Texas regulators last week granted a request by staff and Texas Industrial Energy Consumers (TIEC) for a list of investors behind the investment fund involved in a $4.3 billion acquisition of El Paso Electric. An administrative law judge had ruled against the intervenors’ request during discovery in October (49849).

TIEC’s attorney Katie Coleman, a partner with Thompson & Knight, noted during the Public Utility Commission’s open meeting Thursday that the state’s Public Utility Regulatory Act allows the PUC to require a utility or its affiliates to identify owners of more than 1% of the company.

“This seems pretty straightforward,” Coleman said. “We have a fund that consists of private equity coming in to buy a Texas utility. We are asking, ‘Who is that fund? Who provides this capital?’ This is going to be [EPE’s] long-term source of capital. We feel it’s relevant to get a list of the investors and their ownership shares.”

Eversheds Sutherland’s Lino Mendiola, representing J.P. Morgan Investment Management’s Infrastructure Investments Fund (IIF), said the investors behind the $12.2 billion fund were not trying to hide anything and offered to share a list of the pension funds that make up the top 100 investors. The fund is composed of 517 limited partners and three general partners, he said.

“It’s an open-ended infrastructure fund. It invests in buy-and-hold strategies. It’s not a hedge fund,” Mendiola said. “These are passive investors: limited partners that have no ability to control capital deployment. They don’t control the fund; they don’t control any company in the fund. Our argument is the identity of the passive investors, who change over time and who have no control over anything, are not relevant.”

The commission determined otherwise. “If this were a contract dispute, we might give you the discovery win,” Commissioner Arthur D’Andrea told Mendiola.

The PUC will hold a public hearing on the merger Nov. 20 to 22 in Austin. Coleman said TIEC could likely review the list before then and address any issues during the hearing.

The identities of IIF’s investors have also drawn the attention of consumer watchdog Public Citizen, which has protested the proposed deal at FERC (EC19-120). FERC and the Texas PUC are among several regulatory agencies that must approve the acquisition.

EPE and IIF announced the deal in June. It is expected to close in the first half of 2020.

Briefings on CenterPoint Rate Case

The commission requested briefings from CenterPoint Energy and intervenors following a discussion attempting to iron out a preliminary order approving CenterPoint’s Houston electric utility rate case (49421).

The commission discussed and adopted several ring-fencing proposals made by staff and TIEC, including requirements limiting CenterPoint’s dividend payments to an amount not to exceed its net income and suspending the payments if the utility’s credit rating falls below a certain level.

CenterPoint Houston Electric’s adherence to the PUC’s 60-40 debt-to-equity ratio would require it to make an $800 million payment to its corporate parent, the company said.

The commission asked CenterPoint and the intervenors to file briefings on whether the recommended 60-40 capitalization would “necessitate noncompliance” on CenterPoint’s part. It also asked the parties to suggest options to avoid or mitigate the conflict.

An ALJ in September reduced the utility’s proposed $154.6 million rate increase to $2.6 million, or 0.11% of its present rate base. CenterPoint CEO Scott Prochazka made the decision a central point of the company’s third-quarter earnings report. (See Hot Summer Yields Positive Earnings for CenterPoint.)

PUC Approves ERCOT 2020-21 Budget

The PUC approved ERCOT’s 2020-21 biennial budget and its 55.05-cents/MWh administrative fee. The budget includes $268.3 million in 2020 and $275.2 million in 2021 for operating expenses, project spending and debt-service obligations (38533).

The system administrative fee has remained level since 2016. The fee and the budget were approved by ERCOT’s Board of Directors in June. (See “Board Approves Budget, Change Requests,” ERCOT Board of Directors Briefs: June 11, 2019.)

AEP’s Purchase of Oncor South Texas Assets OK’d

The commission approved the sale of Oncor’s distribution facilities in the Rio Grande Valley cities of McAllen and Mission to AEP Texas for $18 million. (49402). The deal affects approximately 3,000 residential and small commercial customers in the area.

Gexa Energy Docked $35,000

In other business, the commission:

• • Agreed to consider a rehearing request by two landowners over its earlier selection of a preferred route for the second of two 345-kV transmission lines needed to integrate about 470 MW of the city of Lubbock’s load into ERCOT. (See “Commission Approves 1 of 2 Lubbock Projects,” Texas PUC Briefs: Sept. 26, 2019.) Applicants Oncor and Lubbock Power & Light said the two routes have “very similar characteristics, and either one would be a reasonable option” in submitting additional testimony. The move allows the commission to further contemplate and consider the scope of the rehearing (48668).
  • Ordered retailer Gexa Energy to pay $35,000 in administrative fees and issue refunds to 7,610 customers for using misleading energy charges on electric bills (49930). Gexa has already refunded more than $10,423 to 37,122 current customers. The penalties raised the commission’s assessments in 2019 to $2.96 million, according to the PUC’s Oversight and Enforcement Division and the Customer Protection Division. The commission has also ordered more than $89,800 in customer refunds through its enforcement actions this year (50019).
  • Approved requests by Entergy Texas and EPE to adjust their energy-efficiency cost recovery factors. Entergy can recover $8.01 million in costs (49493) and EPE $5.47 million in costs (49496) for the 2020 program year.
  • Agreed to intervene in three FERC dockets: MISO’s proposal to prevent generating resources expecting full or partial outages lasting more than 90 days of the planning year’s first 120 calendar days from participating in a fixed resource adequacy plan and the RTO’s Planning Resource Auction (PRA) (ER20-129); MISO’s Tariff changes regarding the market procurement of short-term reserves (ER20-42); and Wolverine Power Supply Cooperative’s Federal Power Act Section 206 complaint that MISO’s PRA fails to establish an appropriate forward price signal (EL19-102).

— Tom Kleckner