Texas Rate Case Frequently Asked Questions
Why am I receiving a notice about a rate case filing?
On June 1, 2021, El Paso Electric Company (“EPE” or “Company”) filed a petition with the Public Utility Commission of Texas (“PUC” or “Commission”) and with the different municipal authorities in EPE’s Texas service territory for approval to change its base rates. EPE is required to notify the public and its customers that a filing has been made and inform each customer of their ability to participate in the Commission’s evaluation of the Company’s petition to change its rates.
To whom does the company provide this notice?
The Commission requires EPE to mail a notice to EPE customers in the Company’s service area of a rate case filing and also requires EPE to provide notice in newspapers of general circulation. The Company is also informing customers through different media outlets including television, radio, Facebook, Twitter, and internet-based websites.
When was the last time the company changed rates?
EPE’s last base rate case was Docket No. 46831, which changed rates effective with bills issued on or after July 18, 2017.
Who approves EPE’s petition to change rates?
The PUC has the ultimate authority to approve the Company’s petition to change rates. The PUC also has the authority to suspend the requested effective date of new rates for a period of time during which the PUC will carefully evaluate the Company’s petition. Following this evaluation, in which many different parties to the case will participate, the PUC will issue a final decision on approval or disapproval of revised rates.
When would the new rates be effective?
If approved, rates would be implemented in early or mid 2022.
Your bill, however, will still be calculated under the currently existing rates from November 3, 2021, until the PUC issues a final order and the PUC approved rates go into effect. Once the PUC issues its final order, EPE will recalculate bills as if the newly approved rates had been in effect since November 3, 2021, and either refund customers for any overcollection or surcharge them for any under-collection that results from the difference between bills calculated under the new rates and those actually charged to customers on or after November 3, 2021.
Reason for Rate Filing
Why is EPE requesting to change its rates?
Since September 2017, EPE’s last base rate case, EPE has invested over $953 million (total Company). Investments in transmission and distribution plant upgrades, local generation upgrades, and investment in Palo Verde Generating Station. EPE’s non-fuel expenses have also increased over time, however EPE has worked hard to keep its expenses low.
What is the company asking for in its filing?
EPE is proposing to increase base (non-fuel) rates by $69.7 million, which includes amounts currently being collected by customers through the Transmission and Distribution Cost Recovery Factor Riders (TCRF and DCRF). Because EPE intends to reduce the TCRF and DCRF Riders to zero and shift those costs to base rates, the net increase to base rates is reduced to $41.1 million to account for the TCRF and DCRF currently being collected by those riders. The base revenue increase not accounting for the TCRF and DCRF represents an average increase over current non-fuel base revenue of 13.55%, while it is reduced to 7.79% over current non-fuel base revenue once TCRF and DCRF collections are accounted for.
Is the company asking to change its Texas fuel factor in this filing?
No. EPE is not seeking to reconcile its fuel and purchased power costs in this filing nor is EPE requesting to change its fuel factor.
What does it mean to reconcile fuel costs?
EPE would reconcile, or resolve the difference, of the fuel and purchased power revenues and expenses incurred in the provision of electric service to EPE’s Texas jurisdictional customers for a specified time period in a filing. However, EPE is not requesting to reconcile fuel costs in this filing.
Effect on Residential Bills
How is a typical residential bill changing?
Under the proposed rates, using an average of 686 kilowatt-hours per month, the average monthly residential bill increase would be $11.76, or 13.36%.
Residential Distributed Generation Rate
Did EPE change the residential distribution generation rate?
EPE did not change the structure of the distributed generation (DG) rate, however, EPE has proposed to reduce the minimum bill for all non-grandfathered DG residential and small commercial customers, from the current $30 to $24.02 and $25.19 respectively.
Changes in Rates
Are all of EPE’s rates changing?
Yes. EPE initially caps the allocated revenue requirement increase to the Residential and Water Heating classes at 1.5 times the system average increase of 7.79% and limits the revenue requirement reductions for the Small General Service, General Service, and City/County classes at 50% of the cost-based rates.
Are EPE’s residential rate structures changing?
No, the rate structure is not changing. EPE is proposing to change the Summer Season, currently May to October, to June through September. EPE has also proposed opening the Experimental Demand Charge Time of Day optional rate to any residential customer. EPE continues to encourage energy conservation through its rate structures to reflect and recover its costs more accurately. The summer rates are designed to be higher when customer demand for electricity is highest and EPE’s system hits annual peaks. Rates will continue to be lower during non-summer months.
Are there changes to EPE’s Low-Income Rider?
No, the Low-Income Rider is still in effect and exempts low income customers from the proposed $10.54 per month
Are EPE’s small general service rate structures changing?
No. However, EPE is proposing to change the Summer Season, which is currently May to October, to June through September.
Are EPE’s Time of Use Rate Structures changing?
No, EPE is keeping the existing hours for the Residential and Small General Service time of use (TOU) rates. However, EPE is changing the name from TOU to time-of-day (TOD) rates.
Are any new rate classes being proposed?
Are there proposed changes to customer charges?
Yes. EPE is proposing changes to its customer charges to improve cost recovery based on the fully allocated embedded cost of service study for each rate class. The increased monthly customer charges are designed to recover customer-related fixed costs that include meters, billing, meter reading, bill processing and customer accounting.
Is EPE proposing other changes to rates?
Yes. EPE proposes changes to its demand and TOD rates to improve cost recovery based on a cost of service study for each rate class. The proposed seasonal demand charges and TOD pricing will encourage conservation by customers and will make rates more competitive for high load factor customers.
Will EPE ask for changes to its miscellaneous charges?
Yes, almost all the miscellaneous service charges are proposed to change. For example, EPE is requesting an increase in the Requested Meter Test Charge (Single Phase) miscellaneous charge. Some charges will be decreasing, such as the New Service
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Filing Approval Process
What procedure does the commission follow before approving or disapproving EPE’s petition?
After the filing of EPE’s petition, an Administrative Law Judge (“ALJ”) from the State Office of Administrative Hearings (“SOAH”) will be assigned to the docket. Interested parties will typically request to join in the docket. These parties typically include the Commission Staff, the Office of the Public Utility Counsel, municipal and county governments served by EPE, large industrial power users, and other parties with an interest in the filing. A full review of EPE’s petition is then conducted before any decision is made.
Do the other parties to the docket participate in the review of the company’s petition?
Yes. During the period of time referred to as “discovery”, any approved party to the docket has the ability to examine EPE’s filing in its entirety, subject to certain confidentiality requirements, and can ask questions about EPE’s calculations and witness testimony.
May the company also question any calculations or testimony offered by the participating parties?
Yes. Should a party participating in the case offer their own calculations or testimony, EPE has the right to question the basis of the calculations and the reasonableness of any participating party testimony.
What happens after this review is completed?
Following completion of the review, EPE and the participating parties may offer additional information and written testimony to clarify issues and resolve differences. The parties may also conduct negotiations through which an agreement can be reached allowing for a settlement of the docket acceptable to all parties. This settlement would be submitted to the Commission for their review and approval. If no agreement can be reached, the Commission has the authority to issue a decision based on its understanding of the merits of the case.
How much time after the filing does the commission have before a decision must be made?
The docket’s procedural schedule is established by the ALJ. Sufficient time will be allocated to conduct a thorough Discovery process and allow for settlement negotiations. The completion date can be extended by petition of the parties and ALJ approval. The rate case process typically takes anywhere from six months to one year until a final resolution is reached.