PUC Adopts Rules Establishing Avenue for TDUs to Contract With Power Generation Companies for Energy Storage

The Public Utilities Commission of Texas issued an order adopting new 16 TAC §25.58 a proceeding to implement PURA §35.153(i) by adopting the new 16 TAC §25.58, establishing an avenue for transmission and distribution utilities (TDUs) to contract with power generation companies (PGCs) for electric energy storage facility (EESF) capacity.

Among other things the PUCT order:

(1) confirmed that utilities are “required to provide REPs with a 45-day notice before approved rates become effective”;

(2) revised the rule to reflect that PURA §35.153(i) “establishes lease accounting criteria for only those EESF contracts that a TDU seeks a return on contract payments,” and clarified that it does not require TDUs to seek a return on such contracts;

(3) revised the rule to clarify it does not authorize TDU ownership of EESFs;

(4) revised the rule to provide that TDUs must “satisfy the accounting standards relevant to a TDU for a capital lease or finance lease” in order for TDUs to recover a return on investment as part of the “Reasonable and necessary costs associated with a contract for EESF capacity”;

(5) clarified that “eligible costs under §25.58 may be allocated to, and collected from, a TDU’s distribution-level rate classes,” with only “retail transmission service customers and wholesale transmission service at transmission voltage customers” excluded from such allocation and collection; and

(6) revised the rule to “remove the three-month application timeframe following a contract amendment that reduces the rate of necessary cost recovery.”