’n,
129,
Util.
101 S.W.3d
133-36
(NEIL)
Electric Insurance Limited
ac-
2003),
(Tex.App.-Austin
rev’d in part sub
count
generation-related
balances as
rath-
Energy,
nom CenterPoint
Inc. v. Public
Third,
er than transmission-related.
we
Comm’n,
(Tex.2004);
Util.
tion company, transmission and distribu GENERAL BACKGROUND utility, provider. tion and a retail electric 39.051(b). § Finding production Tex. Ann. Power “the and sale Util.Code electricity monopoly generation companies provide is not a wholesale warrant- 39.251(7), code, id. the utilities competition with services generation generally described entering market. has generators supreme court other C.J., TXU, (Phillips, value of a at 132 of the book portion re “as the them providers concurring). Retail electric projected that is assets utility’s generation (REPs) service to retail electric provide that are through rates unrecovered to be competition customers TXU, end-use In re prices.” on market based Transmission and dis Id. other REPs. C.J., concurring) (Phillips, at 132 (TDUs) main own tribution utilities Public Corpus Christi City (quoting electric transport used to tain the “wires” Tex., 231, 238- Util. Comm’n of companies power generation ity from (Tex.2001)). of strand- largest part in the and retail consumers to all REPs to investments attributable ed costs are Id. Be service area. utility’s geographic id. power plants. See nuclear regard continued to cause the byproduct potential costs are Stranded respec monopolies within their TDU’s former rate- from the of Texas’s transition areas, their rates continued tive service competi- electricity system regulated See regulated the Commission. system, the Com- (b). the former tion. Under 39.001(a), A Tex. UtiLCode enable set rates that would mission could through the cre “unbundle” utility could *5 from consumers com to recover separate of unaffiliated utilities ation either affiliated assets. companies generation-related separate or of costs of their panies company in- holding a common made considerable accordingly owned Utilities (“affiliated companies” or “unbundled” assets generation-related vestments or the sale of assets. companies), recov- being able to expectation of 39.051(c). § Id. and of these investments er the costs Ener- See CenterPoint reasonable return. aspects legislatively-man- of the Other Tex., v. Public Util. Comm’n gy, Inc. competitive to a more dated transition (Tex.2004). Theoretical- gave rise to the issues electricity market would, upon of these ly, the existence of these appeal. explore We each this signif- competition, create beginning is- corresponding with its aspects below incum- disadvantages for sues. icant en- new market relative to utilities bent COSTS STRANDED entrants new market Because the trants. (AEP) Company AEP Texas Central genera- have these embedded would not concerning appeal brings three issues cost re- opportunity tion-related costs regarding order strand- the Commission’s return, pricing their in the rate flected nature first review the ed costs. We will than to be lower would tend structure and the Commission’s of stranded costs turn, This, in incumbent utilities. those of to refund “over- decision to order credits price market entrants enable new would true-up. We mitigation” before the incum- at which electricity below level of AEP’s specifics then turn to will their invest- could recover utilities bent issues. Hence, utilities incumbent See id. ments. Nature of stranded costs charge uncompetitive have to would either absorb these simply or higher rates pre- “stranded costs” have
Although
id. at 82-83.2
costs.” See
39 “stranded
cise,
chapter
under
definition
technical
CenterPoint,
recognized
in funda-
Legislature
The
explained in
2. As
industry,
alter-
changing
it was
mentally
legislature
gave
The
thus
careful atten-
phase,
Under the first
which ended on
31, 2001,
December
the Commission
tion to
froze
the issue of stranded costs when
(“freeze period”).
retail electric rates
Tex.
considering deregulation
electricity
39.052;
TXU,
§
Util.Code Ann.
In re
April
Report
market. The
C.J.,
(Phillips,
S.W.3d at 133
concurring).
Texas Senate Interim Committee on Elec-
Utilities that had been identified
having
Utility
tric
Restructuring contained an es-
potential stranded costs in the 1998 ECOM
of projected potential
timate
Report were
to “mitigate”
allowed
them
costs, described as “excess cost over mar-
(1) shifting depreciation from the transmis-
ket,”
“ECOM,”
or
for nine Texas incum-
delivery
generating
sion and
assets to the
31, 2001,
bent utilities as of December
(West
assets,
Tex. Util.Code Ann. 39.256
day
last
before retail competition would
(2)
Supp.2004-05),
accelerating
begin.
Report”
These “1998 ECOM
esti-
recovery
cost
year
stranded costs each
mates were derived from computer models
through the
legislatively-approved
use of
factors,
took account of
such as the
(West
“tools.” Id.
Supp.2004-05);
39.254
cost
power generating
of fuel used to
§§
Among
see also id.
39.251-.265.
plants,
impact
that would
the market value
offered,
legislature
tools
set means for
generating
assets.
computing during the
period
rate-freeze
revenues,
positive annual
annual
that,
among
determined
§§
capital.
invested
Id.
39.257-259.
its other
findings
foundational
regarding
Under the second phase,
January
from
electricity deregulation,
public
it is in the
1, 2002,
31, 2003,
to December
the Com-
interest to “allow utilities with uneconomic
mission was to
determine whether
generation-related
purchased
assets and
stranded costs remained to be recovered
power contracts to recover the reasonable
by entering updated data into the ECOM
*6
excess costs over
market
those assets
39.201(a), (b)(3),
(h);
§
model. Id.
(g),
purchase power
and
contracts.” Tex. Util.
TXU,
C.J.,
(Phillips,
re
at 133
39.001(b)(2).
§Ann.
Code
It established a
calculations,
concurring). Based on these
three-phase regulatory program intended
the Commission was
authorized
consider
recovering
to assist incumbent utilities in
any remaining
setting
stranded costs in
eliminating
or
what otherwise would have
“competition
charge”
transition
or
been stranded
39.201(b)(3).
§ Ann.
“CTC.” Tex. Util.Code
TXU,
market.
