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Statement regarding winter storm outages in Texas

 

Statement from J.P. Urban, Senior Vice President & Acting CEO,
Association of Electric Companies of Texas,
regarding winter storm outages in Texas

February 18, 2021

This unprecedented and ongoing winter storm has affected every part of the electric system, and our member companies are working around the clock to restore power. Significant generation is back online, but we’re not out of the woods yet.

We urge all consumers with power to conserve energy, helping us restore power more widely as we bring electricity back online. As we overcome these weather challenges together, we will work with all stakeholders to fully understand all the causes of the outages, which have impacted so many Texans.

AECT Statement on Gov. Abbott’s State of the State Address

 

Statement from J.P. Urban, Senior Vice President & Acting CEO, AECT:

“Gov. Greg Abbott’s State of the State address today shows, once again, that he is committed to growing the Texas economy. We should all be encouraged today that Texas has a path forward to not just recover, but thrive, as the nation recovers from the COVID-19 Pandemic. The electric industry is the backbone of Texas’ economic growth, providing reliable, affordable electricity to residents and businesses throughout the state, and we’re proud to do our part, to keep Texas open for business.”

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Important information for electricity consumers financially impacted by COVID-19, or those who need an electric-powered medical device to treat ongoing medical conditions

 

Working Directly with a Retail Electric Provider

Customers having trouble paying their electric bill should contact their electric provider to learn what options are available. A customer’s Retail Electric Provider (REP) (the company that sends their electric bill each month) may be able to help customers with a deferred payment plan or other flexible payment arrangement, which can reduce the burden for households facing difficult financial times by spreading balances out over time. The REP may have other options to help as well. Customers served by electric co-ops, municipally-owned utilities and vertically-integrated utilities should also contact their providers for available options.

Finding Bill Payment Assistance Through 2-1-1

If customers need assistance paying their electricity bill, they can call 2-1-1 or visit 211texas.org and search for ‘Electricity Bill Assistance’ to find programs in their area. The 2-1-1 database is extensive, and can help connect customers in need with multiple organizations that may be able to help.

Applying for Special Designation for Certain Medical Circumstances

The PUC allows customers to request designation as “critical care” or “chronic condition,” with the approval of a physician. The designations afford certain special treatment regarding disconnection of service. To qualify, there must be a person with a physician-diagnosed serious medical condition in the home that is dependent upon: a) an electric-powered medical device to sustain life; or b) an electric-powered medical device or electric heating or cooling to prevent impairment of a major life function. The application form is ultimately submitted to the Transmission & Distribution utility, and can be found here: https://www.puc.texas.gov/industry/electric/forms/critical/ccform.pdf.

CSSB 83: Oppose Unnecessary, Redundant and Prescriptive Requirements Related to Electric Grid Security

 

Overview of CSSB 83 by Hall

CSSB 83 creates an Electromagnetic Threat Preparedness Task Force, comprised of 10 members, to implement programs to address electromagnetic pulse (EMP), geomagnetic disturbance (GMD) and cyber-attack threats to the electric grid.

  • The bill defines “energy critical infrastructure” to include electric generation and transmission & distribution facilities.
  • The task force would identify technical and electronic resources, implement an education program for owners and operators of critical infrastructure, evaluate emergency planning & response procedures and develop a threat recovery plan.
  • The task force would submit findings and recommendation to the governor and legislature by July 1, 2018.

The Governor could instruct an agency to take actions as necessary to implement the threat protection and recovery plan developed by the Electromagnetic Threat Preparedness Task Force.

It also establishes a politically appointed Electric Grid Security Advisory Committee to review the findings of the Electromagnetic Threat Preparedness Task Force and prepare a report of its findings to the Governor, Lt. Governor and Speaker of the House by September 1, 2018.

The bill requires each affected electric company to report vulnerabilities to the Texas Division of Emergency Management by December 31, 2018.

Costs would be recovered through regulatory procedures; for those costs ineligible for traditional cost recovery, the legislature could fund recovery through appropriations of general revenue of Texas.

AECT Concerns

In general, the legislation presupposes that electric companies are not focused on improving grid security and recovery.

  • Electric companies in Texas participate in lead roles at a national level to address the security of the electric grid.
  • National activities include the development of mandatory North American Electric Reliability Council (NERC) standards and close collaboration with the Federal Energy Regulatory Commission (FERC), the U.S. Department of Energy (DOE), the U.S. Department of Homeland security, the National Institute of Standards and Technology and numerous utility based forums.
  • The Electric Power Research Institute (EPRI) and DOE recently released the first phase of a three-year study on this issue, finding a limited thermal impact of an EMP detonation on electric transformers, suggesting the collapse of the electric grid due to an EMP causing widespread failure of transformers is unlikely. There are several more studies to be undertaken as part of the EPRI/DOE project.

GMD has been demonstrated through studies and recent events to be of little to no risk to the ERCOT grid.

The indiscriminate requirements of the bill would incur significant costs – perhaps in the billions of dollars – which would ultimately be borne by all customers, regardless of the mechanism for collecting costs.

 

Click here to download a PDF of this issue paper

CSSB 1976 by Whitmire: Support Identifying Customers Eligible for REPs’ Low-Income Programs

 

Overview of CSSB 1976 by Whitmire

With the expiration of the System Benefit Fund, the statutory basis for future determination of eligibility and treatment of low-income electric customers is unclear.

