Exhibit 10 (w)
PUC DOCKET NO. 25230
STIPULATION AND JOINT SS. BEFORE THE
APPLICATION FOR SS. PUBLIC UTILITY COMMISSION
APPROVAL THEREOF SS. OF TEXAS
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF, INCLUDING
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REQUEST FOR EXPEDITED INTERIM RELIEF
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TO THE HONORABLE PUBLIC UTILITY COMMISSION OF TEXAS:
NOW COMES TXU Electric Company ("TXU Electric" or "Company"), on behalf of
itself, its affiliates, and its successors in interest; the Commission Staff
("Staff"); the Office of Public Utility Counsel ("OPC"); the Cities Served by
TXU Electric; Texas Industrial Energy Consumers; Texas Retailers Association;
and AES New Energy; all hereinafter referred to as the "Joint Applicants," and
announce that they have reached a settlement of numerous issues concerning the
Company's transition to competition and related Commission and judicial
proceedings. Entry of a Commission order adopting this Stipulation and Joint
Application for Approval Thereof, Including Request for Expedited Interim Relief
("Stipulation") is in the public interest for the following reasons:
o implementation of the major transition provisions of 1999 Senate Bill No. 7
for TXU Electric, its affiliates, and its successors in interest will be
completed without the need for lengthy and costly litigation;
o the costs and benefits resulting from the resolution of the issues are
reasonably and fairly shared among TXU Electric and all customer classes;
and
o all customers of TXU Electric and its successors will have certainty with
respect to the matters agreed to herein.
The Stipulation includes the following provisions:
o TXU Electric's stranded costs, not including regulatory assets, are $0.0,
including amounts otherwise recoverable as environmental clean-up costs
underss.39.263 of the Public Utility Regulatory Act ("PURA");
o customers will not make any payment as a result of the wholesale "clawback"
provided in PURA ss. 39.262(d)(2);
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 1
o TXU Electric's successor transmission and distribution ("T&D") utility will
provide a nonbypassable excess mitigation credit in a total amount of $350
million during 2002 and 2003;
o T&D rates of TXU Electric's affiliated T&D utility account for the reversal
of depreciation redirection previously accomplished by TXU Electric in
1998, 1999, 2000, and 2001;
o customers of TXU Electric will bear no additional costs associated with TXU
Electric's repurchase of the minority owners' interests in Comanche Peak
Steam Electric Station;
o TXU Electric will be entitled to recover its regulatory assets through the
issuance of $1.3 billion of transition bonds and will not seek any
additional recovery of those regulatory assets;
o TXU Electric's fuel cost recovery, including the recovery of the Company's
December 31, 2001 unrecovered fuel cost balance and the reconciliation of
fuel costs incurred from July 1998 through December 31, 2001, is resolved;
o the determination of a retail "clawback" credit to be instituted on January
1, 2004 that will be applied as a discount to retail delivery rates if
certain conditions are met, is simplified; and
o numerous ongoing litigated disputes and appeals in matters affecting TXU
Electric's rates and stranded cost recovery are resolved and additional
disputes and appeals that would arise if this Stipulation were not approved
are avoided.
The matters addressed in this Stipulation include, but are not limited to, the
following:
o Remand of Docket No. 21527 (Application of TXU Electric Company for
Financing Order to Securitize Regulatory Assets and Other Qualified Costs),
PUC Docket No. 24892 (the remand from the Texas Supreme Court of TXU
Electric's application for a financing order);
o except as expressly provided in Paragraphs V(14) and VII herein, all issues
resolved by the Commission's final Order in Application of TXU Electric
Company for Approval of Unbundled Cost of Service Rate Pursuant to PURA ss.
39.201 and Public Utility Commission Substantive Rule ss. 25.344, PUC
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 2
Docket No. 22350, SOAH Docket No. 473-00-1015 (TXU Electric's UCOS case);
o Remand of Docket No. 9300 (Application of Texas Utilities Electric Company
for Authority to Change Rates), PUC Docket No. 22652, SOAH Docket No.
473-00-1968 (the remand from the Texas Supreme Court related to the
Comanche Peak minority owner disallowance);
o TXU Electric Company v. Public Utility Commission of Texas, Cause No.
GN0-02885 in the Travis County District Court, 353rd Judicial District (TXU
Electric's appeal of Order Nos. 14 and 17 in PUC Docket No. 22344);
o TXU Electric Company v. Public Utility Commission of Texas, Cause No.
GN0-03687 in the Travis County District Court, 200th Judicial District (TXU
Electric's appeal of the Commission's Order on Certified Issues in PUC
Docket No. 22350);
o TXU Electric Company v. Public Utility Commission of Texas, Cause No.
GN1-03171 in the Travis County District Court, 345th Judicial District (TXU
Electric's appeal of the Commission's Interim Orders in PUC Docket No.
22350);
o TXU Electric Company v. Public Utility Commission of Texas, Cause No.
GN1-03825 in the Travis County District Court, 53rd Judicial District (TXU
Electric's appeal of the PUC Docket No. 23806 order concerning the
Company's 2000 annual report of costs and revenues);
o Texas Utilities Electric Company v. Public Utility Commission of Texas,
Cause No. 96-10874 in the Travis County District Court, 261st Judicial
District (the appeal of the Commission's adoption of an integrated resource
planning rule in PUC Project No. 15166);
o In re: TXU Electric Company, No. 01-0547 in the Supreme Court of Texas
(Writ of Mandamus action concerning excess mitigation credit); and
o any appeal by TXU Electric of the Commission's adoption of Substantive Rule
25.263 (the true-up rule adopted in PUC Project No. 23571).
