By Tom Kleckner

The Public Utility Commission of Texas wrapped up its 2016 open meeting schedule Friday by approving a rulemaking on interconnection agreements (IAs) for distributed generation and reports on electric market competition and alternative ratemaking mechanisms.

The distributed generation order allows the end-use DG customer to either be a party to the agreement or the “non-utility” party as the owner of the facility, the facility’s premises or the produced energy (No. 45078). The commissioners said they would have jurisdiction over IAs, but not over “any disputes between an end-use customer and a non-utility signatory to the IA.”

Chairman Donna Nelson dissented from the order. She had expressed concerns last month over the PUC’s inability to help solar energy customers seeking redress from the commission over potential “bad actors.”

2017 Competition Report

The PUC approved its “2017 Report on the Scope of Competition in Electric Markets in Texas” (No. 45635), accepting Commissioner Ken Anderson’s suggestion that the report repeat previous recommendations to the Texas Legislature calling for:

• The repeal of state law establishing natural gas as “the preferential fuel” for electricity generation and creating natural gas energy trading credits. “Because natural gas-fueled facilities have been the most commonly built new generation in Texas for many years and are expected to continue to be, there is no need to establish incentives for natural gas generation,” the report says.
• The repeal of state law requiring the installation of 5,880 MW of renewable energy by 2015, a mandate that was met in 2008.
• Authorization for the PUC to issue advisory opinions on electric industry issues. “Providing clarification to a company concerning issues such as the purchase of assets or the acquisition of another company could allow it to avoid expensive regulatory proceedings, without impairing the commission’s authority,” the report says.
• Authorization for the PUC to use outside consultants, auditors, engineers or attorneys to represent the state before ERCOT, as it is currently permitted to do in FERC proceedings.

The commission also approved its report on alternative ratemaking mechanisms, which concludes that the current ratemaking system is not “in need of major revision” and that periodic rate proceedings using “streamlined recovery mechanisms” is “an efficient and effective way to ensure that electric rates are just and reasonable” (No. 46046).

The report does suggest the Legislature address concerns about vertically integrated utilities operating outside the ERCOT service area, whose key financial metrics “have lagged in comparison to those of the ERCOT utility companies,” with reported rates of return consistently falling below PUC-authorized levels. The report says the utilities’ returns have been hampered by “regulatory lag” in recovering capital investments.

Both reports will be sent to the Legislature, which convenes Jan. 10.