Oncor Electric Delivery Company in March told the Public Utility Commission (PUC) of Texas that to allow the company to recover its reasonable cost of service and provide an opportunity for it to earn a reasonable return, Oncor’s total cost of service should be adjusted by about $317m over rates currently in place, or about 7.5% over present revenues.
In a March 17 statement, Oncor said that if granted in full, its rate adjustment would bring the company’s total revenue requirement to about $4.5bn. The company noted that an average Oncor residential customer uses 1,300 kWh of electricity per month, and that if that same customer has a retail electric plan charging nine cents per kWh, after the company’s rate review – if approved – that customer’s rate would be adjusted to 9.526 per kWh. That would be an overall total bill adjustment of 5.85%, or an additional $6.84 per month, the company said.
The proposed effective date of the requested rate change is April 21, Oncor said in its petition, which was the PUC received on March 17. In its statement, the company noted that it expects its rate review proceeding to last several months, and that if approved, its rate adjustment would most likely take effect in late 2017.
Oncor said in its petition that it has made significant investments in its transmission and distribution (T&D) system since the end of its last test year on June 30, 2010, to benefit customers, support Texas’ economy and growing population, and to ensure that the state is prepared for future growth.
During that time period, Oncor said that it has built more than 2,750 miles of new and rebuilt transmission lines, and has built distribution facilities to serve almost 280,000 new customer connections.
Oncor noted that as reported in its U.S. Securities and Exchange Commission Form 10-K, it has invested about $7.9bn since June 30, 2010. Additionally, Oncor said that it now has more than $1bn in statutorily authorized costs in regulatory assets for which cost recovery is needed. The company said that its other costs have also increased since its last test year ended.
Oncor said that its rate filing package is presented on a system-wide basis and was prepared using actual test year books and records, adjusted for known and measurable changes, using traditional and widely accepted ratemaking principles. The test year upon which the rate filing package is based is the year ending Dec. 31, 2016, Oncor said.
According to the direct testimony of Wesley Speed, vice president of Transmission for Oncor, that was included in the petition, Oncor invested about $644m per year in transmission facilities and load-serving substations between June 30, 2010, and Dec. 31, 2016, for an approximate total of about $4.2bn invested during that period.
Oncor’s investment in the Competitive Renewable Energy Zones (CREZ) initiative accounts for about $1.8bn of the total approximate $4.2bn investment, Speed said. That capital investment, Speed said, was necessary to interconnect new generation, accommodate power flow from new generation facilities, reduce congestion on the ERCOT grid, address load changes, provide for equipment replacement issues, and generally allow Oncor to fulfill its obligations under the Public Utility Regulatory Act (PURA), the PUC’s substantive rules, and its PUC-approved tariffs.
Speed said that among the CREZ line projects that were designated for construction by Oncor and completed by the end of Dec. 31, 2016, was the 15.6-mile, 138-kV Hicks-Elizabeth Creek Project, which went into service on Dec. 28, 2016.
PUC staff on March 31 issued its first request for information to Oncor on the matter. For instance, on payroll, staff asked whether Oncor has “experienced any reductions in force since the end of the test year, or [whether] the company anticipate[s] any reductions in force during the rate year.”