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 3
I.
The Joint Applicants and their authorized representatives are as shown in
the signature blocks set forth at the end of this Stipulation.
II.
The Commission has jurisdiction over the parties and the subject matter of
this Stipulation by virtue of Sections 14.001, 32.001, 32.102, 33.002(b),
36.001, 36.003, 39.001(b), 39.001(d), 39.051, 39.154(e), 39.201, 39.202(c),
39.252, 39.257, 39.262, 29.263 and Subchapter G of the Public Utility Regulatory
Act, Title 2 of the Texas Utilities Code ("PURA").
III.
All of the customers and classes of customers of TXU Electric and its
affiliated T&D utility in all territories historically served by TXU Electric
will be affected if this Stipulation is approved; provided, however, that this
Stipulation will not affect customers located in the certificated service area
of TXU SESCO that will receive delivery service over the facilities of TXU
Electric's affiliated T&D utility on and after January 1, 2002.
IV.
The Joint Applicants, after extensive negotiations, have reached a
compromise and settlement to resolve numerous issues related to the transition
to retail competition, including the true-up proceedings provided in PURA ss.ss.
39.201, 39.202(c), and 39.262, which they urge the Commission to accept. The
Joint Applicants' support of this Stipulation is expressly contingent upon the
Commission's issuing orders that are in all respects consistent with this
Stipulation, as provided in Exhibits A, B, and C(1) to this Stipulation, and
that include, inter alia, Commission findings that this Stipulation is in the
public interest and that it is in the public interest that neither TXU Electric
nor any of its affiliates or successors in interest shall participate in any
manner in any proceeding related to TXU Electric, its affiliates, or its
successors in
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(1) Issuance of an order as provided in Exhibit C will be necessary only if the
Supreme Court grants the Company's petition for writ of mandamus in Cause No.
01-0547.
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 4
interest pursuant to PURA ss.ss. 39.201(l), 39.202(c), or 39.262 (except for the
compliance filing specifically described herein in Paragraph V(20)). This
Stipulation reflects a compromise settlement and accommodation among the Joint
Applicants, and all Joint Applicants agree and represent that the terms and
conditions herein are interdependent and no one of them is bound by any portion
of this Stipulation outside the context of the Stipulation as a whole.
Therefore, if any final order in this Docket is inconsistent with this
Stipulation in any respect, then any party hereto that is adversely affected by
that inconsistency has the right and option of withdrawing its consent to this
Stipulation at any time no later than five business days after the date upon
which an order issued in this proceeding becomes final under Texas Government
Code ss. 2001.144 and shall retain all legal rights as if that party had not
been a party to this Stipulation. If TXU Electric withdraws its consent pursuant
to the preceding sentence, such withdrawal shall immediately, without further
action by any of the other Joint Applicants, render this Stipulation null and
void, thereby releasing all of the Joint Applicants from all commitments and
obligations contained herein and entitling all Joint Applicants to pursue their
legal rights and remedies as if they had not been a party to this Stipulation.
V.
The Joint Applicants hereby stipulate and agree as follows and request the
Commission to find and order the following:
(1) That TXU Electric is entitled to have the Commission issue a financing
order identical to the financing order attached hereto as Exhibit B
(with the exception of certain procedural statements and Findings of
Fact Nos. 15B, 15C, 16A, and 17A therein, which must be completed
before adoption) that empowers TXU Electric or its successor or assign
to issue $1.3 billion of transition bonds to securitize its
generation-related regulatory assets as reported by TXU Electric in
its 1998 annual report on SEC Form 10-K as regulatory assets and
liabilities and other qualified costs. Such financing order shall be
identical to the financing order previously issued by the Commission
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 5
in PUC Docket No. 21527 with the exception that portions are revised
to conform to the mandate of the Supreme Court of Texas issued in
Cause No. 00-00936 and to revise the total dollar amount of authorized
transition bonds and the period in which such bonds may be issued to
conform to this Stipulation. TXU Electric will be authorized to issue
up to $500 million in transition bonds immediately upon the entry of
the financing order and to issue the remainder of the transition bonds
on or after January 1, 2004 consistent with the requirements of
Exhibit B. The transition charge ("TC") to be implemented by TXU
Electric's successor T&D utility to collect the costs of the initial
issuance of transition bonds and qualified costs shall be designed so
that the annual amount collected under the TC in 2002 and 2003 shall
not exceed the annual amount that would have been collected under a TC
that would have been authorized by the Commission's Order issued on
May 1, 2000 in PUC Docket No. 21527, using the interest rate assumed
in the expected case scenario in that Order. Further, the TC shall be
designed so that the difference between the amounts recovered under
the TC in 2002 and 2003 and the amount that would have been recovered
under the TC in 2002 and 2003 if the TC were designed as a
mortgage-type amortization shall be recovered in years 2004, 2005, and
2006.
(2) That, pursuant to PURA ss. 39.303(f), such financing order shall not
be subject to rehearing and any appeal of any issue addressed in such
financing order shall be entitled to expeditious treatment as
specified in PURA ss. 39.303(f).