In re
Identified costs before the over-recovery of stranded likely to have stranded one of the utilities However, true-ups. it determined implemented procedures AEP had order utilities to refund by reducing that it could stranded costs mitigate its it had de- over-recovery of stranded costs by amount value of its assets the book ECOM esti- through interim a result of termined earnings. excess As of its mates, in the first relying language up- evidentiary hearings input and the the 2004 model, governing of the section in Octo- sentence dated data into the ECOM utility ... electric “[a]n 2001 the Commission revised ber permitted not be to overrecover neg- for AEP to be stranded-cost estimate words, through procedures established $615,066 In other ative million.5 application this section or that the con- the Commission determined by the other provided measures efforts would of the tinuation of AEP’s Tex. $615,066 chapter.”6 this See Util. sections of over-mitigation result in an C.J., concurring). Baker (Phillips, Justice part, between the 1998 5. the difference Rodriguez the court had felt that be related to an and Justice and 2001 estimates could surge gas prices a state board or unprojected jurisdiction be- to mandamus in natural no J., (Baker, years, the market con- tween those which affected Id. at 136-45 commission. Brister, generating plants serving relative to price nuclear at the time curring). Justice gas. In re TXU powered sitting by assign- natural See appeals' those on the court Co., (Tex.2001) ment, juris- Elec. court did have that the believed C.J., concurring). (Phillips, had the Commission diction but that mitigation efforts. Id. at 145- order reverse time, peti- Co. filed a 6. At that TXU Electric Hecht, J., (Brister, concurring). Justice *8 supreme mandamus in the tion for writ of Justice Jefferson joined then-associate court, arguing lacked that the Commission Owen, juris- argued had that the court Justice mitigation credits jurisdiction to order reverse lacked statu- and that the Commission diction See In interim estimates. based on the 2001 mitigation ef- tory authority to order reverse 130, (Tex. Co., 67 S.W.3d 131 re TXU Elec. at forts. Id. 150-71. 2001) curiam). Six (per members TXU,only justices four reached deny rea- In In re to relief for different court voted regarding the Com- we here Phillips, joined issues confront Chief sons. Id. Justice mitigation others, power to order reverse mission's not have exercised manda- two would estimates. Al- cost based on interim stranded he believed TXUhad jurisdiction because mus authority, strictly binding though thus not remedy Id. at 132-36 adequate at law. an
689 39.262(a). determined, based on the individ- Commission had Code Ann. AEP’s case, calculations, to have been ual the Commission then ordered 2001 ECOM argues AEP AEP that the to refund those amounts over-recovered. next (“excess mitigation requiring credit credit” or “over- in over-miti- district court erred credit”) mitigation in transmission and dis- paid to end-use con- gation credits to be REPs, Third, tribution rates to the amortized than to the REPs. sumers rather that, if years. over five It also decided chap- that the Commission violated asserts AEP is found at the 2004 to have ordering that AEP not be ter 39 would having stranded costs after refunded any to interest on amount it had entitled amounts, AEP “over-mitigated” could AEP agree over-refunded. We with that recover interest on the over-refunded authority to re- the Commission lacked amounts. calculated in quire a refund amounts estimates to have been interim ECOM appealed
AEP the Commission’s orders below, over-mitigated. explained As we court, claiming to the district that third need not reach AEP’s second or is- statutory authority Commission lacked in light disposition.7 sues of this mitigation halt or to order a refund of over-mitigation amounts that it of review would Standard be any entitled interest on amount de- powers of the Commission termined to be over-refunded at its 2004 powers delegated by legis include the true-up. The Cities and the Office of the express statutory lature in clear and lan (OPC) Utility Public appealed, Council also guage, together implied powers claiming that the refund of a over- TDU’s necessary func perform that be mitigation properly ought paid to be duty delegated by legislature. tion or end-use residential and small commercial Southwest, GTE Inc. v. Public Util. consumers, not REPs. The district court Comm’n, 7, (Tex.App.-Austin ruled that chapter requires over-mitiga- 1999, pet.). may imply no that We tion credits to paid directly to the con- legislature agency intended that would sumer rather than the REP and affirmed reasonably power have whatever would be the Commission’s regarding orders all oth- necessary perform to fulfill a function or er issues. AEP appeals now the district duty expressly has judgment resulting court’s from the Com- Id.; placed agency. see also Kawa mission’s stranded cost order. Corp. saki Motors U.S.A. v. Texas Motor Discussion (Tex. Comm’n, Vehicle 1993, writ); Dep’t brings App.-Austin AEP three It no Texas appeal. issues on Ctrs., argues first that Human the Commission exceeded Servs. Christian Care Inc., statutory authority requiring (Tex.App.-Austin AEP to denied). However, refund stranded cost amounts if writ even speaking, opinions provide especially joins these REP. AEP ar- filiated Constellation helpful background regarding applicable guing requiring that the district court erred in statutes, the nature of stranded and the over-mitigation paid credits to be to end-use parameters regarding of the debate Commis- REPs. It also consumers rather than to the order sion reverse efforts. argued applying over-mitigation credits purposes, opinions For these we cite these against to REPs does not discriminate resi- extensively foregoing in the discussion. commercial dential and small customers permit does not XDUsto over-recover strand- reasons, separate- 7. For the same we will not *9 joining ed thus AEP’s second issue. ly presented by cross- address three issues appellant Energy, Constellation New an unaf-
