Texas Customer Petitions PUC To Launch Retail Electric Choice Pilot In Non-ERCOT Service Area

September 8, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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East Texas Salt Water Disposal Company (ETSWD) filed with the Public Utility Commission of Texas a petition for declaratory order and request for the opening of a pilot retail electric choice implementation project at Southwestern Electric Power Company (SWEPCO)

As has been noted repeatedly by EnergyChoiceMatters.com, all of the Texas investor-owned utilities, except El Paso Electric, now operate in an RTO with a day-2 market -- a condition which did not exist when the various transition to competition plans were originally shelved for non-ERCOT utilities

"While SWEPCO remains a vertically-integrated monopoly, the Public Utility Regulatory Act ('PURA') establishes as its goal the transition to a fully competitive electric power industry, and includes express language anticipating a Pilot Project in the SWEPCO service territory. ETSWD operates saltwater disposal facilities for oil and gas producers in the Woodbine Formation, also known as the East Texas Oil Field. ETSWD is an industrial consumer of SWEPCO in the Kilgore, Texas area and purchases electricity from SWEPCO under its OLI rate tariff. Individually, ETSWD's oil and gas producers also purchase electricity from SWEPCO under the OLI rate tariff for their production wells," ETSWD said

"ETSWD has contacted SWEPCO through its customer representative and through SWEPCO's counsel regarding ETSWD's desire to participate in a Pilot Project. Based on these communications. it is ETSWD's belief that SWEPCO contends that a Pilot Project is precluded by legislation that was passed in 2009, which delayed the implementation of full retail competition in SWEPCO's service territory," ETSWD said

"In 2009, PURA was modified to enumerate certain events that must precede full retail competition in the SWEPCO service territory, including a Pilot Project. As such, current law clearly anticipates a Pilot Project be made available. Moreover, mechanisms for a Pilot Project, including a necessary delivery tariff, remain in place from prior to the 2009 legislative change," ETSWD said

"Last modified in 2009, PURA § 39.503 lists the events that must occur before the SWEPCO retail service territory is entirely open to retail competition. Notably, 'The commission may modify the sequence of events required ..., but not the substance of the requirements.' That list of requirements includes 'initiation of the customer choice pilot project in accordance with Section 39.104.' Full retail competition cannot occur without a Pilot Project occurring first. SWEPCO's position that a Pilot Project is no longer authorized by statute undercuts the meaning to this provision," ETSWD said

ETSWD averred that, "SWEPCO has raised an objection to ETSWD's participation in a Pilot Project without the Southwest Power Pool ('SPP') first taking steps to transition SWEPCO's full service territory to retail competition. While implementation of a Pilot Project will necessitate future actions by the Commission and SWEPCO, these future actions need not be addressed in this proceeding with its narrow question of whether a Pilot Project in the SWEPCO service territory is permissible under PURA. Further, a Pilot Project is not the same as the complete opening of the SWEPCO service territory to retail competition. An argument that the Pilot cannot occur because steps for full retail competition have not yet been taken merely chases its tail."

"Subsequent to this proceeding, PURA § 39.503 identifies the future need for 'an expedited proceeding to develop non-bypassable delivery rates for the customer choice pilot project to be implemented under Subsection (c)(1)' and eventually 'commission evaluation of the results of the pilot project.' As to this latter point, it goes without saying that the Commission cannot evaluate the results of a Pilot Project without the operation of a Pilot Project in the first place. With respect to the former, there are several ways by which those steps might be fulfilled. For example, in the event that SWEPCO files a rate case in the near future, the development/update of non-bypassable delivery rates could occur in that docket, consistent with PURA § 39.503(b)(3). There also will be critical logistical and implementation issues for the Commission to consider that will be best considered in a new Commission project subsequent to this Docket. Because consideration of implementation issues and non-bypassable delivery rates is unnecessary to the determination of whether PURA permits a Pilot Project and is moot absent a conclusion that a Pilot Project in the SWEPCO service territory comports with PURA, ETSWD does not seek their consideration in this proceeding," ETSWD said

