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Sharyland Recommends Alternatives to Move SPP Load to ERCOT as SPS Unwilling to Sell Transmission Assets
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March 2, 2011
A consultant's "preferred" method of transferring Sharyland's Stanton and Colorado City divisions from the Southwest Power Pool to ERCOT is not viable, but two other alternatives which contemplate a complete transfer of the divisions into ERCOT would still benefit customers, Sharyland said in testimony at the PUCT supporting its study on the future of the two divisions (390710).
As only noted in Matters (see 1/14), a study performed by GDS Associates, Inc. found that moving the Sharyland divisions into ERCOT, where customers could avail themselves of retail choice, would result in reduced rates for residential, commercial, and industrial customers.
GDS Associates' study found a scenario known as ERCOT-6, under which Sharyland would purchase the Southwestern Public Service Hobbs-Midland and Borden-Grassland transmission lines and would disconnect the lines from the SPP ties (at Grassland and Hobbs), and synchronize the lines to the ERCOT grid, to be the best option for transferring the loads to ERCOT.
However, Sharyland said in testimony filed yesterday that Option ERCOT-6 is no longer practical, as it understands that Southwestern Public Service does not want to sell the transmission assets that would be needed to implement Option 6.
Sharyland said that benefits still result from the two remaining scenarios, ERCOT-5 and ERCOT-7, which contemplate a complete transfer of the Sharyland SPP load to ERCOT though various disconnections of existing lines and construction of new lines, but with no transfer of ownership of the Southwestern Public Service lines. Sharyland supports either ERCOT-5 or ERCOT-7.
Option ERCOT-7 actually produces a lower cost for ERCOT customers versus the originally preferred scenario of ERCOT-6, but results in higher costs to SPS customers, due to the added transmission required under ERCOT-7.
Under either ERCOT-5 or ERCOT-7, two actions would be required by FERC. First, Sharyland Utilities' FERC tariff would need to be modified to reflect the fact that certain transmission facilities were no longer FERC jurisdictional. Second, the NERC delegation agreements with SPP-Regional Entity and Texas Reliability Entity would need to be amended to reflect the fact that certain facilities would be moved from SPP to ERCOT. Both actions would require FERC approval.
Sharyland said it does not support options under which only a partial transfer of the SPP loads to ERCOT would occur, as these options would not result in benefits to customers and still require Sharyland to arrange for supply for the remaining SPP load.
Sharyland reiterated that competitive retail prices in ERCOT are lower than the regulated bundled rates currently paid by Sharyland's customers. Citing the GDS report, Sharyland noted that, if Sharyland SPP residential customers had the opportunity to utilize ERCOT REPs in the period analyzed in the GDS study, they would have saved between $170 and $434 (13 percent to 23 percent) annually. Commercial customers would have saved around 18 percent, and industrial customers would have saved between 30 percent and 46 percent based on sample REP offers.
Sharyland also testified that the move to ERCOT would facilitate the provision of advanced meters in Sharyland's Stanton and Colorado City divisions. "Because retail competition currently is not a realistic option for the divisions located within the SPP region, there would be no immediate benefit to implementing advanced metering in those divisions. Were those divisions moved to ERCOT, with the potential for retail competition, there would be a more immediate need for advanced metering," Sharyland said.
Sharyland reported that it is currently considering the roll-out of advanced meters in its McAllen division, and the possible implementation of advanced meters in its non-competitive divisions if the Commission orders retail competition in those divisions.
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