Texas SC sides with utility commission

Jessica M. Karmasek Nov. 1, 2010, 8:00am


AUSTIN (Legal Newsline) - The Texas Supreme Court last week upheld an appeals court judgment affirming a utility commission's order for a competition transition charge.

The Texas Public Utility Commission, or PUC, issued an order setting the transition charge under Chapter 39 of the state's utilities code.

The order followed a proceeding initiated by CenterPoint Energy Houston Electric, LLC, to recover from ratepayers its investments "stranded" by Texas' transition to a less-regulated, more-competitive retail electricity market.

However, groups representing electricity consumers challenged the commission's order, contesting CenterPoint's "recovery of interest" and "recovery of costs of a valuation panel."

According to the Court's opinion, filed Oct. 22, it affirmed the state appeals court's approval of the commission's order in favor of CenterPoint.

In 1999, the Texas Legislature had overhauled the Public Utility Regulatory Act, or PURA, to create a "fully competitive electric power industry" in Texas.

As part of this restructuring, utilities were required, not later than Jan. 1, 2002, to split into three distinct units: a power-generation company, a retail electric provider and a transmission and distribution utility.

After that date -- known as the date of consumer choice -- retail consumers could choose among competing retail providers.

As for the transmission and distribution utility, its rates continue to be regulated by the PUC.

This unit also continues to provide metering services and to charge retail electric providers for "nonbypassable delivery charges" under rates approved by the commission. The transmission and distribution utility may also, at the retail provider's request, bill retail customers directly.

Justice Don R. Willlett, who authored the Court's opinion, wrote that, in sum, the PUC "did not act in an arbitrary or capricious manner in following its own rule, relying on a previously determined cost of capital in proceedings whose fairness is not challenged here, ultimately choosing an interest rate for which a reasonable basis exists in the record, and substantially lowering the interest rate when circumstances warranted."

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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