"The passage of Senate Bill ('SB') 547 in 2009 postponed the opening of full retail competition in the SWEPCO retail service territory due to a lack of demand at that time, and codified a list of conditions for transition to full retail competition. But it did not prevent or terminate retail Pilot Projects in the service territory. SB 547 did not impose a timeline on the review of those various requirements for retail competition. And although there has been no active Pilot Project in SWEPCO's territory since the 2009 legislation, this absence of activity should not be mistaken for a prohibition on the Commission initiating or customers participating in a Pilot Project. In fact, absent an initiative to effectuate a Pilot Project, consideration of many of the requirements for full retail competition might be considered premature, e. g., development of a balancing energy market, a market for ancillary services, and a market-based congestion management system, implementation of a seams agreement, etc. Notably, PURA § 39.503 expressly gives the Commission the authority to determine the sequence used for addressing the various requirements, including the development of a Pilot Project A Pilot Project is a very sensible place to begin activities contemplated in SB 547. For example, a Pilot Project does not implicate FERC-jurisdictional entities like the SPP as full retail competition would," ETSWD said

"In addition to a Pilot Project being anticipated in PURA, prior Commission actions to effectuate a Pilot Project remain in effect. For that reason, in the alternative, ETSWD asks the Commission to order SWEPCO to make service available under a Pilot Project pursuant to existing Commission Rules and current Commission-approved SWEPCO tariffs," ETSWD said

"Commission Rules remain in effect for a Pilot Project in the SWEPCO service territory. For example, Substantive Rule 25.422, last changed in 2006, remains in effect. Substantive Rule 25.422 expressly continues the Pilot Project. It also anticipates that SWEPCO would be able to administer customer registrations, i.e., an outside entity like ERCOT is not needed for administering switches in a Pilot Project. Substantive Rule 25.422 expressly provides that, 'The utilities will continue the operation of the pilot projects to a point that competitive retail electric providers are providing service to a reasonable number of customers for all major customer classes in the pilot program offered in the utilities' service areas,'" ETSWD said

"As a SWEPCO customer, ETSWD is legally entitled to acquire services offered in a current SWEPCO tariff . The Commission - approved Tariff or Retail Delivery Service the Energy Delivery Company Providing Transmission and Distribution Service to the Area Served by Southwestern Electric Power Company ('Pilot Tariff') remains in effect and presently is available on the Commission website. The Pilot Tariff offers the Delivery Service, i. e., 'wires' service, for a retail customer to receive retail electric energy from a competitive provider. The Pilot Tariff clarifies that '[t]his Tariff governs the rates, terms of access and conditions of the provision of Delivery Service by Company to Competitive Retailers and Retail Customers. The provisions of this Tariff shall uniformly apply to all Competitive Retailers and Retail Customers receiving Delivery Service from Company.' Pilot Tariff § 3.1. ETSWD, other SWEPCO retail customers, and Competitive Retailers should be permitted to avail themselves of the existing Pilot Tariff as they are legally entitled," ETSWD said

"The Pilot Tariff incorporates and accounts for the changes in PURA from 2009. It does not get revoked by the change in statute as it adapts to changes in law. SB 547 did not render performance under the Pilot Tariff impossible -- quite the opposite. It memorializes an expectation of service through a Pilot Project. Since 2009, SWEPCO has had 11 years and has filed four rate cases following the passage of SB 547. But in that time SWEPCO has not withdrawn its applicable tariff sheets or asked the Commission to terminate the Pilot Tariff. Consistent with its § 3.11, the Pilot Tariff should be interpreted as a tool to effectuate a Pilot Project consistent with PURA § 39.503," ETSWD said

"ETSWD respectfully requests that the Commission act on this Petition as expeditiously as possible and enter an order declaring that PURA continues to permit the Commission to initiate and/or maintain a Pilot Project in the SWEPCO retail service territory," ETSWD said

"ETSWD prays that the Commission: (a) enter an order declaring that a Pilot Project is consistent with PURA; (b) establish the procedural schedule set out in Section VI of this Petition; (c) approve the method and form of notice described in Section VII of this Petition; (d) open a project to effectuate a Pilot Project in the SWEPCO retail service territory; and (e) grant it such other relief to which it is entitled," ETSWD requested

Docket 51257

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