690 Dist., 81 agency Appraisal that an created v. Travis Cent. S.W.3d legislature intends 2002, 869, (Tex.App.-Austin pet. de 873 expertise regula in a certain to centralize nied); Quick, 930 City Austin v. S.W.2d tory given large degree area of “be of 1996) 678, (citing (Tex.App.-Austin 687 in the methods it uses to accom latitude Garrett, Inc., 618 Cameron v. Terrell & function,” Mun. regulatory Texas plish 535, (Tex.1981)), Quick aff'd, v. 540 S.W.2d Comm’n, 150 Agency Power v. Public Util. Austin, (Tex.1999); 109 City 7 S.W.3d 2004, 579, (Tex.App.-Austin S.W.3d 586 of Singer, 2A J. Sutherland see also Norman not, in granted), agency may pet. (6th § 47.25 Statutory Construction implied powers, exercise what is guise of ed.2000). determining scope In of the effectively power, a new or a con authority, we must read Commission’s statute, theory that such trary to a underly PURA as a whole discover agency’s pur for the expedient exercise is ing legislative intent. State v. Public Util. Bell pose, City Austin v. Southwestern of (Tex.1994); Comm’n, 190, 196 883 S.W.2d Co., (Tex.2002), 434, 92 441 nor Tel. S.W.3d Managers Building & Texas Owners statutory lan may specific it contravene Comm’n, 110 Ass’n v. Public Util. S.W.3d general objec guage, run counter 524, 2003, pet. de (Tex.App.-Austin 532-33 statute, impose tives of the or additional nied). weight to how the Com giveWe conditions, burdens, in ex or restrictions only powers, its own but interprets mission of or inconsistent with the relevant cess and not if that is reasonable interpretation statutory provisions. State v. Public Util. the statute. Southwest inconsistent with Comm’n, 314, (Tex.App. 131 321 S.W.3d 441-42; Bell, City ern 92 S.W.3d at denied). 2004, pet. Austin Church, Baptist 152 Hyde Austin v. Park scope To determine 2004, 162, no (Tex.App.-Austin 166 S.W.3d case, must powers this we Commission’s pet.). provisions chapter
construe the relevant power to order refunds of Commission Statutory con of the utilities code. 39 over-recovery cost stranded law, which we question struction is a Forlenza, In re 140 review de novo. issue, as in In re In AEP’s first (Tex.2004); McIntyre v. S.W.3d TXU, not whether stranded question is (Tex.2003). Ramirez, 741, 745 109 S.W.3d See 67 costs be over-recovered. statutory provision, interpreting "When (Hecht, J., dissenting). It is at 151 legisla must ascertain and effectuate we that, true-up, at least at the clear Protective & Dep’t tive intent. Tex. finally determined that are “[utilities Care, Mega Child Regulatory Servs. entitled to costs will be have stranded (Tex.2004). Inc., costs and no more.” only recover those intent, may we con ascertaining legislative Id.; also Tex. UtiLCode see remedied, the sought 39.262(a). to be Rather, sider the evil question present consequences of legislative history, and the the Commission can ed here is whether Liberty See particular utility’s ongoing construction. in a stranded intervene Contractors, true-up and Mut. Ins. Co. v. Garrison the 2004 cost before (Tex.1998). Inc., Fur on interim estimates compel refunds based word, ther, argues AEP every phrase, of stranded costs. we read until it makes its as if it were delib must wait expression a statute ex final of AEP’s the words determination erately presume chosen and proceedings be pur are done so cluded from the statute “actual values” fore it can reconcile Realty P’ship Ltd. posefully. Gables See *10 utility mitigation natively, require stranded costs with its efforts each to refund from the 1998 estimates. costs. Tex. derived ECOM over-recovered stranded Util. 39.201(i), In response, argues the Commission §§ .262. Code legislature’s prohibition on over-recov- follow- Only true-up phase, in the 2004 ery only appears stranded costs—which utility’s ing the final calculation of each governing the section the 2004 true- costs, legislature explicit- stranded did the up implied authority for it to ad- —confers ly over-recovery of stranded contemplate limit, just, or reverse utilities’ Likewise, the costs. See id. admonish- true-up, efforts before the 2004 at which ... utility ment that electric “[a]n point finally any it would reconcile over- or permitted to overrecover stranded under-mitigation as determined in that costs,” relies, on which the Commission proceeding. analysis Our of the text and appears solely governing in the statute structure of the compels relevant statutes true-up. §§ id. 39.201-.262. In See agree us to with AEP. contrast, did not mention To policy effectuate its allow utilities during role for the Commission at all to recover their legisla stranded § mitigation phase. the initial Id. 39.254. supreme ture established what the court As for phase, the second the sole role the “comprehensive has described as legislature provided for the Commission scheme” for stranded recovery. cost See impose permit was to the CTC to addi- 39.201(b)(2); § Tex. UtiLCode Ann. Cen recovery tional stranded cost as warranted terPoint, 143 at legisla S.W.3d 83. The estimates; legisla- the 2001 ECOM ture presented started with data 1998 in nothing ture said ordering about refunds project ECOM administrative model to any over-recovery through ascertained might which utilities have costs juncture. § estimates at that Id. 39.201. on December 2001. Tex. UtiLCode statutes, The literal text of these the com- provided Ann. 39.254. It then “a number prehensiveness of this stranded cost recov- utility mitigate tools to an electric CenterPoint, scheme, er see at stranded costs” between 1999 and the 2004 83, prohibition and the fact true-up. Id. It mandated that each iden against over-recovery of ap- stranded costs utility tified use these tools “to reduce the pears only provision governing in the net book value of ... its stranded costs legisla- convinces us that the However, year.” each Id. it provided no ture did not intend to on the confer during phase. role for the Commission this Commission order refunds of stranded prepare Commission was to cost over-recoveries based on interim esti- revised stranded cost estimates enter true-up. mates before the 2004 and, ing 2001 data into the if ECOM model support find further for our conclu- We necessary, utility allow the to recover unique sion when we consider the nature stranded costs Id. CTC. difficulty of stranded and the of their 39.201; TXU, In re at 133 measurement. See Tex. Gov’t Code Ann. C.J., (Phillips, concurring). In the third (West 1998) (code § 311.023 construction true-up, and final the 2004 phase, act). is, Conceptually, stranded costs under essentially, up to settle chapter 39 of the utilities code exist as of utility’s based on a final calculation of each and, warranted, day of retail opening the last before permit stranded costs or, recovery competition, additional stranded cost alter December 2001. Tex. *11 692 39.251(7).8 TXU, However, (Hecht, J., ac- 67
Util.Code Ann. S.W.3d at 163 dissent- ing). curate of such could take calculation costs
years,
utility may
as a
it
know whether
Against
backdrop,
legislature
this
the
of
has been able to recover the millions
mandated
2004
calculation
true-up
that the
spent
generation-related
dollars
on a
asset
final, controlling
would be
calculation
the
by
it
generated
until
sells the last kilowatt
utility’s
of each
stranded costs.
