### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-11-00005- CV

Entergy Texas, Inc., Appellant

v. P ubl ic Utility Com m ission of T exas; Cit ies of B eaum ont, Bridge City, Conroe, G roves, Hun tsville, Montgom ery, N avasota, Neder land , Orange, P inehu rst, P ort N eches, Shenan doah, S ilsb ee, and Willis ; and Texas In dus trial Energy Consum ers, A ppellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 201 ST JUDICI AL DISTRICT NO. D-1 -GN-1 0-0 0064 5, H ONO RAB LE STEP HEN Y ELENOSK Y , JUDGE P RESIDING



### M E M O R A N D U M O P I N I O N
Enterg y Texas, I nc. appea ls from the district court’s judgme nt aff irming a final order of appellee Public Utility Commi ssion of Texas. I n t h e order , the Commi ssion set Enterg y ’s 201 0 en ergy eff

iciency cost rec overy fac tor (EECRF). See Tex. Util. Code Ann. § 39.905 (West Supp. 2010); 16 Tex. Admin. Code § 25.181 (20 0 8 ) (P ublic Util. Comm’n of Tex., Energ y Effic iency Goal). On appea l, Enterg y contends that the Commi ssion misconstrued section 39.905 1 of t he uti lities code and m isapplied the rule a g ainst retroa ctive ra temaking . Be cause we conclude that the Commiss ion’s construction compor ts with the plain lang uag e of the statute, we aff irm the district court’s judg ment aff irming the Commi ssion’s final order

.

Section 39.905 of the utilit ies code was am ended in 2011, see Act of May 17, 2011, 1 82d L eg ., R.S., ch. 1346, § 1, 2011 Tex. Gen. L aws 180 (ef fec tive Sept. 1, 2011), and Commi ssion rule 25.181 was amende d in 2010. See 35 Tex. Reg

. 7747 (2010). We r efe r to se ction 39.905 and rule 25.181 a s they

exis ted prior to the 2010 a nd 2011 amendments.BACK GR OUND

Statu tory Fram ework

I n 1999, as part of the re structuring of the elec tric utilit y industry , the leg islature

enac ted section 39.905 of the utilit ies code, a part of the Public Utility Reg ulatory Act (PURA). See Act of May 27, 1999, 76th L eg. , R.S., ch. 405, § 39, 1999 Tex. Gen. L aws 2543, 2600 (ame nded 2005) (cur

rent version at Tex. Util. Code. Ann. § 39.905). At that time, section 39.905, titled “Goa l For Energ y Effic iency ,” provided that “ele ctric utilit ies wil l administer ener g y saving s incentive
prog rams” and that a g oal for t h e p rogra ms was “to acquir e additional cost-ef fec tive ener g y eff iciency equivalent to at l east 10 perc ent of the electric uti lity ’s annual gr owth in demand.” Id

. The leg isla t ure direc ted the Commi ssion that it “shall provide oversig ht and adopt rules and
proce dures, as nece ssary , to ensure that the g oal of this section is achie ved by J anuar y 1, 2004.” Id

. Electric utilit ies rec o v er ed t h e costs of these prog rams throug h their base rate s as opera ting expenses. See Tex. Util. Code Ann. § 36.051 (West 2007). Once base rate s are set, 2 utilit ies’ reve nues from their rate s are not reconciled with actua l costs; the base rate s are only chang ed prospec tively in r ate proce eding s. Id

. §§ 36.101–.156 (West 2007); Public Util. Comm’ n

v. GTE-Southwest, Inc ., 901 S.W .2d 401, 406 (Tex. 1995) (“[U]ti lity rate s, like any other leg islation,

Section 36.051 of the utilities code provide s the para meters f or setting base r ates: 2
I n establishing an electric uti lity ’s rates, the reg ulatory authority shall establish the utilit y ’s overa ll reve nues at an amount t h at will permit the utilit y a rea sonable o p portunity to ear

n a rea sonable return on the utilit y ’s invested capital used and useful in providing service to the public in ex ce s s of the utilit y ’s rea sonable and nece ssary opera ting e x penses.

Tex. Util . Code Ann. § 36.051 (West 2007). 2g ener ally can have only prospec tive application and cannot be used to rec oup losses or g ains incurre d

under pr ior leg al ra tes.”).

