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PUCT Staff Retain Proposed Requirement for System-Wide Implementation of DCRF Rate Charged to REPs
September 9, 2011
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PUCT Staff have filed a recommended proposal for adoption (39465) to implement new Substantive Rule 25.243, which would allow TDUs to implement a Distribution Cost Recovery Factor (DCRF).
The DCRF will allow the TDUs to change their distribution rates charged to REPs once annually outside of a base rate case (See 7/4).
The final proposal retains the features which REPs said were essential to allowing the DCRF to be smoothly implemented in the retail market, including the system-wide implementation of the new or updated DCRF on the same date, use of a September 1 implementation date, and 45 days notice to REPs of the approved rates.
To facilitate the system-wide implementation of the DCRF, Staff has proposed adding to the proposed rule a provision holding that on the 60th day after a DCRF application is filed with a city with original jurisdiction, the electric utility is deemed to appeal the city's final decision to the PUCT, regardless of whether the city approves or denies the application. Such appeal shall be deemed, at that time, to be consolidated with the electric utility's DCRF proceeding before the PUCT.
In addition, the city's interim and final decisions are deemed automatically suspended at the times they took effect.
Responding to cities' objections to the DCRF mechanism, in which cities cited their original jurisdiction, Staff's proposed preamble states that the statute requires the Commission to adopt a DCRF rule that: imposes filing requirements; mandates an expedited procedure; specifies the manner in which a DCRF is reviewed and approved; ensures that REPs receive at least 45 days' notice of the approved DCRF; and ensures that the DCRF is applied on a system-wide basis.
"These statutory requirements cannot be met without the commission establishing parameters for a city's consideration of a DCRF," Staff's preamble states.
One of the major changes in Staff's final proposal is revising the DCRF formula to account for additional revenue related to load growth by crediting this revenue on a system basis, rather than on a class-by-class basis as was done in the proposed rule.
"The effect of this change is a reduced potential for DCRF rate disparity between classes," Staff said.
This change was advocated by State Agencies and is in a sense a compromise between the proposals advocated by industrial customers, who proposed an alternative formula, and the electric utilities, city groups, and the Office of Public Utility Counsel, all of whom supported the basic elements of the formula in the proposed rule.
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