In ex
TXU,
at
that asset. See In re
67 S.W.3d
change
accuracy
for
in the
sacrificing some
(“it
J.,
(Brister,
concurring)
147
will be
legisla
calculation of stranded
the
impossible to tell
provided finality regarding
whether income stream ture
the issue
to facilitate the transition
true-up
[on
estimates
which
stranded cost
id.;
electricity
see
market
2008. See
will
based]
estimates
are accurate until
39.262(a);
Tex.
Cen
also
UtihCode
from
is
decades
now when the last kilowatt
143
101-02
Energy,
terPoint
S.W.3d at
sold.”).9 Any estimates of
costs
stranded
(Brister, J.,
TXU,
dissenting);
In re
67
1998,
in
made before that time—whether
(Brister, J., concurring).10
at
S.W.3d
147
2001, or
in
true-up
even
the 2004
—will
statute, then,
The
reflects the intent
inaccurate,
inherently
especially
thus be
calculation,
legislature
only
that
this final
they
on
fluctuat-
depend myriad,
because
“kaleidoscopic”
not the
com
interim
CenterPoint,
ing economic variables. See
estimates, could
as the basis
puter
serve
(Brister, J., dissenting);
vorces the stranded cost prohibition from its context within the NEIL MEMBER ACCOUNT statutory framework and overlooks the BALANCES role of the final 2004 calculations present now turn to the issues We in ensuring a clear and certain basis by appeal begin ed the Cities on guide any Commission-ordered refunds first, they argue that their which agree overrecovered stranded costs. We characterizing erred in AEP’s with the chapter dissent that 39 does not genera NEIL account balance as member permit utilities the “windfall” of overrecov- tion-related rather than as an asset of ered stranded not but whether or AEP’s transmission and distribution busi actually such a windfall has occurred is to ness. be determined in true-up, the 2004 upon continually shifting, based “kaleido- Background scopic” interim estimates. The 2004 true- calculations, fact,
up
Electric Insurance Limited is a
belie the earli-
Nuclear
company operated
er estimates of
mutual
insurance
“windfalls”
the dissent
utilities,
AEP,
hardly
including
which own nuclear
“ambiguous”
decries. This is
an
scheme,
policies covering
It
statutory
urges,
power plants.
as the dissent
issues
Moreover,
in-
damage
much
and losses caused
property
less an “absurd” one.
we
exceedingly
apply terruptions
power plants.
should be
hesitant
at nuclear
and control
justify
expansion
agen-
such labels to
NEIL’s 79 members own
where,
here,
NEIL,
divi-
cy power
rights
policyholder
as
have
to its
Energy,
Util.
11. We assume that the Commission will con-
of CenterPoint
Inc.
Public
Tex.,
(Tex.2004).
implications
case the
Comm’n
Carpenter result, we must affirm under As asset, not an because represent surplus, Scheffey, rule. See substantial-evidence paid. rates In they premium result from the Cit- at 436. We overrule words, charges NEIL insurance other ies’ first issue. been determined to be rates have purpose for the prudent” “reasonable and for nuclear acci- providing insurance DEMAND CHARGES dents. REPs receive the benefit issue, the Cities In their second addition, coverage.
insurance distribu- in autho argue that the Commission erred surplus *15 NEIL are made tions from the charges in excess of those rizing demand premi- form of reduction in rates of the rate under AEP’s bundled be charged ums, money in form of transfers. allegedly shifted the cause the Commission to the Cities when proof burden of findings several The Commission made the utili should have remained on burden First, it determined that in its order. charges any demand ties and because generation-related are NEIL assets unbun- greater approved than those before genera- the unbundled thus remain with in competition vio dling negatively impact Second, the Commission company. tion 39.001(d) utilities of the lation of section ratepayers REP have received found that code. premiums from the NEIL benefits risk reduction and have received Background through NEIL expenses for rate
credits “the Finally, it noted that distributions. bill con- A customer’s demand-metered in the the asset be determined value of will for charge, charge a of a customer sists generation true-up proceeding at the for electricity, charge and a “de- delivered Therefore, the Commis- valuation.” plant of a is a measurement mand.” Demand AEP’s NEIL sion concluded utility’s on the actual demand customer’s a be treated as member account balance in time. other system given point at a asset. generation-related words, rate at a of the it is measurement Demand is energy is consumed. appeal on center which complaints The Cities’ meters, and most by measured physically in of evidence the record on a lack users commercial and residential about small statement support Commission’s de- maximum meters which measure They do not have a 2004 reconciliation. in the “per- highest monthly demand period mand over a of a month tomer’s Large preceding months. kilowatt-hour” units. commercial eleven expensive customers often have more me- phase unbundling, initial During the ters that measure maximum demand over El utility except in Texas for Paso each intervals, thirty short such as fifteen or Electricity Company had filed a rate case periods, “per-kilowatt” minute on a basis. The Commission before Commission. charge The function of the demand is to decided, of the factors common because utility aris- allow the to recover fixed costs cases, in the all the to set the rate cases system ing placed from the demand on the generic company- docket to be followed that are not reflected in the rate set for docket, generic In the specific hearings. electricity itself. a rate de adopted the Commission then sign charge Transmission and distribution facilities that included a demand rather they design are “fixed cost” facilities are than a rate based on a “seasonal” It an system.12 adopted constructed to meet local or individual differential 80% A com- and dis peak demands. demand ratchet demand ratchet for transmission utility a initial it that an pensates cost and main- tribution rates because decided appropriately recognized of those facilities ratchet most tenance over course 80% year, diversity those do not load different custome because between patterns. or demand rs.13 further announced follow seasonal other The Commission charges grant exceptions generic Use of a ratchet “flattens” these could throughout year. example, design,14 only necessary For rate but “if ratchet, an ultimately extraordinary impacts 80% demand address on the abili Commission, a adopted ty a customer’s of customers to obtain service from