May 10, 2019

Texas utility commission identifies issues in CenterPoint rate case (D-49421)

by Kelso King, Grid Monitor
Source – Grid Monitor
Posted 05/10/2019

Preliminary Order

A draft Preliminary Order was filed on May 2, 2019, identifying 58 issues to be addressed in this proceeding, including issues related to Invested Capital — Rate Base and Return, Expenses, Deferred Costs, Rate Design and Tariffs, Baselines for Cost-Recovery Factors, Hurricane Harvey Restoration Costs and Additional Issues.

At the May 9, Open Meeting, Chairman Walker recommended some changes to the preliminary order and wanted to address some issues that had been brought up by the parties.

Concerning the request to install voltage reduction battery assets, Chairman Walker recommended that this issue not to be taken up. She noted that the Commission had asked for guidance on this from the Texas legislature and believed that would be forthcoming. She noted that a bill had been approved in the Senate and moved to the House, adding that all indications are that something would come out of the House.

Commissioner D’Andrea agreed adding that, although it is a legal issue, there are also a lot of policymaking and fact questions contained in it and he did not believe litigation would be the proper way to “pull those out.”

Chairman Walker took the same position concerning the allowance for facility extensions to electric vehicle charging stations, that the PUCT had recently opened a “very broad project” (P-49125) to look at EV issues and she did not want to tie the Commission’s hands in a contested case on where that would end up.

Commissioner D’Andrea agreed, adding that a central question in that project is who pays, which he noted is what the Commission was asked to answer here.

With regard to the acquisition of the Vectren Corporation,[1] Chairman Walker recommended modifying Issue No. 8 to read: “[a]re any protections, such as financial protections, appropriate to protect CenterPoint’s financial integrity and ability to provide reliable service at just and reasonable rates?”

Chairman Walker suggested that issues related to substations had been adequately addressed and believed this was adequately covered in the issue on prudent invested capital. However, she encouraged parties, especially PUCT staff, to look at those issues as they pertain to substations and transmission projects.

Finally, Chairman Walker recommended not addressing the lost revenue adjustment issue but “staying silent,” adding that, after reading the testimony, it was not clear to her what they were really requesting. If they are requesting energy efficiency costs, that is not through base rates, and if that is what they are asking for it can be litigated and decided. However, the Chairman added that the Commission’s rulings on that issue are “pretty clear.”

The Commission approved the preliminary order consistent with the Commission’s discussion.


On April 5, 2019, CenterPoint Energy Houston Electric, LLC filed an application for authority to increase its annual transmission and distribution revenues by $161 million, from $2.1 billion to approximately $2.3 billion. That amount includes a net annual increase in retail transmission and distribution rates of $154 million over adjusted test-year revenues, an increase of 7.4%. It also includes an annual increase of $6.8 million for wholesale transmission service, an increase of 1.8%. CenterPoint’s application reflects an increase in total rate base from $3.47 billion in its last base rate case (D-38339) to $6.48 billion. CenterPoint requested a return on equity of 10.4%, and a weighted average cost of capital of 7.39%. CenterPoint proposed revising its debt-to-equity ratio from 55% /45% equity to 50%/50%.

[1] Vectren Corporation is a Fortune 1000 energy holding company headquartered in Evansville, Indiana that distributes natural gas to approximately one million business and residential customers in Indiana and Ohio, electricity to 141,000 customers, and has 1,425 MW of primarily coal-fired generating capacity in Indiana.

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