AEP Texas North Co. v. Public Utility Commission of Texas

On June 3, 2002, West Texas Utilities Company (“WTU”),*fn1 a subsidiary of American Electric Power Company, Inc. (“AEP”), filed a petition with the Public Utility Commission of Texas (the “Commission”) for reconciliation of its eligible fuel expenses and revenues for the period from July 1, 2000, to December 31, 2001. This represented WTU’s final fuel reconciliation as an integrated utility. The cities of Abilene, Ballinger, San Angelo, and Vernon (“Cities”), Texas Industrial Energy Consumers, and the Office of Public Utility Counsel (“OPC”) intervened and recommended various disallowances to TNC’s petition. After hearings, the Commission issued its order on rehearing, the final order in this case. TNC and the Cities appealed the Commission’s decision to the Travis County District Court, which affirmed the final order in all aspects. This appeal followed.

TNC argues that the Commission erred by (1) extending the reconciliation period; (2) not following prior reconciliation methodology; (3) improperly sharing TNC’s off-system sales margins with its ratepayers; and (4) denying TNC’s request to include the settlement payments made in a prior docket as part of its final fuel reconciliation. Cities bring four issues on appeal, complaining that the Commission erred by (1) finding that TNC’s spot gas purchases were prudent; (2) applying an inappropriate standard of review in evaluating TNC’s natural gas costs; (3) determining that the Oklaunion coal-fired plant operated efficiently and productively in 2001; and (4) finding that a maintenance outage at the Oklaunion plant was prudent.