charge given demand in a competitive provider month will be due restrictions of concerns’[ (i.e., amount on greater price based of the cur- to beat ‘headroom 15 ]).” concerns, however, rent month’s demand or 80% the cus- Headroom charge sys- agri- exempted 12. Under a "seasonal” 14. differential The Commission seasonal tem, ratchet utility permitted charge cultural customers from demand would be finding only use elec- that those customers higher during (typically rate summer months tricity significant one or two amounts through September) from June lower *16 Thus, year. agricultural months a seasonal during year rate the rest of the to reflect the only charges customers are billed demand put system during peak demand the on the during significant months of demand. demand A summer months. seasonal differ- system ential is also termed a "flat kWh” margin 15. "Headroom” refers to the between matters, charge. To further confuse a de- "price the to beat” and the new REPs’ costs charge system may mand also be termed a providing electricity. January From charge.” Typically, "seasonal kWh a demand 1, 2007, January providers 2002 until electric charge system charges results in that remain formerly regulated affiliated with utilities relatively year. over the A "flat” course of provide electricity must at rates that are six charge system, seasonal differential on the deregu percent their rates lower than before hand, yields higher charges during other the "price lation. This rate is known as the to charges summer and lower the rest of the beat.” See Util.Code Ann. Tex. 39.202 year. general- Generated revenue for TDUs is (West enacting Supp.2004-05). price- In the ly system. the same from either The differ- statute, to-beat the intended to cre mostly lie in the flow of revenue ences the ate for new REPs not affiliated incentives stream. regulated utility industry with the to enter the compete market and for customers with affili so, REPs, doing rejected proposed formerly part 13. AEP’s ated those that were Thus, utility companies. ratchet. the bundled the demand 100% automatically made no excep would not mandate an load-factor customers.” She con- design. proper clusion the demand generic charge tion to the rate about agreed rate. The with the Commission docket, In AEP’s individual AEP had ultimately analysis ALJ’s set AEP’s originally proposed charge for demand charge demand at $3.27/kW. $2.83/kW, customers large commercial Discussion argument original based on their the generic that the be case demand ratchet bring challenges The two to the Cities 80%, than at sup- concerning set at 100% rather Commission’s order AEP’s de- testimony ported proposal large with the of mand commercial charge for custom- Moncrief, manager First, the regu- Donald the ers.16 the claim that Cities bur- analysis proof showing proposed one of den of for that a pricing lated section of “just in- rate is lies with the argued AEP’s subsidiaries. Cities and reasonable” §Ann. utility. that the demand re- See Tex. UtihCode 36.006 charge stead should (West 1998). result, they argue main at the bundled rate level of As a that $2.74/kW. in adopting that de- erred They believed customers “with Next, vary analysis. argue ALJ’s the Cities mands that month month” would adoption that unlikely to have access to Commission’s “de- those application charges exceeding of the de- mand assessed services because negatively impacts demand service charges coupled mand ratchet bundled competition would of’ utilities code proposed with the rate reduce head- violation 39.001(d).17 section do non-competitive room to levels. AEP re- The Cities not ar- negatively that sponded justify gue adopted rate im- that the Cities failed to Rather, they problem pacts competition. argue that a headroom or the existed that than the necessity greater of a shift. The found that rate bundled ALJ negatively competition that rate produced proposed impacts AEP evidence vio- 39.001(d). lation of Nor do problem. not create headroom section rate would argue to Cities that the Commission acted She also found Cities failed authority in produce statutory setting “an ex- outside its any specific evidence of only charge. They argue traordinary headroom concern war- demand generic statutory the rate exception rate de- itself violates re- rants Thus, reducing quirements. Assuming deciding concluded that without sign.” she properly lay that the in this case charge demand bundled rate burden AEP’s AEP,18 challenges of both arbitrarily “high- shift costs to the essence level would headroom, impact competition.” Util.Code Tex. greater the more room for new engage competi 39.001(d) (West pure Supp.2004-05). This market entrants statu- REPs. tory tion with affiliated mandate does not forbid the Commission *17 setting greater the unbundled from rates than argues party evidence Neither about the 16. “impose only requires It that orders the rate. ultimately adopted by supporting rate impact competition.” least Id. on Commission, only They argue $3.27/kW. adoption any rate about the Commission’s 18. See Pub. Util. Counsel Public Office of greater than the bundled rate. Tex., 03-03-00462-CV, Util. Comm'n No. *17-18, (Tex. slip op., WL 1787434 at "shall or order 17. The Commission authorize 28, 2005, h.) (claim pet. App.-Austin July no regulatory than to competitive rather methods improperly shifted burden of that Commission goals [chapter utilities 39 of the achieve case, utility proof in offered fuel-factor when greatest extent feasible and shall code] support position, decided evidence in of its adopt issue orders that are both rules and review). under practical impose and limited so as the least substantial-evidence suggested that the rev- charge by service.” He then to the demand set the Commis- from lower produced by is that the evidence AEP enue shortfall that would result sion upon by increas- charges relied Commission does demand be recovered responded Moncrief support ing energy charges. the Commission’s decision testimony by out greater pointing set a rate than the bundled rate. to Anderson’s Thus, re- when we recommendation would proper considered the that Anderson’s MABs, characterization of in rates for residential and higher NEIL sult above, support in second customers to considering the Cities’ small commercial large commer- apply charges issue we will the substantial-evi- lower demand for shifting, This cost-burden dence test. cial customers. “the rule that argued, he would violate initially proposed AEP demand its on costs” and would rates