A draft preliminary order – which was filed with the PUC by the Public Utility Commission (PUC) of Texas’ Commission Advising and Docket Management Division – listed certain issues that must be addressed in the matter concerning the application to merge by AEP Texas Central Company (TCC), AEP Texas North Company (TNC) and AEP Utilities into AEP Utilities.
As noted in the draft order, TCC, TNC and AEP Utilities – collectively, the applicants – in June filed the application for approval to merge TCC and TNC into their immediate parent company, AEP Utilities, which would change its name to AEP Texas Inc.
The applicants stated that the proposed merger would not affect customer rates and that the existing tariffs for TNC and TCC would be maintained and applied separately by AEP Texas under a “one utility, two divisions” approach. That arrangement, the draft order added, would continue unless and until rates and tariffs were changed by the commission in a subsequent rate proceeding.
The applicants stated that there are three primary drivers of their proposal to merge TCC and TNC into a single transmission and distribution utility: access to financing; efficiencies in financial reporting; and efficiencies of regulatory filings. The draft order also noted that the applicants said that neither TNC nor TCC would seek recovery of the incremental costs associated with approval and implementation of the merger.
The docket was referred to the State Office of Administrative Hearings (SOAH) on June 23. The SOAH administrative law judge (ALJ) set an intervention deadline of July 15, and as of July 11, several parties had filed motions to intervene including the Office of Public Utility Counsel.
The applicants on July 6 filed a proposed list of issues, and commission staff did not file a proposed list of issues, the draft order added.
The draft order also said that after reviewing the pleadings submitted by the parties, the commission identifies certain issues that must be addressed in the docket, including:
- Is the proposed merger in the public interest, considering such factors as, will the proposed merger adversely affect service reliability?
- If the merger is found to be in the public interest, should the rights and obligations of TCC and TNC, including the certificates of convenience and necessity of TCC and TNC, inure to AEP Texas upon the closing of the merger?
- Will the transaction cause Texas customers to bear merger costs?
As noted in the July 13 filing from the Commission Advising and Docket Management Division, the commission will consider the draft preliminary order at the July 20 open meeting.