REGULATORY ARCHEOLOGY: Service Area Disputes Arising from 1975 Certification Proceedings Cody Faulk Texas Public Power Association Lloyd Gosselink Rochelle & Townsend, 2019 Annual Meeting P .C. www.lglawfirm.com
CODY FAULK • Energy – Utility Associate at Lloyd Gosselink Rochelle and Townsend P .C. in Austin, Texas. • Represent municipally owned utilities (MOUs), cities, and investor owned water utilities in proceedings at the Public Utility Commission. • Rulemakings • Service Area disputes • Integration into ERCOT • Transmission Line Routing • Fun Fact: Has only ever been a TPPA Member City customer. TPPA 2019 ANNUAL MEETING
TEXAS 1975 • Population: • Texas - 12,568,000 • Bexar - 919,300 • Travis - 369,700 • Denton - 106,300 • Prior to 1975, cities within the state of Texas were responsible for regulating their electric utility service and rates. • Vertically integrated utilities. TPPA 2019 ANNUAL MEETING
TEXAS TODAY • Population: • Texas – 28,700,000 • Bexar - 1,958,578 • Travis - 1,226,698 • Denton - 836,210 • Distribution utilities are regulated by both municipalities and the PUC. Wholesale generation market, and PUC regulated transmission. • Unbundled utilities. TPPA 2019 ANNUAL MEETING
QUESTIONS FOR TODAY. • What is the history behind service area certification? • What is the law as it relates to service area issues? • How has the PUC addressed these service area disputes? • What should utilities do to avoid these types of disputes? TPPA 2019 ANNUAL MEETING
HISTORY OF CERTIFICATION • In 1975, PURA went into effect and created a regulatory arrangement wherein the Commission would license utilities to provide electric energy to particular geographical regions, called service areas. • A utility had to apply for and obtain a CCN from the Commission to obtain such a license. • The Commission consolidated applications for neighboring service areas into certification dockets for joint hearings. These dockets established the boundaries for neighboring service areas. TPPA 2019 ANNUAL MEETING
NEED FOR THE “CORRIDOR RULE” • At the time PURA went into effect, there were situations in which multiple electric utilities were already providing retail electric service to the same general area. • The Commission's division of the state into service areas, each to be served by one utility, could have resulted in a utility's inability to continue provide service to some of its customers that may end up in another utility's service area. This situation would have "stranded" the utility's power lines within the service area of another facility. • The Corridor Rule was created to address this scenario. TPPA 2019 ANNUAL MEETING
THE “CORRIDOR RULE” • 16 Tex. Admin. Code § 25.101(e)(3): • Certificates of convenience and necessity for existing service areas and facilities. For purposes of granting these certificates for those facilities and areas in which an electric utility was providing service on September 1, 1975, or was actively engaged in the construction, installation, extension, improvement of, or addition to any facility actually used or to be used in providing electric utility service on September 1, 1975, unless found by the commission to be otherwise, the following provisions shall prevail for certification purposes: (3) The facilities and service area boundary for the following types of electric utilities providing distribution or collection service to any area, or actively engaged in the construction, installation, extension, improvement of, or addition to such facilities or the electric utility's system as of September 1, 1975, shall be limited, unless otherwise found by the commission, to the facilities and the area which lie within 200 feet of any point along a distribution line, which is specifically deemed to include service drop lines, for electrical utilities. TPPA 2019 ANNUAL MEETING
THE “CORRIDOR RULE” • The Corridor Rule applied to situations in which boundaries created in the certification dockets stranded a utility's pre-existing distribution lines in another utility's certificated service area. • The rule allowed a utility with distribution lines in place as of September 1, 1975, to obtain a CCN for a 400-foot wide corridor (200 feet on either side of the lines) within which the utility could provide service to customers located inside the other utility's service area. • The certification allowed under the Corridor Rule creates a dual certification within the corridor where customers in that area may be served by both the utility with the stranded lines and the utility certified for that service area. • The rule automatically applied to all certification dockets unless the Commission provided otherwise. TPPA 2019 ANNUAL MEETING
