REGULATORY ARCHEOLOGY: Service Area Disputes Arising from 1975 - - PowerPoint PPT Presentation

REGULATORY 
 ARCHEOLOGY: 


Service Area Disputes Arising 
 from 1975 Certification Proceedings 


Texas Public Power Association 
 2019 Annual Meeting

Cody Faulk

Lloyd Gosselink Rochelle & Townsend, P .C.

www.lglawfirm.com

• Energy – Utility Associate at Lloyd

Gosselink Rochelle and Townsend P .C. in Austin, Texas.

• Represent municipally owned utilities

(MOUs), cities, and investor owned water utilities in proceedings at the Public Utility Commission.

• Rulemakings
• Service Area disputes
• Integration into ERCOT
• Transmission Line Routing
• Fun Fact: Has only ever been a TPPA

Member City customer.

CODY FAULK

TPPA 2019 ANNUAL MEETING

• Population:
• Texas - 12,568,000
• Bexar - 919,300
• Travis - 369,700
• Denton - 106,300
• Prior to 1975, cities within

the state of Texas were responsible for regulating their electric utility service and rates.

• Vertically integrated

utilities.

TEXAS 1975

TPPA 2019 ANNUAL MEETING

• Population:
• Texas – 28,700,000
• Bexar - 1,958,578
• Travis - 1,226,698
• Denton - 836,210
• Distribution utilities are regulated

by both municipalities and the

• PUC. Wholesale generation market,

and PUC regulated transmission.

• Unbundled utilities.

TEXAS TODAY

TPPA 2019 ANNUAL MEETING

QUESTIONS FOR TODAY.

• What is the history behind service area

certification?


• What is the law as it relates to service area issues?

• How has the PUC addressed these service area

disputes?


• What should utilities do to avoid these types of

disputes?

TPPA 2019 ANNUAL MEETING

HISTORY OF CERTIFICATION

• In 1975, PURA went into effect and created a

regulatory arrangement wherein the Commission would license utilities to provide electric energy to particular geographical regions, called service areas.

• A utility had to apply for and obtain a CCN from

the Commission to obtain such a license.

• The Commission consolidated applications for

neighboring service areas into certification dockets for joint hearings. These dockets established the boundaries for neighboring service areas.

TPPA 2019 ANNUAL MEETING

NEED FOR THE “CORRIDOR RULE”

• At the time PURA went into effect, there were situations

in which multiple electric utilities were already providing retail electric service to the same general area.

• The Commission's division of the state into service areas,

each to be served by one utility, could have resulted in a utility's inability to continue provide service to some of its customers that may end up in another utility's service

• area. This situation would have "stranded" the utility's

power lines within the service area of another facility.

• The Corridor Rule was created to address this scenario.

TPPA 2019 ANNUAL MEETING

THE “CORRIDOR RULE”


• 16 Tex. Admin. Code § 25.101(e)(3):
• Certificates of convenience and necessity for existing service areas and
• facilities. For purposes of granting these certificates for those facilities and

areas in which an electric utility was providing service on September 1, 1975, or was actively engaged in the construction, installation, extension, improvement of, or addition to any facility actually used or to be used in providing electric utility service on September 1, 1975, unless found by the commission to be otherwise, the following provisions shall prevail for certification purposes: (3) The facilities and service area boundary for the following types of electric utilities providing distribution or collection service to any area, or actively engaged in the construction, installation, extension, improvement of, or addition to such facilities or the electric utility's system as of September 1, 1975, shall be limited, unless otherwise found by the commission, to the facilities and the area which lie within 200 feet of any point along a distribution line, which is specifically deemed to include service drop lines, for electrical utilities.

TPPA 2019 ANNUAL MEETING

• The Corridor Rule applied to situations in which boundaries

created in the certification dockets stranded a utility's pre-existing distribution lines in another utility's certificated service area.

• The rule allowed a utility with distribution lines in place as of

September 1, 1975, to obtain a CCN for a 400-foot wide corridor (200 feet on either side of the lines) within which the utility could provide service to customers located inside the other utility's service area.

• The certification allowed under the Corridor Rule creates a dual

certification within the corridor where customers in that area may be served by both the utility with the stranded lines and the utility certified for that service area.

• The rule automatically applied to all certification dockets unless

the Commission provided otherwise.

TPPA 2019 ANNUAL MEETING

THE “CORRIDOR RULE”


HOW HAS THE PUC EXAMINED “CORRIDOR” CASES?

• The Commission has had several opportunities to review

the “Corridor Rule” and guide utilities in its application.