(3) That TXU Electric will amortize the full $1,840,797,221 of retail
generation-related regulatory assets over a period of time determined
by the Company in consultation with its auditors but not to exceed the
life of the securitization bonds.
(4) That TXU Electric will not seek further recovery of its $1,840,797,221
of retail generation-related regulatory assets and that this
Stipulation resolves all issues related to those regulatory assets.
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 6
(5) That TXU Electric will not seek recovery of non-regulatory-asset
stranded costs as defined in PURA ss. 39.251, that TXU Electric is not
required to quantify its stranded costs using the methods specified in
PURA ss. 39.262(h), and that TXU Electric's non-regulatory-asset
stranded costs are conclusively determined to be $0.0 and are not
subject to reconsideration in any future proceeding.
(6) That this Stipulation resolves all issues related to TXU Electric's
stranded costs, and neither TXU Electric nor any of its affiliates or
successors in interest will have any obligation to return, refund, or
account for any positive excess of the market value of generation
assets over the net book value of those generation assets.
(7) That the Joint Applicants will not advocate a change in the law or
take a position in any proceeding that would affect this Stipulation
or require TXU Electric, its affiliates, or its successors in interest
to return any positive excess of the market value of its generation
assets over the net book value of those assets, except that this
Stipulation is not intended to otherwise impair the ability of the
Commission and OPC to communicate with the Texas Legislature. If the
Texas Legislature, the United States Congress, or any court considers
changing or interpreting the law in a manner that would require TXU
Electric, its affiliates, or its successors in interest to return any
positive excess of the market value of generation assets over the net
book value of those assets, then the Joint Applicants agree that this
Stipulation may be used as conclusive evidence demonstrating the
intent of the Joint Applicants, individually and jointly, to
permanently address and resolve TXU Electric's, its affiliates', and
its successors in interest's recovery of stranded costs and all issues
surrounding any positive excess of the market value of generation
assets over the net book value of those assets, irrespective of future
legislation or court decision. The Joint Applicants will not, by
agreeing to this Stipulation, be otherwise precluded from
communicating with the Legislature in a manner that does not conflict
with this Stipulation.
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 7
(8) That, if, pursuant to a change in the law or otherwise, the Commission
or any entity initiates a proceeding that would in any manner
establish or implement a requirement that TXU Electric or any of its
affiliates or successors in interest return, refund, or account for
any positive excess of the market value of generation assets over the
net book value of such assets, the Joint Applicants shall not advocate
any position in support of any such requirement; provided, however,
that this provision shall not preclude Staff or OPC from taking action
that is mandatory and non-discretionary pursuant to a law enacted
after the date this Stipulation is filed at the Commission.
(9) That this Stipulation fully and finally resolves all issues concerning
the stranded costs of TXU Electric, its affiliates, and successors in
interest. Consequently, the Joint Applicants will not advocate, in any
manner in any forum, that TXU Electric or any of its affiliates or
successors in interest should be required to participate in any manner
in any proceeding to finalize or true-up the stranded costs of TXU
Electric, its affiliates, or successors in interest pursuant to
PURAss.ss. 39.201(l) or 39.262 (except for the compliance filing
specifically described herein in Paragraph V(20)); provided, however,
that this provision shall not preclude Staff or OPC from taking action
that is mandatory and non-discretionary pursuant to a law enacted
after the date this Stipulation is filed at the Commission.
(10) That TXU Electric will reverse the previously redirected depreciation
of transmission and distribution to generation plant as provided in
the Commission's final Order in PUC Docket No. 22350 ("UCOS Order").
(11) That TXU Electric will not seek environmental retrofit stranded cost
recovery as provided in PURA ss.ss. 39.263 and 39.264.
(12) That any plants that are modified in accordance with PURA ss. 39.264
will, pursuant to PURA ss. 39.154(e), for purposes of calculating the
numerator specified in PURA ss. 39.154, reduce the installed
generation capacity owned and controlled by TXU Electric's affiliated
power generation company by the installed generation capacity of any
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 8
such modified grandfathered facility that is within an ozone
nonattainment area as of September 1, 1999.
(13) That, as reflected in proposed Rider TC (attached hereto as Exhibit
D), the transition charge related to the securitization referred to in
Paragraph V(1) will be collected utilizing the bond structure, rate
design, and cost allocation provided in the proposed financing order
attached as Exhibit B.
(14) That the proposed Rider EMC, attached hereto as Exhibit E, be approved
on an interim basis effective the first billing cycle of January 2002
(i.e., applicable to electricity service on and after January 1, 2002)
and on a final basis effective the first billing cycle immediately
following the Commission's approval of this Stipulation. Rider EMC
will implement an excess mitigation credit ("EMC") in a total amount
of $350,000,000 plus interest on the unamortized balance accrued at an
annual rate of 7.5 percent, such that all principal and interest is
accounted for and returned to retail electric providers based on a
monthly amortization through December 31, 2003. Such EMC will apply in
lieu of, and will wholly replace and supersede, the EMC authorized in
the UCOS Order.
