The Public Utility Commission (PUC) of Texas, in a July 20 preliminary order, identified certain issues that must be addressed in the docket concerning the June application by AEP Texas Central Company (TCC), AEP Texas North Company (TNC) and AEP Utilities – collectively, referred to as the applicants – for approval to merge TCC and TNC into their immediate parent company, AEP Utilities, which would change its name to AEP Texas.
As noted in the preliminary order, the applicants said 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 preliminary order added, would continue unless and until rates and tariffs were changed by the PUC in a subsequent rate proceeding.
According to the applicants, the three primary drivers of their proposal to merge TCC and TNC into a single transmission and distribution utility are access to financing; efficiencies in financial reporting; and efficiencies of regulatory filings.
The applicants also said that neither TNC nor TCC would seek recovery of the incremental costs associated with approval and implementation of the merger, the preliminary order added.
The docket was referred to the State Office of Administrative Hearings (SOAH) on June 23, and a SOAH administrative law judge (ALJ) set an intervention deadline of July 15. As of July 11, these parties had filed motions to intervene: Texas Industrial Energy Consumers, the Office of Public Utility Counsel, and South Texas Electric Cooperative.
The applicants on July 6 filed a proposed list of issues, and PUC staff did not file a proposed list of issues, the preliminary order added.
The PUC said that the issues that must be addressed include:
- Is the proposed merger in the public interest, considering such factors as will the proposed merger adversely affect service reliability?
- Is the proposed merger consistent with the public interest, considering such factors as will the transaction adversely affect the health or safety of customers or employees?
- Will the transaction cause Texas customers to bear merger costs?
Among other things, the preliminary order said that the SOAH ALJ may deviate from the order when circumstances dictate that it is reasonable to do so.