  • The System Benefit Fund was created in 1999 as part of the advent of electric competition in Texas. The program included electric bill discount to low-income Texans, customer education programs and other benefits to transition to competition.
  • Under PURA 39.903, low-income customers are identified using information from the Health and Human Services Commission (HHSC), which is provided to the Public Utility Commission of Texas (PUC), to create a list of low-income electric customers. That section will expire on August 31, 2017.

CSSB 1976 will reinstate the ability for the HHSC to coordinate with the PUC to populate a list of customers that meet the eligibility criteria, provided one or more retail electric provider (REP) requests that the list be developed by July 31 of the previous fiscal year.

  • The REP or REPs that voluntarily request the list would agree to reimburse the PUC for the cost of developing the list.

CSSB 1976 will allow REPs to continue to provide benefits to low-income customers

Without this bill, there will be no fair or consistent method to identify low-income electric customers to whom REPs could offer services that specifically benefit low-income Texans on a competitive basis.

The bill would simply allow the PUC to continue to coordinate with DHHS to have the same list of customers they had in the past, so REPs can offer services that are tailored to specific customer needs.

As substituted, CSSB 1976 will have no fiscal impact to the state.

Click here to download a PDF of this issue paper

CSSB 735 by Hancock: Support Revisions to PUC Ratemaking Oversight of Electric Utilities

 

Overview of CSSB 735 by Hancock

  • Requires the Public Utility Commission of Texas (PUC) to establish a schedule requiring periodic rate cases for electric utilities. Provides the PUC the ability to extend the date for good cause.
  • Eliminates the sunset date on the distribution cost recovery factor (DCRF) as recommended by the PUC, which has been used by electric utilities to more efficiently recover its investment in infrastructure.
  • Removes the four-time limit on an ERCOT utility’s use of the DCRF between rate cases. ERCOT utilities would be allowed to utilize the DCRF only once per year.
  • Extends the time available to the PUC to evaluate a sale, transfer or merger of a utility under its purview by 60 days beyond current statute limitations.

AECT Supports Ratemaking Approaches that Promote a Reliable, Cost-Effective Electric System

  • Efficient ratemaking allows for the timely recovery of the costs of critical investments made to meet the demands of a growing economy and to replace aging infrastructure.
  • The DCRF mechanism has been used several times by electric utilities to more efficiently recover costs over the six years since it was enacted by SB 1693 in 2011, and the PUC recommended its continued use in its 2017 Scope of Competition Report.

Click here to download a PDF of this issue paper

HB 2576 by S. Thompson: Support Revisions to PUC Ratemaking Oversight of Electric Utilities

 

Overview of HB 2576 by S. Thompson

  • HB 2576 eliminates the sunset date on the distribution cost recovery factor (DCRF) mechanism, as recommended by the Public Utility Commission of Texas (PUC).
  • The DCRF mechanism was created following the passage of SB 1693 in 2011, which Rep. Thompson sponsored in the House.
  • The expiration date for the DCRF mechanism was extended from January 31, 2017, to September 1, 2019, with the passage of SB 774 in 2015. SB 774 also required the PUC to study alternative ratemaking mechanisms adopted by other states; that study was completed and reported to the Legislature in January 2017.
  • HB 2576 also removes from code two outdated studies related to alternative ratemaking, including the study included in SB 774.

AECT Supports Ratemaking Approaches that Promote a Reliable, Cost-Effective Electric System

  • AECT supports all forms of efficient rate-making, including the reduction of rate case expenses.
  • Efficient ratemaking allows for the timely recovery of the costs of critical investments made to meet the demands of a growing economy and to replace aging infrastructure.
  • The DCRF has been used several times by electric utilities to more efficiently recover costs over the six years since SB 1693 was enacted in 2011.

Click here to download a PDF of this issue paper

HB 2235 by Murphy: Support Clarification of Utility Accounting Based on Change in GAAP

 

Overview of HB 2235 by Murphy

  • The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAP) required to be followed by U.S. companies filing financial statements with the SEC.
  • FASB is adopting a change in the presentation (not calculation) of retirement benefit costs.
  • The change is intended to promote ease of financial analysis by the investor community.
  • FASB has acknowledged this change has national implications in the utility sector, and has left it to be addressed at the individual state level or at the Federal Energy Regulatory Commission.
  • This change in presentation in no way affects the amount of pension costs to be included in rates.

AECT Supports Retaining the Current Regulatory Treatment of Retirement Benefits

  • HB 2235 removes one word (“operating”) in two places within PURA 36.065(b).
  • This aligns PURA with FASB, preserving the current regulatory treatment of retirement benefits relied on by more than 10,000 Texans.
  • HB 2235 does not impact electric rates, and all required ratepayer protections remain in place.

Click here to download a PDF of this issue paper

The AECT App

In order to better communicate with legislators, staffers and electric industry professionals in Texas, we’ve launched an app. Simply named after our organization, the AECT App provides easy access to our most recent issue papers, as well as occasional high-priority updates on key legislation.

Download it using a link below, or visit the Apple or Android store and search AECT!

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