• The Commission in Docket No. 2103 opined as to the

intent behind the “Corridor Rule,” stating:

• The purpose of [the “Corridor Rule”] was to provide

reasonable service area for grandfathered facilities so they may be economically utilized to their fullest extent. Before the enactment of the PURA, there were no controls

• ver where a particular line could reasonably serve. After

the enactment of the PURA, the intent of [the “Corridor Rule”] was to avoid waste and unnecessary duplication

• f facilities while still protecting the newly certificated

service areas of other utilities competing in the same area.

TPPA 2019 ANNUAL MEETING

PUC Docket No. 2103 - Brownsville

• CP&L and MVEC alleged that BPUB was providing electric service to three

developments, all outside Brownsville’s city limits.

• BPUB contended that these three developments are within its certificated

service area. BPUB argued that the certificated service area boundaries indicated on Staff Exhibit #2 suffer from distortion inherent in the county highway map drawn by the Texas Department of Transportation and in the color coding system used by the Commission on Staff Exhibit #2 to designate service area boundaries. BPUB argued that this distortion is such that it is impossible to locate the service area boundaries on the ground with any reliable accuracy.

• Commission found BPUB was grandfathered to a service area in two of the

subdivisions consisting of the distribution lines in place on September 1, 1978 and all the area located within 200 feet in any direction of any point on any such distribution line, including the terminal point of any such distribution line.

TPPA 2019 ANNUAL MEETING

PUC DOCKET NO. 36649 – Burleson ISD

• Oncor and United Electric Operative Services (United) filed a petition

for a declaratory order regarding whether United was authorized to provide retail electric delivery service to the main building of Burleson Independent School District’s high school.

• Final order summary:
• The Commission found that ~85% of the main building would be located in

an area singly certificated to Oncor, while 15% would be located in an area dually certificated to Oncor and United.

• The Commission concluded: “Where any portion of a consuming facility is

located within a retail electric utility’s certificated service area, the consuming facility is located in that utility’s certificated service area and that utility is authorized and obligated to provide electric service to the entire consuming facility.”

• Finally, the Commission concluded that United, in accordance with its

CCNs, was authorized to service the entire main building.

TPPA 2019 ANNUAL MEETING

PUC DOCKET NO. 42110 –Chevrolet Dealership

• Central Texas Electric Cooperative, Inc. (CTEC) filed a petition for a

cease-and-desist order and declaratory order regarding service to the Bob Price Chevrolet Dealership, located in the City of Fredericksburg.

• Final order summary:
• The Commission found that both CTEC and the city are certificated to

serve the 200-foot area from the City’s SH 16 distribution line.

• The Commission concluded that the entire dealership is a consuming

facility within the meaning of PURA § 37.051(b).

• The Commission denied CTEC’s petition for a cease-and-desist order.
• The Commission ruled that the city is entitled to serve the entire

dealership because the dealership is a single consuming facility and a portion of the consuming facility is located within an area in which the city is certificated to provide service.

TPPA 2019 ANNUAL MEETING

PUC DOCKET NO. 43999 – Ira ISD

• Oncor filed a petition for a cease-and-desist order against Big Country

and a declaratory order regarding service to the Ira Independent School District.

• Final order summary:
• The Commission found that ~5% of the campus was located in an area

dually-certificated to Oncor and Big Country, and that ~95% of the campus was located in an area singly-certificated to Oncor.

• The Commission found that the Ira ISD high school complex is a “consuming

facility” within the meaning of PURA § 37.051(b).

• The Commission denied Oncor’s petition for a cease-and-desist order.
• The Commission ruled that Big Country is entitled to serve the entire Ira

ISD high school complex because the campus is a single consuming facility, and a portion of the consuming facility is located in an area where Big Country is certificated to provide service.

TPPA 2019 ANNUAL MEETING

PUC DOCKET NO. 47163 - Coleman

• The City of Coleman filed a complaint and request for a cease-and-desist order

against Coleman County Electric Cooperative, Inc., pertaining to CCEC’s provision

• f retail electric service within the City’s municipal boundaries.
• City Arguments:
• The Commission did not explicitly find, conclude, or order in the original 1976

certification docket that CCEC had grandfathered rights to use existing facilities to provide electric service in the City of Coleman, as the Commission had done for CCEC facilities in other municipalities.

• The Commission found in the original docket that CCEC “has facilities in place within the

cities of Miles, Santa Anna and Ballinger as shown on its application and facilities maps filed with the Commission.” No mention of Coleman.

• General grant of a corridor for the facilities identified on CCEC’s application.
• In the alternative, if CCEC was originally granted a corridor certificate, CCEC’s

facilities being used today are not the same “facilities in place” on September 1, 1975, and a corridor right is not granted in perpetuity.

