Texas regulators last week approved El Paso Electric’s request to build a gas-fired generator that has drawn opposition from the city and local environmentalists.

During its open meeting Friday, the Texas Public Utility Commission amended a certificate of convenience and necessity for an additional generating unit at EPE’s Newman Generating Station at a cost of $157.6 million. The unit, with a nameplate capacity of 228 MW, will allow the utility to retire three older gas-fired units, with a total capacity of 196 MW, that date back to the Eisenhower administration (50277).

Based on its load forecasts, expected generation retirements and reserve margin criteria, EPE said it will need additional capacity with about 50 MW of daily cycling ability by 2022 and 320 MW by 2023. The utility plans to supplement the plant with three power purchase agreements for solar power, storage and solar-plus storage.

The project also needs approval from the New Mexico Public Regulation Commission, which is expected to take up the matter in November. EPE serves Las Cruces and other portions of the state.

The city contends that the new unit is a financial risk during an uncertain time and would increase customer bills. Environmental groups say EPE has overlooked less costly and risky alternatives, given new state law in New Mexico that requires the utility to supply 100% of its power to the state’s customers from carbon-free sources by 2045.

Small Munis’ Appeal Rejected

The PUC rejected eight small municipal utilities’ appeal of ERCOT’s definition of transmission operator, saying the grid operator’s Board of Directors was right to scuttle the measure (48366).

“I think the ERCOT board handled this correctly,” Commissioner Arthur D’Andrea said.

The Small Public Power Group (SPPG) — comprising utilities for the cities of Bartlett, Bridgeport, Farmersville, Goldsmith, Hearne, Robstown, Sanger and Seymour — was appealing the 2018 defeat of a proposed change to ERCOT’s Nodal Operating Guide that would have required every transmission or distribution service provider to either register as a TOP or designate a representative on its behalf.

The SPPG developed the revision request in 2015 to settle the noncompliant status of municipally owned utilities with loads of 9 to 21 MW. (See “Small Public Power Group’s Appeal Again Meets Defeat,” ERCOT Board of Directors Briefs: April 10, 2018.)

Denton Utility Called in for Rate Case

The commission ordered Denton Municipal Utility (DME) to file a rate case by November 2021 as it provided notice it will conduct an inquiry into the reasonableness of the municipality’s wholesale transmission rates.

The action came after a staff review of the 2019 year-end earnings reports (50655).

Staff recommended the PUC require the rate case based on DME’s 28.05% rate of return, the 15 years it has been since a review of the utility’s wholesale transmission costs and revenues, and the city’s growth in revenue and rate-base levels during that time.

“The city has been overearning significantly and has been for a while,” PUC Chair DeAnn Walker said.

Terry Naulty, DME’s assistant general manager, said the utility’s population in 2005 was 60% of what it is now (142,000, based on U.S. Census projections). The growth has required DME to upgrade its mostly 69-kV infrastructure to 138 kV, he said.

“Denton believes its investments in the ERCOT transmission grid, which were predominately made from 2014 to 2019, were prudently necessary,” Naulty said. “They avoided congestion expense to not only Denton, but the regional [cooperatives] as well.”

In other actions, the commission:

• approved Entergy Texas’ request to amend its distribution cost recovery factor revenue requirement to $19.5 million (50714) and its application to adjust its 2021 energy efficiency cost recovery factor (EECRF) to $9.4 million (50803);
• consented to CenterPoint Energy’s request to adjust its 2021 EECRF to $48.8 million (50908); and
• signed off on staff’s settlement with Mozart Wind, requiring the generator to pay a $48,000 administrative fee. Mozart was dinged for failing to maintain its voltage within 2% of its voltage set point while operating at less than its maximum reactive capability for 783 operating hours (51050).