City continues to negotiate with electric companies as rate increases loom

high voltage post.High-voltage tower sky background (photo courtesy of Deposit Photos)

Both electric transmission and distribution utilities that serve Lewisville have requested to increase customer rates in the past couple months, with Lewisville City Council rejecting an application by Oncor Electric and suspending an increase by Texas-New Mexico Power.

TNMP, who serves a majority of Lewisville, submitted a filing in late May, wanting to increase system-wide transmission and distribution rates by $33.3 million, according to background material provided to the council. At their June 18 meeting, council suspended the increase and hired Lloyd Gosselink and consultants to evaluate it.The suspension lasts for 90 days after the set date for the increase, which was set to be July 5.

Oncor Electric submitted an application to the city in early April, which was rejected by council at their May 7 meeting. According to background material provided to the council on that item, Oncor was attempting to increase their distribution revenues of a little more than $19 million, but the city found the increase unreasonable. The increase would impact the DFW Metroplex.

Both the resolution to reject Oncor’s increase and the one to suspend TNMP’s price increase also call for hiring Gosselink, which has worked with the city in the past. The firm will review both filings and negotiate with Oncor.

In its filing, TNMP requested an approval of a 23.4 percent increase to residential rates and an 11.8 percent increase in street lighting rates. The average customer bill would have seen an increase of $12.21. If the city fails to pursue action on the suspension prior to Oct. 3, which would be the 90-day mark, the increase will be deemed effective.

According to testimony from TNMP President Neal Walker, more than eight years have passed since the company’s last base rate change. Walker stated the company has filed this to address increases in cost of service, which have been serving customers but not being reflected in the rate base.

In short, the request allows TNMP to update its rate base to reflect new expenses and considers impacts from the Tax Cuts and Jobs Act of 2017. The details of this increase show TNMP has a projected cost of service of a little less than $332 million. This has led to a revenue deficiency of around $31 million, according to testimony.

“We anticipate that this will probably continue through most of the rest of this year,” TNMP Communications Representative Eric Paul said. “What we are doing at this point is responding to RFI’s (Request for Information) [from the cities].”

These RFI’s deal with a litany of things, such as invoices for expenses, legal fees, information regarding specifics to the increases and outlines of plans and programs.

Oncor’s request comes under the “Distribution Cost Recovery Factor,” which was a rule passed in 2011 that allows utilities to increase rates on an annual basis to match new capital expenditures made on their distribution systems, according to the Texas Coalition for Affordable Power.

The increase was set to occur in September, and would see an increase of about 22 cents for every 1,000 kilowatt-hour bill.

Oncor representatives could not be reached for this story after several attempts and calls to their media department dating back to three weeks ago. But the application submitted to the city shows the company requesting approval for a Distribution Cost Recovery Factor, which would allow them to adjust rates based on how their distribution costs change.

Another thing the application notes is the reduction of tax rates due to the Tax Cuts and Jobs Act of 2017, which reduced the company’s federal income tax rate from 35 percent to 21 percent. This new tax rate would eventually allow customers to save money on their rates. The new DCRF would anticipate this new tax rate, but the application itself does not propose it at this time.

According to a Dallas Morning News article, Oncor will be working with the Public Utility Commission of Texas to try and figure out the best way to return these tax benefits to their customers. At the time of their last negotiation with the PUC, the rate had already been settled by the time the tax overhaul took place.

Oncor serves the eastern part of Lewisville, with TNMP serving the majority of the city.

While electric customers purchase their electric power directly from retail electricity provider, the transmission and distribution utility’s portion of the bill from TNMP or Oncor is passed along to the customer.

For more information about these potential changes, you can visit TNMP or Oncor’s websites.