DATELINE: 18 July 2009
Oncor asks state to OK $253.5 million rate increase
By JACK Z. SMITH
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While Metroplex residents brace for soaring electric bills inflated by a recent triple-digit heat wave, the Texas Public Utility Commission is weighing a decision that could further boost consumers’ power costs.
Oncor Electric Delivery, the electric transmission and distribution company for most North Texans, is asking the commission to approve a $253.5 million boost in its annual revenue. The request represents a 10 percent increase in what it charges all classes of customers and a 17 percent increase in charges for delivering power to residential customers.
Oncor spokeswoman Catherine Cuellar said residential customers using 1,300 kilowatt hours of electricity in a month would see a $4.67 increase in the "wires" portion of their bill. That would result in a 2.7 percent increase in the total monthly electric bill for such a customer, she said.
Some key participants in Oncor’s rate case contend either that the company should be allowed a revenue increase much smaller than it is seeking or that its revenue should be slashed.
A group of 148 cities served by Oncor — including Fort Worth, Arlington and other Tarrant County municipalities — says Oncor’s annual revenue should be reduced by $175.4 million, while the PUC staff is urging a reduction of $101.9 million. Administrative law judges Henry Card and Catherine Egan have recommended a $30.2 million increase, less than one-eighth of what Oncor wants.
Among the most contentious issues is Oncor’s request that it be allowed to recover $93.2 million for its purchase of more than 600,000 automated meters, a sizable portion of which the administrative law judges say the company was "imprudent" in buying before the state set a new standard for "smart meters" — a standard the automated meters don’t fully meet.
The rate case, which includes thousands of pages of filings, will affect rates charged for more than 3 million metered locations and approximately 7 million people altogether, including most Dallas-Fort Worth area residents.
The $253.5 million that Oncor seeks "is a lot of money," said Thomas Brocato, an Austin attorney representing the cities group. "That would be an overall .That’s a big increase." . . increase of about 10 percent for the company.
The increase is justified, however, because Oncor is attempting to recover legitimate costs, Cuellar said. The additional revenue is needed for the company to maintain safe, reliable electric service, she said.
Even if the full rate increase were approved, Oncor’s charges "would still be among the lowest in the state" for transmission and distribution companies, she said.
Oncor, like retail electric provider TXU Energy and electric power generator Luminant Generation, is a subsidiary of Dallas-based Energy Future Holdings Corp., which was created when private equity firms bought the former TXU Corp. in a $45 billion leveraged buyout in 2007 and took it private. But while TXU Energy and Luminant operate in deregulated markets, Oncor is still regulated by the PUC, a three-member panel appointed by the governor and aided by a professional staff.
The PUC potentially could rule on the case as soon as its July 30 meeting in Austin, but there is no certainty that it will.
The issue drawing the most media attention is what amount of money, if any, the PUC should allow Oncor to recover for its $93.2 million expenditure for automated meters purchased before the commission adopting a final rule — effective May 30, 2007 — that set a standard outlining requirements for smart meters.
Oncor ordered 627,244 of the automated meters, according to PUC filings. But after the regulatory agency set functionality requirements that the automated meters could not fully meet, Oncor said it would replace them with advanced meters that could meet the new state standard.
Both the automated and advanced meters are dubbed "smart meters" because they are designed to help customers manage their electricity consumption better, enable prompter responses to power outages and eliminate the need for meter readers. Residential customers in Oncor’s service area are already paying a $2.21 fee on their monthly electric bills for the advanced meters.
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