(15) That the first $320,395,070 of the EMC described in Paragraph V(14)
will be allocated on the same basis as specified for the EMC
authorized in the UCOS Order except that the maximum EMC factor for
the Transmission Service EMC Class as shown on Rider EMC (attached
hereto as Exhibit E) shall be $1.360/kW and any amount of the first
$320,395,070 of the EMC that would have otherwise been allocated to
the Transmission Service EMC Class shall be allocated to the Primary
Service EMC Class; $11,397,534 of the EMC described in Paragraph V(14)
will be allocated to the Primary Service EMC Class to correct the
transposition of base revenues between rate classes that resulted in
the computational error in the Commission's determination of EMC
allocation factors in the UCOS Order (as discussed in Assignment of
Error No. 1 in TXU Electric's October 23, 2001 Motion for Rehearing in
PUC Docket No. 22350); and the remainder of the EMC described in
Paragraph V(14) shall be allocated as if the computational error in
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 9
the Commission's determination of allocation factors in the UCOS Order
were corrected as specified by TXU Electric in its October 23, 2001
Motion for Rehearing in PUC Docket No. 22350.
(16) That because this Stipulation resolves all issues related to stranded
costs and excess mitigation, the Company is not required to file an
annual report pursuant to PURA ss. 39.257 for the year 2001.
(17) That, as a result of this Stipulation, notwithstanding the
Commission's Substantive Rule 25.263 or any other applicable law,
there is no need for the Company, its affiliated retail electric
provider, its affiliated power generation company, its affiliated T&D
utility, and any other affiliates or successors in interest to file a
proceeding to finalize stranded costs pursuant to PURA ss.ss.
39.262(c) and 39.201(l); a final fuel reconciliation as required by
PURA ss. 39.202(c); or a true-up proceeding pursuant to PURA ss.
39.262(d), (e), (f), and (g), except for the compliance filing
specified in Paragraph V(20) related to the retail clawback specified
in PURA ss. 39.262(e).
(18) That if, for any reason, it is determined by a court of competent
jurisdiction that TXU Electric, its affiliates, or its successors in
interest must file or participate in any proceeding to finalize
stranded costs pursuant to PURA ss.ss. 39.262(c) and 39.201(l); a
final fuel reconciliation as required by PURAss. 39.202(c); or a
true-up proceeding pursuant to PURAss. 39.262(d), (e), (f), and (g),
the Commission's order approving this Stipulation shall be considered
a determination that TXU Electric's non-regulatory-asset stranded
costs are $0.0 and the Joint Applicants shall be limited to advocating
the positions contained in this Stipulation, including without
limitation the agreement that TXU Electric has no non-regulatory-asset
stranded costs - that is, that there is no positive excess of net book
value of TXU Electric's generation assets over the market value of
those assets and there is no positive excess of market value of TXU
Electric's generation assets over the net book value of those assets,
so TXU Electric has no positive non-regulatory-asset stranded costs
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 10
and no "negative stranded costs," however such term may be construed.
(19) That, except as expressly provided herein in Paragraphs V(14) and VII,
the Joint Applicants to this Stipulation intend for this Stipulation
to constitute a final, binding resolution of all issues addressed
herein that will resolve all issues related to: the unbundling
required by PURA ss. 39.051 (by virtue of the Joint Applicants
agreeing to not appeal the unbundling issues resolved by the UCOS
Order); the securitization of regulatory assets; the final
determination of stranded costs; the recovery of unrecovered fuel
balances; the final fuel reconciliation; the determination of
over-earnings; and all other issues associated with the true-up
proceedings anticipated by PURA ss.ss. 39.201(l), 39.202(c), and
39.262. As a result, the Joint Applicants to this Stipulation agree
that--
(i) they will not initiate or support in any fashion; and
(ii) except for Staff, will jointly file to dismiss-- any matter,
proceeding, or action that would require the Company or any of its
affiliates or successors in interest to file or litigate issues:
(a) in any way related to or deriving from the requirements of
PURA ss.ss. 39.051, 39.201, 39.202(c), or 39.262 as such
requirements pertain to TXU Electric, its affiliates, or its
successors in interest; or
(b) in any way related to or affecting any other issue addressed
herein;
provided, however, that this provision shall not preclude Staff or OPC
from taking action that is mandatory and non-discretionary pursuant to
a law enacted after the date this Stipulation is filed at the
Commission.
(20) That, with respect to the reconciliation required by PURA ss.
39.262(e), if TXU Electric's affiliated retail electric provider has
not satisfied the 40% loss of customer load test of PURA ss.
39.202(e)(1) or (2) before January 1, 2004, then on January 1, 2004,
TXU Electric's affiliated retail electric provider will begin paying
to TXU Electric's affiliated T&D utility a Retail Clawback Credit
("RCC") related to such residential or small commercial customer
class, to be paid over 24 months using the procedures specified in
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 11
Rider RCC (attached hereto as Exhibit F). The total amount of the
aggregate RCC payments will be based on the following calculation:
(a) the number of residential or small commercial customers served by
TXU Electric's affiliated T&D utility that are buying electricity from
TXU Electric's affiliated retail electric provider at the price to
beat on January 1, 2004, as indicated by ERCOT;
(b) minus the number of new customers who are buying electricity from
TXU Electric's affiliated retail electric provider and are not served
by TXU Electric's affiliated T&D utility on January 1, 2004, as
indicated by ERCOT;
(c) multiplied by $90.