should be based charge large for commercial customers headroom for residential and small reduce testimony sup- and offered Moncriefs commercial customers. port proposition that its demand testimony, the ALJ Considering this charge would leave sufficient headroom for analysis produced found that Moncrief es- competition provide and would an attrac- demand tablishing proposed customers. AEP is tive rate for Because charge produce prob- no headroom entitled to recover its transmission and would typical lem for customers. She also ac- utility any reduction in the demand cepted argument AEP’s the Cities’ charge large for commercial customers rates, position in would shift burden created would result an increase in and a (and high away the demand ratchet from de- related decrease headroom thus mand, onto large commercial customers possible competition), decrease for other residential and small commercial custom- Large customer classes. commercial cus- tomers, Cities, agreed ers. The Commission with place larg- such as the system. a ALJ’s conclusions. est share demand As result, analyzed “typical Moncrief custom- find that reasonable minds could We proposed er bills” based on AEP’s set of the conclusion that the Com- have reached proposed rates and concluded that the de- produced AEP evidence in mission did. charge large mand commercial custom- proposed rate and support its ease to ers would result in bills that ade- would proffered evidence. rebutted the Cities’ quately reflect their of the demand share accepted could have The Commission placed system. on the testimony, sup- whole Moncriefs which setting charge greater a demand ported response, the Cities offered the testi- rate, rejected in than the bundled Anderson, mony of Steven a consultant Therefore, testimony. whole Anderson’s specializing regulatory analysis and as- based on we find valuation, argue set that the Commis- its decision to set a substantial evidence charge at sion should set AEP’s demand demand charge greater demand than the charge. the level of its unbundled demand utility. charge approved for the bundled higher charge that a demand He testified second issue. overrule the Cities’ We demand ratchet coupled 80% on REPs hardship would create a financial CONCLUSION with de-
that elect “to serve customers *18 arguments AEP’s vary significantly from month We have sustained mands that result, authority to unlikely that the Commission lacked to month. As a it is such allegedly “over-mitigated” of have access to order refunds customer will 1993, (Tex.App.-Austin costs a final determination stranded before denied) (we con- result, agency’s defer to writ true-up. the 2004 As is made at charged agency that is of statute of the district struction portion reverse the we respectful- I enforcing). Accordingly, cost with judgment concerning stranded court’s ly dissent. and remand those issues over-mitigation proceedings further consistent I hold that the Commis- Because would time, have At the same we opinion. this order the re- authority to sion had the concerning the overruled the Cities’ issues com- funds, briefly address AEP’s I must NEIL characterization of AEP’s proper (1) erred plaints that adoption and the account balances member any excess for interest on providing greater than the de- charges of demand that refunded now mitigation revenues charges approved for the bundled mand AEP as stranded may be awarded to Thus, court’s affirm the district utility. we (2) and true-up proceeding, in the 2004 respects. judgment those AEP ordering district court erred refunds to con- mitigation excess pay B.A. Dissenting Opinion by Justice REPs, as the Com- rather than to sumers SMITH. the reasons ordered. Since mission had rep- SMITH, Justice, order dissenting. expressed in the Commission’s BEA ANN construction resent a reasonable join majority affirming I While Chapter of PURA provisions relevant handling of the member the Commission’s (1) I affirm its determination would In- Nuclear Electric account balances with any AEP not entitled to interest is charge Limited and the demand surance be awarded refunded revenues issues, prior strongly disagree I (2) that costs in 2004 and as stranded authority lacked the 2004 the Commission mitigation AEP refund its excess should Company to AEP Texas Central require REPs, directly than to consum- rather earnings it had retained the excess refund ers. recovery of stranded to accelerate market circumstances changed costs when DISCUSSION of prospect eliminated au the Commission’s challenges AEP that the Commission’s I would hold costs. (1) excessive to order a refund of thority deference because action is entitled to collected stranded costs meeting method it was a reasonable now are by statute. We provided “full tools encouraging statutory obligations that, deregu the fact before familiar with among providers all competition fair and as lation, generation invested utilities the overrecov- electricity” preventing reasonable to recover their expecting sets see Tex. Util.Code ery of stranded rates. .262(a) (West through regulated 39.001(b)(1), prudent costs Supp. §§ (2) costs of these assets Recognizing that the 2004-05); conflict with it did not un and thus uneconomical might in- become or the overall any express provision, deregulated competitive, in a recoverable tent, City 39. See Chapter of PURA de Co., market, Tel. 92 electric Bell Austin v. Southwestern for (Tex.2002) (we to enable three-phase program 'give vised 441-42 their utilities to recover merly regulated interpretation weight to Commission’s from transition during the and not investments if it is reasonable powers its own Center deregulation. See statute); regulation to Southwestern inconsistent with v. Public Util. Comm’n, Inc. Energy, Point v. Public Util. Telephone Bell Co.
701 Comm’n, 81, (Tex.2004); recoveries when 1999 to avoid excessive 143 S.W.3d 82-83 in began market 2002 or competitive Inc. v. Public Energy, Reliant Util. (Tex. finally to be recon Comm’n, 129, when the costs were 101 133-34 S.W.3d in 2003), ciled 2004. sub nom App.-Austin 'part rev’d Energy, at 99. CenterPoint 143 S.W.3d I, covering years 1998 In Phase phrase represents “stranded costs” utilities legislature required of the net of a portion book value miti- Report begin identified the 1998 assets, utility’s generation yet recov through mea- gating their stranded costs through depreciation,
ered
that has be
reduce the
value of
designed
sures
book
deregulated
come unrecoverable in a
envi
Reliant, 101
generation assets.
their
Ann.
ronment.