HOW HAS THE PUC EXAMINED “CORRIDOR” CASES? • The Commission has had several opportunities to review the “Corridor Rule” and guide utilities in its application. • The Commission in Docket No. 2103 opined as to the intent behind the “Corridor Rule,” stating: • The purpose of [the “Corridor Rule”] was to provide reasonable service area for grandfathered facilities so they may be economically utilized to their fullest extent. Before the enactment of the PURA, there were no controls over where a particular line could reasonably serve. After the enactment of the PURA, the intent of [the “Corridor Rule”] was to avoid waste and unnecessary duplication of facilities while still protecting the newly certificated service areas of other utilities competing in the same area. TPPA 2019 ANNUAL MEETING
PUC Docket No. 2103 - Brownsville • CP&L and MVEC alleged that BPUB was providing electric service to three developments, all outside Brownsville’s city limits. • BPUB contended that these three developments are within its certificated service area. BPUB argued that the certificated service area boundaries indicated on Staff Exhibit #2 suffer from distortion inherent in the county highway map drawn by the Texas Department of Transportation and in the color coding system used by the Commission on Staff Exhibit #2 to designate service area boundaries. BPUB argued that this distortion is such that it is impossible to locate the service area boundaries on the ground with any reliable accuracy. • Commission found BPUB was grandfathered to a service area in two of the subdivisions consisting of the distribution lines in place on September 1, 1978 and all the area located within 200 feet in any direction of any point on any such distribution line, including the terminal point of any such distribution line. TPPA 2019 ANNUAL MEETING
PUC DOCKET NO. 36649 – Burleson ISD • Oncor and United Electric Operative Services (United) filed a petition for a declaratory order regarding whether United was authorized to provide retail electric delivery service to the main building of Burleson Independent School District’s high school. • Final order summary: • The Commission found that ~85% of the main building would be located in an area singly certificated to Oncor, while 15% would be located in an area dually certificated to Oncor and United. • The Commission concluded: “Where any portion of a consuming facility is located within a retail electric utility’s certificated service area, the consuming facility is located in that utility’s certificated service area and that utility is authorized and obligated to provide electric service to the entire consuming facility.” • Finally, the Commission concluded that United, in accordance with its CCNs, was authorized to service the entire main building. TPPA 2019 ANNUAL MEETING
PUC DOCKET NO. 42110 –Chevrolet Dealership • Central Texas Electric Cooperative, Inc. (CTEC) filed a petition for a cease-and-desist order and declaratory order regarding service to the Bob Price Chevrolet Dealership, located in the City of Fredericksburg. • Final order summary: • The Commission found that both CTEC and the city are certificated to serve the 200-foot area from the City’s SH 16 distribution line. • The Commission concluded that the entire dealership is a consuming facility within the meaning of PURA § 37.051(b). • The Commission denied CTEC’s petition for a cease-and-desist order. • The Commission ruled that the city is entitled to serve the entire dealership because the dealership is a single consuming facility and a portion of the consuming facility is located within an area in which the city is certificated to provide service. TPPA 2019 ANNUAL MEETING
PUC DOCKET NO. 43999 – Ira ISD • Oncor filed a petition for a cease-and-desist order against Big Country and a declaratory order regarding service to the Ira Independent School District. • Final order summary: • The Commission found that ~5% of the campus was located in an area dually-certificated to Oncor and Big Country, and that ~95% of the campus was located in an area singly-certificated to Oncor. • The Commission found that the Ira ISD high school complex is a “consuming facility” within the meaning of PURA § 37.051(b). • The Commission denied Oncor’s petition for a cease-and-desist order. • The Commission ruled that Big Country is entitled to serve the entire Ira ISD high school complex because the campus is a single consuming facility , and a portion of the consuming facility is located in an area where Big Country is certificated to provide service. TPPA 2019 ANNUAL MEETING
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