For purposes of the RCC calculation, the term "small commercial
customer" shall not include unmetered lighting accounts unless such an
account has historically been treated as a separate customer for
billing purposes. For purposes of the RCC calculation, the number of
customers shall be determined in accordance with Commission
Substantive Rule 25.263. Because this Stipulation finally and
completely resolves the determination of stranded costs and the
calculation of the RCC, no other provision of Commission Substantive
Rule 25.263 shall apply to TXU Electric, its affiliates, or successors
in interest. The Company will make a compliance filing to demonstrate
the calculation described above. The only issues to be determined in
the administrative review of that compliance filing are whether TXU
Electric correctly determined the number of customers on which to base
the RCC calculation and whether TXU Electric correctly calculated the
total RCC amount by subtracting (b) from (a) and multiplying the
result by $90. TXU Electric's affiliated T&D utility will apply the
credit specified in this paragraph to the retail electric providers
serving customers in the residential or small commercial price to beat
classes. The Joint Applicants agree that Exhibit F to this
Stipulation, Rider RCC, should be approved. At any time during any
effective period of the RCC, if the Commission modifies the
residential or small commercial price to beat of the TXU affiliate REP
for any reason other than a fuel factor adjustment, the RCC shall be
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 12
incorporated into the calculation of such modification.
(21) That, notwithstanding Paragraph V(20), to the extent TXU Electric's
affiliated retail electric provider has satisfied the requirements of
PURA ss. 39.202(e)(1) or (2) or both before January 1, 2004, then TXU
Electric`s affiliated REP will not pay an RCC for the residential or
small commercial class or both, as appropriate.
(22) That TXU Electric will not further seek recovery of its December 31,
2001 balance of unrecovered eligible fuel expense.
(23) That, except as specifically provided by Paragraph V(14), the
Commission's order in this proceeding shall not affect the
Commission's final UCOS Order.
(24) That TXU Electric and its affiliated T&D utility will not seek any
change in base transmission and distribution rates that would take
effect before January 1, 2004, provided that TXU Electric or its
affiliated T&D utility shall not be precluded from:
(i) revising at any time its transmission rates to reflect changes in
invested capital pursuant to Commission Substantive Rule
25.192(g) and Finding of Fact No. 23A in Section III.F.2.e of the
Commission's final UCOS Order;
(ii) updating at any time its Transmission Cost Recovery Factor
pursuant to Commission Substantive Rule 25.193; or
(iii) updating its rates to reflect plant actually in service on
December 31, 2002 pursuant to Ordering Paragraph 6 in Section V.D
of the Commission's final UCOS Order.
(25) That the Commission should issue orders in this proceeding as provided
in Exhibits A, B, and C(2) to this Stipulation.
(26) That because the Joint Applicants have, in conjunction with agreeing
to this Stipulation, agreed to voluntarily relinquish certain rights
to contest the Commission's final Order in TXU Electric's UCOS case
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(2) Issuance of an order as provided in Exhibit C will be necessary only if the
Supreme Court grants the Company's petition for writ of mandamus in Cause No.
01-0547.
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 13
(Docket No. 22350) if certain specified conditions are satisfied, that
final UCOS Order should be considered a settlement of the issues in
TXU Electric's UCOS case, and the Commission's final UCOS Order in
Docket No. 22350 should not be regarded by the Commission as binding
precedent in future proceedings as to the appropriate principles or
methodologies for resolving such issues.
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 14
VI.
REQUEST FOR EXPEDITED INTERIM RELIEF
Should the Supreme Court of Texas grant the Company's petition for writ of
mandamus in Cause No. 01-0547, in accordance with PURA ss. 36.104 and Commission
Substantive Rules 22.5, 22.125(c), and 25.241(i), the Joint Applicants
respectfully request that the Commission immediately issue an order in this
proceeding that is consistent with Exhibit C so that the EMC contemplated by
this Stipulation and the T&D rates established in the final UCOS Order will be
effective the first billing cycle of January 2002. As more fully described
herein, the implementation in January 2002 of the EMC and the T&D rates
established in the UCOS Order are essential to the Stipulation.(3) If the
Supreme Court of Texas grants the Company's petition, that will invalidate the
excess mitigation credit established in the Commission's final UCOS Order. In
the absence of an immediate order authorizing the implementation of an EMC in
accordance with the negotiated settlement embodied in this Stipulation, TXU
Electric and its successor T&D utility would be without authority to implement
Rider EMC as proposed in this Stipulation.(4) Furthermore, if the Supreme Court
grants the Company's petition, that will invalidate the Commission's directive
in the UCOS Order that TXU Electric reverse the redirection of depreciation that
TXU Electric had accomplished for the years 1998, 1999, 2000, and 2001. Thus, in
the absence of an order from the Commission authorizing TXU Electric to
voluntarily, as part of the Stipulation, implement T&D rates as specified in the
UCOS Order (i.e., including the effect of reversing the previously accomplished
redirection of depreciation), TXU Electric and its successor T&D utility would
be without authority to offer T&D service at the UCOS Order T&D rates.
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(3) Tariffs to implement the T&D rates established in the final UCOS Order were
approved in TXU Electric's compliance filing (PUC Tariff Control No. 23921) on
December 10, 2001 and shall be referred to herein as the "UCOS Order T&D rates."
(4) PURA ss. 36.004(a); PUC Subst. R. 25.241(b) ("No utility shall directly or
indirectly offer any service, collect any rate or charge, give any compensation
or discount to a customer, or impose any classification, practice, or regulation
different from that which is prescribed in its effective tariff filed with the
commission.").