See Tex. UtihCode
this, the utilities
at 134. To do
S.W.3d
39.251(7) (West
Supp.2004-05); Center
(1)
depreciation
could
transfer
from trans-
82-83;
Energy,
Point
at
Reli
S.W.3d
genera-
and distribution assets to
mission
Energy,
ant
tion that scheme for recognized that because long have We market is so deregulated transition to a every legislature cannot contend that it affords no discretion comprehensive carrying out involved imaginable detail to to correct an overrecov- the Commission laws, legisla- delegation of some applicable recovery strand- ery adjusts while agencies is both power regulatory to tive statutory scheme is ed costs in 2002. Texas Workers’ necessary proper. careful, thoughtful and but the transition Advocates, 136 v. Patient Comp. Comm’n undertaking deregulation complex to is a (Tex.2004). Thus, leg- legislature for the to impossible and it was to admin- delegate powers islature might every consequence that anticipate carry out established agencies istrative pos- Although it was mindful of the arise. long as it estab- purposes as legislative capital investments sibility of enormous guide reasonable standards lishes the market value of might exceed Id. exercising powers. those agencies and fail to be recovered generation assets to include required were legislature If the rates, ne- by competitive all unforeseen anticipate every detail and very circumstance glected to consider the need there would be no then circumstances in the market value that occurred: the rise Comm’n See Railroad delegation. assets generation of nuclear authority a refund to order utility the Commission’s only of those that AEP is the 2. We note prior credits of excess to have overrecovered identified in 2001 true-up proceeding. challenged appeal costs that has Co., proportion must consider both the Lone Gas 689 mission Star (Tex.1992). of estimated stranded costs to the invested utility other factor capital of powers The Commission has those interest as ex- public consistent with upon confers it. legislature expressly 39.201(k). Id. pressed Chapter 39. Austin, City at 441. consideration should be One reasonable addition, any implied the Commission has express duty prevent the Commission’s necessary accomplish express overrecovery of stranded costs. See legislature gives duties that the to it.3 Id. 39.262(a). re- id. If no stranded costs give serious consideration to the Com We main reviews a utili- after the Commission PURA, long interpretation mission’s *22 efforts, a ty’s mitigation impose it will not interpretation as that is reasonable and utility permit But to the to retain CTC. of plain language does not contradict the earnings of million would skew the $54 441-42; Id. at the statute. Continental utility deregulated by giving market that Downs, 807 Cas. Co. S.W.3d competi- advantage an unfair over other (Tex.2002). Furthermore, give we due discourage competition. full tors a agency’s deference to an construction of Thus, the au- the Commission should have agency charged statute that the is overrecovery of Tel., thority to address the Bell enforcing. See Southwestern utility costs a at the same stranded at In order to ascertain 758. any time it would have addressed underre- au possessed whether the Commission the covery by setting a CTC. thority to order AEP to refund overrecov- true- ered stranded costs before the 2004 legislature Additional evidence that the analyze Chapter must up proceedings, we intended for the to take action Commission whole, in of transi 39 as a the context the can be prior true-up proceedings deregulated tion to a electric market. See three-phase in the structure of the found Comm’n, 883 State v. Public Util. recovery scheme. The fact stranded cost (court (Tex.1994) must read immediately utility required that a was underlying PURA as a whole to discover during begin mitigating its stranded costs intent). legislative desire legislature’s Phase I illustrates the Chapter 39 formerly regulated utilities that the waiting of until 2004 to have the burden whole, Chapter 39 as a construing When if Conversely, the recover their costs. it reasonable for the Commission to was utility that the 2001 ECOM model shows legislature determine that the intended then it stranded costs has overrecovered of utility’s over-mitigation it to a address utility should not makes sense that the costs before the 2004 stranded waiting until 2004 to privilege the of have proceedings. example, id. For the See mitigation costs. disgorge those excess required updat- to consider Commission is Furthermore, that logical it is to assume in order to projections ed stranded cost establish a scheme the would modify utility’s dereg- a impose or CTC Therefore, if the symmetrical. is begins. Tex. ulation UtiLCode authority to address has the Additionally, Commission 39.201(g). when determin- of stranded costs dur- underrecovery the utility may of time a recover ing length CTC, CTC, II it must ing by setting Phase costs the Com- stranded implied by explicitly provided or legislature granted power that is Specifically, 3. (West § 14.001 authority anything Tex. UtiLCode Ann. to do PURA. Commission the 1998). “necessaiy to exercise and convenient” conclusion, decision authority recovery adjust In Commission’s have the utility of costs that is not AEP to overrecovered stranded refund its to order competition entitled to at the time that prior beginning of costs stranded fact, begins. the manner which and consistent competition was reasonable ordered AEP to refund utility goals preventing with its dual parallels stranded overrecovered overrecovering costs and stranded from costs. Un- overall treatment competition. promoting statutory der the scheme AEP was allowed 39.262(a) Section immediately its stranded costs mitigate (1999-2001). Phase I If the throughout that we majority asserts correctly despite had projections shown provisions must construe relevant costs re- AEP’s efforts stranded Chapter 39 order to determine mained, have set a the Commission would Al powers. scope of Commission’s immediately in continue CTC 2002 to majority many of the though the cites to recovery during years AEP’s the first two construction, statutory ignores rules Likewise, competition. when the relevant to this principles two are projections mitiga- indicated that AEP’s First, is unam statutory when text issue. *23 successful, tion efforts had been the too interpreta adopt a court must the biguous, grant Commission ordered AEP to excess lan plain supported tion the statute’s mitigation credits over five amortized that would guage interpretation unless years. The fact that the Commission Dep’t lead to absurd results. See Texas recogni- refund signifies amortized the Mega Regulatory Protective & Servs. legislature tion that the not intend for did Care, Inc., Child S.W.3d recovery of to occur in a the stranded costs (Tex.2004). title, Second, heading the of a sub time, true-up at one lump sum such as the title, chapter, subchapter, or section does proceeding in 2004. have an This would a stat expand meaning not limit or the It competitive adverse effect on market. Tex. Gov’t Ann. 311.024 ute. See Code recovery over spreading devised a scheme 2005). (West applica I the contend that years; several would occur ear- principles tion of these two demonstrates ly (1999-2001), adjusted in would be majority the the has misconstrued 2003, prior 2002 and to a final reconcilia- 39.262(a). scope of section years competitive after mar- tion two the true-up 39.262(a) ket had stabilized 2004. The that, elec- “[a]n states Section adjustment, to proceeding was be a may ... to utility permitted not be tric final