LG attorneys help negotiate El Paso rate cut

The electric utility that serves the city of El Paso has agreed to a $15 million annual rate decrease after it was determined through a financial review that its revenues were excessive.

The settlement comes at no cost to El Paso ratepayers, and will result in lower rates for both businesses and residential customers. It also represents a rare victory for electric consumers in such cases, which more typically lead to rate hikes. Lloyd Gosselink attorneys Geoffrey Gay and Georgia Crump were among those representing the city during the negotiations.

Residents in El Paso will get a rare rate cut.

Public Utility Commission spokesman Terry Hadley told the online Texas Energy Report that it's been 15 years since a similar rate case resulted in a big drop in customer bills. When combined with a related reduction in the fuel portion of the bill, a typical residential customer should see a reduction of about $4 per month.

"I'm thrilled! This is a victory for people and small businesses of El Paso," said El Paso City Councilmember Cortney Niland, on her Twitter account.

El Paso is located outside the area of the state with electric deregulation, and the company that serves its residents — the El Paso Electric Company — remains rate regulated. In October the city called upon El Paso Electric to justify its rates. The company responded by filing paperwork in which it requested a $26 million rate increase. But under the deal approved April 17, the company instead must submit to a $15 million rate cut, effective in May.

For residential customers, the settlement will result in rate savings of about $1.5 million annually — but in the form of a credit to summer electric bills. For business customers, the rate cute will amount to savings of about $13.5 million annually. The cost of reviewing the case will be borne by the company only, and not by its customers. El Paso Electric also has committed to provide an additional $2.2 million towards an economic development incentive program.

The company’s rates have typically been somewhat high in comparison to rates charged in other areas of Texas exempt from electric deregulation, and often higher than rates in deregulated areas. The general trend statewide is that average electricity prices in areas exempt from deregulation typically are lower than average prices in deregulated areas.

The last time El Paso Electric cut its rates was in 1998.

The Oncor Rate Case: Shifting a $90 million tax burden onto Texas residents

Oncor customers could see their rates go up by about $130 million annually, according to an analysis of several preliminary decisions rendered by the Texas Public Utility Commission in the utility’s pending rate case.

The analysis also shows that as a consequence of just one PUC decision, the burden of paying about $90 million in corporate taxes would get shifted onto Oncor’s captive ratepayers. That single decision represents nearly two-thirds of the annual rate increase, according to the analysis.

“By shifting this tax burden onto Oncor’s customers, the PUC will be increasing the cost of electricity for millions of Texas residents,” said Geoffrey Gay, general counsel of the Steering Committee of Cities Served by Oncor that developed the analysis. He said evidence developed in the case shows that Oncor customers should be getting a rate cut, not a rate hike.

The Steering Committee of Cities Served by Oncor is a coalition of about 100 municipalities and political subdivisions that represents consumer interests before the PUC. The Steering Committee analyzed the potential effects of rate case decisions rendered by the PUC during a meeting on July 30th.

The regulated monopoly wants permission to hike rates by about $253.4 million annually. By contrast most other parties in the case — including the PUC’s own staff — have concluded that the company already collects too much and should instead lower rates. The Steering Committee estimates Oncor’s overearnings at about $175.4 million annually.

Oncor has about 7 million customers in Texas. It is the state’s largest transmission and distribution utility. Because it provides transmission services, all of its customers — regardless of their retail electric provider — would have to pay the higher rates.

The PUC’s three commissioners could render an official decision in the rate case later this month.

-- R.A. Dyer