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 15
The Joint Applicants agree that in such event good cause would exist to
support the immediate issuance of an order that will implement Rider EMC and the
UCOS Order T&D rates on an interim basis effective the first billing cycle in
January 2002 for, inter alia, the following reasons:
o In the absence of such immediate interim relief, the competitive retail
market would open in January 2002 without an EMC in effect;
o In the absence of such interim relief, the competitive market would open in
January 2002 with higher T&D rates in effect than would be in effect if
reversal of the previously accomplished depreciation redirection were
accounted for, as in the UCOS Order T&D rates;
o Implementation of the EMC proposed in this Stipulation will provide more
"headroom" than would exist without the EMC;
o Using the UCOS Order T&D rates will also provide more "headroom" than would
exist if the effect of reversal of previously accomplished depreciation
redirection were not taken into account in establishing T&D rates;
o By providing more "headroom," the implementation of Rider EMC and the UCOS
Order T&D rates in January 2002 will make the initial competitive Texas
retail electricity market more attractive to competitive REPs, thus
providing customers with more choices for electricity service in the first
years of competition;
o There would be an imperative public necessity that the Commission take
immediate action to implement Rider EMC and the UCOS Order T&D rates on an
interim basis, so that the Stipulation would not immediately fail of its
own force and effect, which would otherwise happen by the terms of the
Stipulation if the EMC and UCOS Order T&D rates are not implemented in
January 2002;
o Preventing the Stipulation from failing would be in the public interest
because that will ensure that the Commission will have the opportunity to
continue processing this docket and will thus have the opportunity to
consider the terms of the Stipulation as a whole on its merits;
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 16
o Implementation of the Stipulation as a whole, including the EMC, will
ensure that customers will bear no charges for recovery of the Company's
non-regulatory-asset stranded costs or the Company's unrecovered fuel
balance;
o Rider EMC as proposed in this Stipulation and the UCOS Order T&D rates are
supported by all the Joint Applicants, who collectively represent the
interests of a broad range of stakeholders in the Texas electricity market;
o Because the Supreme Court had not issued any decision concerning the
Company's petition at the time that this agreement was being finalized
among the Joint Applicants and because the EMC and the T&D rates in the
Commission's final UCOS Order will go into effect if the Supreme Court does
not grant the Company's petition, it was impossible for the Joint
Applicants as a group to definitively anticipate the need for and to
request the immediate interim relief being requested until immediately
prior to finalizing and filing this Stipulation;
o Only the Commission can grant the requested relief, since TXU Electric or
its successor T&D utility would need an order authorizing the Rider EMC
tariff and the UCOS Order T&D rate tariffs in order to lawfully implement
those tariffs;
o The Joint Applicants' request would be necessitated by changed
circumstances that include the final resolution of this settlement
agreement among the Joint Applicants and the ruling by the Supreme Court of
Texas if the Supreme Court grants the Company's petition;
o Granting the interim relief requested would allow the retail market to open
with nonbypassable charges and T&D rates that will be lower than they would
be in the absence of such immediate interim relief;
o An immediate order approving the implementation of Rider EMC and the UCOS
Order T&D rates effective the first billing cycle in January 2002 would be
necessary to allow TXU Electric or its successor T&D utility to effect
uniform system-wide rates that incorporate the effect of the EMC and the
UCOS Order T&D rates proposed in this Stipulation; and
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 17
o Expedited action by the Commission to implement an interim rate or a
refunding mechanism, especially in conjunction with a settlement agreement,
is consistent with Commission precedent.(5)
Additionally, the Joint Applicants agree that, pursuant to Commission
Substantive Rule 22.125(e), interim Rider EMC and the UCOS Order T&D rates
should be subject to surcharge if the Commission does not approve the
Stipulation or to the extent that the Commission's final orders in this
proceeding do not establish an EMC or establish charges or T&D rates that differ
from the interim Rider EMC or the UCOS Order T&D rates.
VII.
Upon entry of final orders fully consistent with this Stipulation that
resolve all matters discussed in this Stipulation as specified herein and upon
expiration of all rights to appeal such orders or completion of any and all
appellate and remand proceedings regarding such orders, so that all matters
discussed in this Stipulation are resolved as specified herein with complete
finality, the Joint Applicants, except Staff, stipulate and agree that they will
promptly seek dismissal or agree not to seek:
(a) TXU Electric Company v. Public Utility Commission of Texas, Cause
No. GN0-02885 in the Travis County District Court, 353rd Judicial
District;
(b) TXU Electric Company v. Public Utility Commission of Texas, Cause
No. GN0-03687 in the Travis County District Court, 200th Judicial
District;
(c) TXU Electric Company v. Public Utility Commission of Texas, Cause
No. GN1-03171 in the Travis County District Court, 345th Judicial
District;
(d) In re: TXU Electric Company, Relator; No. 01-0547; In The Supreme
Court Of Texas;
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(5) E.g., Application of Texas-New Mexico Power Company for Approval of
Transition Plan and Statement of Intent to Decrease Rates, PUC Docket No. 17751,
1998 Tex. PUC LEXIS 6 (Sept. 4, 1998); Petition of West Texas Utilities for
Exception and Order of Refund, PUC Docket No. 6367, 11 P.U.C. Bull. 493 (July
29, 1985).
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 18
(e) Remand of Docket No. 9300 (Application of Texas Utilities
Electric Company for Authority to Change Rates), PUC Docket No.
22652;
(f) If not consolidated with this proceeding, Remand of Docket No.