• A reasonable interpretation of Commission rules and comparative precedent leads to the

conclusion that the addition or upgrade of facilities would not qualify as “existing facilities” under the Corridor Rule pursuant to 16 TAC § 25.101(e)(3), nor would they be “facilities which were in place”

TPPA 2019 ANNUAL MEETING

COLEMAN FINAL ORDER

• Final order summary:
• The Commission found that CCEC was granted a

CCN in the City’s limits in PUC Docket No. 61, and that the Commission had not revoked that CCN since.

• The Commission concluded that CCEC’s provision of

retail electric service to customers located within 200 feet of CCEC’s distribution line does not violate PURA §§ 39.105(b) or 41.052(a).

• The Commission denied the City’s request for a

cease-and-desist order, and dismissed the City’s complaint.

TPPA 2019 ANNUAL MEETING

CRITICAL HOLDINGS FROM COLEMAN

• Under PURA § 37.051, only the Commission, not utilities or any other

entities, can set certification boundaries. The Commission is restricted from granting additional certification in a singly certificated area unless the utility that is already certificated is not providing service to that area and cannot do so adequately. PURA does not authorize the Commission to act in equity with regard to certification.

• Just because you were serving in the area, and the other utility knew about it

and didn’t’ complain, doesn’t give you the right to continue to serve.

• Any agreement between the parties regarding service to customers that

has not been approved by the Commission has no legal relevance under PURA.

• Dismantling and subsequent rebuilding of lines that were certificated

pursuant to the Corridor Rule, does not violate the rule.

• Maintenance and upgrades to distribution lines, installation of service

drops and transformers, and conversion of a single-phase distribution line to a three-phase distribution line by CCEC does not violate the Corridor Rule.

TPPA 2019 ANNUAL MEETING

THE “CORRIDOR RULE” IN THE COURTS

• There has been no appeal to State Court of any of the

Commission’s signature “Corridor Rule” rulings as described.

• The only major court ruling has been limited to Lamb

County Elec. Co-op., Inc. v. Pub. Util. Com'n, 269 S.W. 3d 260 (Tex. App.—Austin 2008, pet. denied).

• Lamb County Electric Cooperative asserted that Southwestern

Public Service Company (“SPS”) had exceeded the scope of its certificates of convenience and necessity and was improperly providing electricity to oil field customers inside Lamb County’s service area.

TPPA 2019 ANNUAL MEETING

LAMB COUNTY CASE

• The original hearing report stated that as part of the agreements, the utilities agreed to

waive any right to provide service to customers through the corridor rule.

• ”[t]he agreement[s] would allow the parties to keep existing customers but would

prohibit taking a new customer outside of certificated areas” and were “restricted to service of existing customers.”

• The court ruled that certification maps were not the only evidence Public Utility

Commission could examine when determining whether a utility could serve oil field customers, as the issue of the geographical boundaries between utility and cooperative were not in dispute, instead issue was the extent of utility's authority to provide electricity to utility's preexisting oil field customers, and the certification maps did not unambiguously establish the extent to which utility could provide electricity to customers in cooperative's service area.

• Investor-owned electric utility's authority to provide electricity to preexisting oil field

customers in electric cooperative's certified service area did not expire as a result of utility allegedly providing service that exceeded amount allowed when cooperative's service area was initially certified, as utility and cooperative had entered into agreements that were incorporated into certificates of convenience and necessity issued to utility and cooperative, the agreements allowed utility to provide electricity to meet the future needs of its customers located in cooperative's service area, and Public Utility Commission never made a determination stating that utility's authorization to provide service in cooperative's service area would expire if utility exceeded its authorization.

TPPA 2019 ANNUAL MEETING

CASE STUDY: CITY OF SANGER

• Our Firm was called on by the City of Sanger to

examine their service territory and their ability to serve a specific development.

• A question arose as to whether Sanger or CoServ could

provide service to the development.

• It required examining the 1976 mapping and

interpreting marker colors that were less than clear.

• Ultimately we reached an agreement with CoServ as to

service, without first scratching our heads when looking at the maps…

TPPA 2019 ANNUAL MEETING

HOW CAN UTILITIES AVOID CONFLICT?

• Go get a copy of your service territory map from the PUC!
• Utilities should examine their entire service area, and

ensure you have accurate mapping to confirm your service territory.

• Digitize your mapping, Google Earth, etc.
• Including identifying your own lines, those in existence, and

those in existence in 1975.

• Identify your neighboring utilities’ lines, and coordinate with

them to determine areas where there may be possible confusion.

• Don’t wait until a developer comes in to determine

whether you can or cannot serve an area, be proactive.

• Look for opportunities to come to alternative agreements

with neighboring utilities, through service area swaps or exceptions, as opposed to costly PUC litigation.

TPPA 2019 ANNUAL MEETING

Cody Faulk

cfaulk@lglawfirm.com 512.322.5817

Lloyd Gosselink Rochelle & Townsend, P.C. www.lglawfirm.com 512.322.5800