adjustment. only not the through costs the overrecover stranded or by this section procedures established or- Finally, the Commission’s decision to application the of the measures der refunds of overrecovered stranded by the other sections this provided Chapter goal is consistent with 39’s 39.262(a). Tex. chapter.” UtiLCode after de- promoting markets say does not the Commis- The text when If a allowed to regulation. utility was overrecovery prevent is to act to the sion Phase I earnings retain its excess from mainly costs. on the Relying of stranded competition begins it would have an when true-up that section 39.262 is in the fact advantage newly over created utili- unfair section, majority holds that proceeding the Preventing Phase the throughout II. ties 39.262(a) found in is prohibition section overrecovery of stranded costs is a tool only true-up the 2004 applied during cre- to be necessary promote competition contrary holding This is playing proceedings. ating a level field. language tently throughout chapter 39. See In re plain both the the section (Brister, J„ TXU, 67 at 149 n. 18 principle heading and the of a (“For concurring) example, section specific meaning section does not limit the 39.201(Z) concerning the tools available at of a statute. con- is located the section phrase “provided by The the other sec- Conversely, cerning rate-setting for 2002. 39.262(a) chapter” tions of this in section 39.262(b) concerning section annual re- unambiguously utility states that the not ports by beginning certain utilities permitted using any to overrecover mit- concerning is located in the section any phase, just in igation during tool not 2004.”). true-up beginning in Thus, true-up proceedings. Phase Ill’s 39.262(a) sets forth the over- Section majority by limiting applica- erred arching principle utility that a should not 39.262(a) tion of 2004 true-up section be allowed to overrecover stranded costs. Care, proceedings. Mega See Child not plain language The of the section does Furthermore, logical at 177. it is limit when the act to Commission prohi- intended overrecovery. goal of fos- reverse the against overrecovery apply bition at the tering competition through fair and full time that the Commission is instructed to accomplished by can deregulation best be updated review an ECOM model to evalu- correcting over-mitigation competition recovery ate effective the accelerated how by giving utility with ex- begins, during of stranded costs has been Phase I. advantage earnings cess retained an unfair adjustments competi- If are needed as years. for two The section is unclear as to II, begins why tive market Phase would how the is to enforce this in- only the Commission be allowed to *24 when the interim review based principle utility’s recovery crease but not decrease a adjustment on 2001 data calls for an to Logically, of stranded costs at that time? Therefore, I reduce costs recovered. adjustment im- contemplating the 2002 the to would conclude that we should defer the if position of a CTC stranded costs remain determining a expertise Commission’s adjustment mitigation after is an after dealing method of with the ov- reasonable I, true-up proceeding Phase while the is an errecovery point, of stranded costs at that adjustment to review the affect of the CTC beginning competitive the of the which was remaining stranded costs. The market. any reconcile stranded proceeding will and
costs not recovered the CTC 39.254 Section mitigation. See Tex. UtiLCode Ann. utility AEP insist that majority The (West (true- Supp.2004-05) §§ 39.251-.265 utility a identi- code section 39.254 orders 39.262(a) up part Subchapter section is having as stranded costs the 1998 fied titled, Recovery F of Stranded Costs Report mitigate to its stranded ECOM Charges). Through Competition Transition year during recovery each the costs scheme, suggest if
Moreover, obligation to even interim estimates the fact that the at some utility in the true- that the has overrecovered prevent overrecovery is found However, only states point. section 39.254 up proceeding section of the statute does not, itself, legislatively the the which utilities use application limit its costs; to stranded provided tools recover majority suggests. See Tex. Gov’t Code can continue utility it not state that a The title of this section does 311.024. costs based on the mitigate to stranded language does not control over its because utility longer no estimates when the statutes inconsis- legislature placed the projected has stranded See id. CONCLUSION costs. 89.254; TXU, at In re S.W.3d it Essentially, majority avers that
(Brister, J., is concurring). 39.254 Section imply to improper for the Commission was costs a ambiguous as to which stranded authority to refunds stranded order re utility mitigate year. is to each See projected be- on estimates costs based TXU, (Brister, J., at 146 concur- I Phase II because the Phase tween ring). explicitly grant did legislature not However, doing so. tool for Commission recovery The cost scheme calls stranded it legislature explicitly did not forbid I. for a correction after Phase mid-course Thus, the here doing from so either. issue remain, If stranded costs the Commission it Com- is whether was reasonable mar- impose, must before the imply mission to order begins, utility’s But if miti- ket a CTC. Austin, 92 at City refunds. See during Phase worked gation efforts I have (Commission powers expressly 441-42 has well, utility permitted too is not any upon by legislature conferred windfall, retain its and the Commission its implied powers necessary accomplish prevent must act time to the ov- at that duties). The mandated express errecovery generated a utility from prevent Commission tools. any provided Chapter using tools and im- 39 to overrecover majority argues utility’s The miti deregulation in a manner plement gation efforts are to be based on the 1998 all competition among providers promotes legis stranded cost estimates and that the Moreover, electricity. ordering the re- lature for the to deal intended any express with funds did conflict underrecovery of strand over-or intent, or overall PURA provision, ed costs at the 2004 true-up proceedings. forth, 39. For all the reasons set Chapter construction, however, majority’s construction of the stat- the Commission’s leads to the result absurd which is obligations under the statute ute and required to rely Commission is on interim Therefore, it is entitled to reasonable. projections stranded cost a util increase *25 majority’s The deference this Court. CTC, ity’s recovery by imposing a but statute reason- construction be ignore very must those projections same well, agency’s but interpretation able as recovery required. when a reduction is only permissible interpre- need (Tex. Short, See Utts tation to be entitled to deference. 2002) (“[W]e must not construe statutes majority may judgment not substitute way re that would lead an absurd in addressing for that Commission’s sult.”). Furthermore, majority’s con specifically a circumstance not addressed con struction of section 39.254 is in direct statute. This must defer to Court plain language flict with the of section in this interpretation the Commission’s 39.262(a). light of section 39.254’s am regulation to de- complex transition from I defer biguity, would hold we should Ac- regulation industry. electric that sec Commission’s construction respectfully I cordingly, dissent. 39.262(a) prevent mandates tion that it utility overrecovering from stranded costs byI
using mitigation during tools Phase dis
reversing a at the time it is windfall
covered, years not two later.