21527 (Application of TXU Electric Company for Financing Order to
Securitize Regulatory Assets and Other Qualified Costs), PUC
Docket No. 24892;
(g) Except as expressly provided in this Paragraph VII, any appeal of
the Commission's final Order in TXU Electric's UCOS case (PUC
Docket No. 22350), including TXU Electric Company v. Public
Utility Commission of Texas, Cause No. GN1-04114 in the Travis
County District Court, 98th Judicial District;
(h) TXU Electric Company v. Public Utility Commission of Texas, Cause
No. GN1-03825 in the Travis County District Court, 53rd Judicial
District (TXU Electric's appeal of the Commission's Docket No.
23806 order concerning the Company's 2000 annual report of costs
and revenues);
(i) Texas Utilities Electric Company v. Public Utility Commission of
Texas, Cause No. 96-10874 in the Travis County District Court,
261st Judicial District (the appeal of the Commission's adoption
of an integrated resource planning rule in Project No. 15166);
and
(j) any appeal by TXU Electric of the Commission's adoption of
Substantive Rule 25.263 (the true-up rule adopted in Commission
Project No. 23571).
During the pendency of this proceeding and any appeal or remand of the
Commission orders issued in this proceeding, each appeal, remand, or other
proceeding listed in this Paragraph VII shall proceed, except that TXU Electric
shall, after the filing of this Stipulation, seek to abate PUC Docket No. 22652
(the remand of PUC Docket No. 9300). Additionally, TXU Electric retains the
right to respond to and defend any appeal brought by OPC pursuant to this
Paragraph VII or any appeal or continuation of litigation brought or maintained
by a party to any of the proceedings listed above who is not a Joint Applicant.
OPC retains the right to appeal the Commission's determinations in the final
Order in TXU Electric's UCOS case (PUC Docket No. 22350) concerning: the
calculation of authorized energy efficiency costs (Findings of Fact Nos. 112 and
113 in Section III.F.3.m.i); authorization for use of an "environmental adder"
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 19
(Findings of Fact Nos. 114 and 115 in Section III.F.3.m.i); the inclusion in
cost of service of existing demand-side management contracts (Findings of Fact
Nos. 117 and 118 in Section III.F.3.m.ii); the allocation of nuclear
decommissioning costs (Finding of Fact No. 190 in Section III.F.5.vii); and the
allocation of IDR meter costs to residential customers (Findings of Fact Nos.
157 through 164 in Section III.A.3.c.ii). Further, OPC retains the right to
re-assert its position regarding the allocation of local gross receipts taxes
(Finding of Fact No. 157 in Section III.F.5.i) if any non-settling party appeals
that issue. This Stipulation does not alter the Commission's right and duty to
participate in any case for judicial review of a Commission order, rule,
decision, or other action.
VIII.
The Joint Applicants, except Commission Staff, are contractually bound by
this Stipulation. Although not contractually bound, the Commission Staff agrees
to advocate the positions contained in this Stipulation in any Commission
proceeding concerning or affecting the issues addressed herein. The Joint
Applicants further agree: (1) to urge the Commission to consider and approve
this Stipulation as quickly as possible; and (2) to participate in this
proceeding and actively advocate the approval of this Stipulation.
IX.
Except as otherwise provided in this Paragraph IX, the Joint Applicants
further agree that if a reviewing court determines, for any reason, that a
Commission order adopting this Stipulation is invalid or unenforceable, the
Joint Applicants, except Commission Staff, shall nonetheless be contractually
bound by this Stipulation and shall advocate or not oppose the positions
contained in this Stipulation in any proceeding concerning or affecting the
issues settled by this Stipulation, including without limitation the
securitization of TXU Electric's regulatory assets, the quantification of TXU
Electric's, its affiliates', or its successors in interest's stranded costs, the
final resolution of fuel-related cost recovery, the amount of an EMC, and the
methodology for determination of an RCC. Although not contractually bound, the
Commission Staff agrees to advocate the positions contained in this Stipulation
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 20
in any Commission proceeding concerning or affecting the issues settled by this
Stipulation, including without limitation the securitization of TXU Electric's
regulatory assets; the quantification of TXU Electric's, its affiliates', or its
successors in interest's stranded costs; the final resolution of fuel-related
cost recovery; the amount of an EMC; and the methodology for determination of an
RCC. This Paragraph IX shall not bind the Staff or OPC to advocate any position
that a reviewing court has determined to be unlawful or contrary to PURA.
X.
The Joint Applicants expressly acknowledge and agree that oral and written
statements made by any party or its representative during the course of
settlement negotiations that led to this Stipulation or during the course of
this proceeding cannot be used or portrayed as an admission or concession of any
sort and shall not be admissible as evidence in this or any other proceeding in
any forum. Notwithstanding the preceding sentence, however, the Joint Applicants
further expressly acknowledge and agree that if the Commission issues orders
satisfying the conditions expressed in Paragraphs IV, V, and VI herein, this
Stipulation shall be binding upon the Joint Applicants and each and every
element of this Stipulation, including without limitation the agreements that
TXU Electric's non-regulatory-asset stranded costs shall conclusively and
finally be determined to be $0.0, and that neither TXU Electric nor its
affiliates or successors in interests shall be required to return, refund, or
account for any positive excess of the market value of generation assets over
the net book value of such assets, shall constitute a judicial admission of each
Joint Applicant to that effect, which shall be admissible in any proceeding in
any forum.
XI.
Each person executing this Stipulation represents that he or she is
authorized to sign this Stipulation on behalf of the party represented.
Facsimile copies of signatures are valid for purposes of evidencing this
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 21
Stipulation, and this Stipulation may be executed in multiple counterparts.
XII.
TXU Electric will provide notice of this Stipulation and this proceeding to
all parties in PUC Dockets Nos. 22350, 22652, 23806, and 24892; Cause No.
GN0-02885 in the Travis County District Court, 353rd Judicial District; and
Cause No. 96-10874 in the Travis County District Court, 261st Judicial District.
Additionally, TXU Electric will publish notice of the Stipulation and this
proceeding, in the form attached as Exhibit G, once each week for four
consecutive weeks in newspapers of general circulation in each county in which
TXU Electric is certificated to provide electric service.
XIII.
Because approval of this Stipulation and issuance of a financing order as
attached in Exhibit B will resolve the issues presented in PUC Docket No. 24892,
Remand of Docket No. 21527 (Application of TXU Electric Company for Financing
Order to Securitize Regulatory Assets and Other Qualified Costs), the Joint
Applicants request that the Commission consolidate that Docket No. 24892 with
this proceeding and incorporate into the record of this proceeding the entirety
of the record of Docket Nos. 21527 and 24892. Additionally, the Joint Applicants
respectfully request that the Commission subsequently sever Docket No. 24892
from this proceeding if the Commission does not ultimately issue an order in
this proceeding as provided in Exhibit B hereto, so that a financing order may
be issued in that severed docket.
WHEREFORE, PREMISES CONSIDERED, the Joint Applicants respectfully pray this
Honorable Commission to enter orders as set forth in Exhibits A, B, and C(6)
granting the relief requested in this Stipulation and to grant them such
additional relief not inconsistent therewith to which they are entitled.
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(6) Issuance of an order as provided in Exhibit C will be necessary only if the
Supreme Court grants the Company's petition for writ of mandamus in Cause No.
01-0547.
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 22
STIPULATED AND AGREED TO AND RESPECTFULLY SUBMITTED:
WORSHAM FORSYTHE WOOLDRIDGE LLP
Jo Ann Biggs
State Bar No. 02312400
Howard V. Fisher
State Bar No. 07051500
William A. Moore
State Bar No. 00794330
1601 Bryan Street, 30th Floor
Dallas, Texas 75201
Telephone: 214.979.3000
Fax: 214.880.0011
By: ___/s/ Jo Ann Biggs_______________
Attorneys for TXU Electric Company
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 23
OFFICE OF PUBLIC UTILITY COUNSEL
Suzi Ray McClellan
State Bar No. 16607620
Laurie Pappas
State Bar No. 12128690
Office of Public Utility Counsel
P.O. Box 12397
Austin, Texas 78711-2397
Telephone: 512.936.7500
Fax: 512.936.7520
By: ___/s/Suzi Ray McClellan_________
Attorneys for the Office of Public
Utility Counsel
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 24
STAFF OF THE PUBLIC UTILITY
COMMISSION OF TEXAS
Paula Mueller
State Bar No. 09681200
Public Utility Commission of Texas
1701 N. Congress Avenue
P.O. Box 13326
Austin, Texas 78711-3326
Telephone: 512.936.7000
Fax: 512.936.7268
By: _____/s/Paula Mueller_______
Attorney for Public Utility
Commission Staff and the
Public Interest
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 25
CITIES SERVED BY TXU ELECTRIC
Geoffrey M. Gay
State Bar No. 07774300
Lloyd Gosselink Blevins Rochelle
Baldwin & Townsend, P.C.
Suite 1800
111 Congress Avenue
Austin, Texas 78701
Telephone: 512.322.5800
Fax: 512.472.0532
By: ___/s/Geoffrey M. Gay_________
Attorneys for Cities Served by
TXU Electric
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 26
ANDREWS KURTH MAYOR DAY
CALDWELL & KEETON, LLP
Lino Mendiola, III
State Bar No. 00791248
Suite 1700
111 Congress Avenue
Austin, Texas 78701
Telephone: 512.320.9200
Fax: 512.320.9292
By: ____/s/Lino Mendiola, III_____
Attorneys for Texas Industrial
Energy Consumers
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 27
LAW OFFICE OF JIM BOYLE, PLLC
Jim Boyle
State Bar No. 02795000
1005 Congress Avenue, Suite 550
Austin, Texas 78701
Telephone: 512.474.1492
Fax: 512.474.2507
By: ___/s/Jim Boyle_____________
Attorneys for Texas Retailers
Association
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 28
AES New Energy
Vanus J. Priestley
Vice President
1301 Capital of Texas Highway South
Suite A-304
Austin, Texas 78746
Telephone: 512.381.1900
Fax: 512.381.1898
By: ___/s/Vanus J. Priestley____
Vanus J. Priestley
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 29
WORSHAM FORSYTHE WOOLDRIDGE LLP
Carolyn Shellman
State Bar No. 18196200
1005 Congress Avenue, Suite 1050
Austin, Texas 78701
Telephone: 512.349.6433
Fax: 512.349.6485
By: ____/s/Carolyn Shellman____
Attorney for TXU Energy
STIPULATION AND JOINT APPLICATION FOR APPROVAL THEREOF - Page 30