I n 2007, the leg islature amend ed s ection 39.905, incre asing its benchma rk g oals applicabl e to residential and commerc ial customers. See id

. § 39.905(a) (3). As part of the 3 amendment, the leg islature cre ated a new ty pe of rate schedule separ ate from base rate s for utilit ies
to rec over their ener g y eff

iciency expenditures. The leg islature direc ted the Commi ssion to establish an “ener g y eff

iciency cost rec overy fac tor” (EECRF). See id

. § 3 9

. 9 0 5(b)( 1). The legislature did

no t expressly define EECRF, but stated that “[t] he commission shall provide oversig ht and adopt
Subsection (a) (3) of

section 39.905, as amended in 2007, stated: 3 [E] ach elec tric utilit y will provide, throug h marke t-based standard offe r prog rams or limit ed, targ eted, marke t-transfor mation progr am s , incentives sufficie nt for reta il elec tric provi ders and competitive ener g y service providers to acquir e additional cost-ef fec tive ener g y eff

iciency for residential and commerc ial customers equivalent to at least: (A) 10 perc ent of the elec tric utilit y ’s annual g rowth in demand of residential and commerc ial customers by Dec ember

31, 2007; (B ) 15 perc ent of the elec tric utilit y ’s annual g rowth in demand of residential and commerc ial customers by Dec ember 31, 2008, provided that the ele ct ri c utilit y ’s prog ram ex penditures for 2008 funding may not be g rea ter than 75 perc en t ab o v e the utilit y ’s prog ram budg et for 2007 for residential and commerc ial customers, a s included in the April 1, 2006, filing ; and (C) 20 perc ent of the elec tric utilit y ’s annual g rowth in demand of residential and commerc ial cu s t o m ers by Dec ember 31, 2009, provided that the elec tric utilit y ’s prog ram expenditures for 2009 funding may not be g rea ter than 150 perc en t ab ove the utilit y ’s prog ram budg et for 2007 for residential and commerc ial customers, a s included in the April 1, 2006, filing ; . . . .

Id

. § 39.905(a) (3))

. Subsection (a) (3) was further amende d in 2011, but the 2011 amendment is not applicable here

. See Act of May 17, 2011, 82d L eg ., R.S., ch. 1346, § 1, 2011 Tex. Gen. L aws 180 (ef fec tive Sept. 1, 2011). 3rules and proce dures to ensure that the utilit ies can achiev e t he g oal of this section, including

. . .

establishing an ener g y eff i ci en cy cost rec overy fac tor for ensuring timely and rea sonable cost

rec overy for utility expenditures made to satisfy the goal of this section.” Id . I n contra st with the
proce dure for rec overing opera ting expenses in base rate s, the leg islature authorized EECRFs to be adjusted to “matc h reve nues ag ainst ener g y eff iciency costs.” Id . § 39.905(b-1)

. I n acc ordanc e with the leg islature’s direc tiv e, the Commi ssion adopted a new rule 25.181 in 2008. See 16 Tex. Admin. Code § 25.181 ; see also Tex. Util. Code Ann. § 39.001 (West 4 2007). Subsection (f) of the new rule 25.181 addre ssed cost rec overy and provided the proce dures for e lectric utilit ies to establish EECRFs. Wit h this contex t, we turn to the pa rties’ dispute.
The Parties’ Dispute

I n May 2009, Enterg y applied to set its 2010 EECRF rate schedule

. I n t hat
proce eding , Enterg y soug ht to revise its EECRF to allow for the rec overy of ener g y eff iciency costs that it alleg ed that it incurre d but did not rec over from 2005 to 2008. Enterg y did not seek to rec over those costs in its ini tial proce eding to establish a n EECRF. Enterg y applied for its fir st EE CRF in May 2008, which wa s approve d eff ective January

1, 2009. Appellee s the Citi es of Be aumont, Br idge City , Conroe, Grove s, Hunt s ville, Mon tg o me r

y , N a v a s o ta , N e d e r la

n d , O r a n g e , Pi n e h

u r s t, Po r t N e ches, Shenandoah, Sils bee, and Wil lis intervene d in the proce eding to set Enterg y ’s 2010 EECRF rate schedule , contesting Enterg y ’s rig ht
to rec over its alleg ed ener g y eff iciency costs incurred b u t u n re cover ed from 2005 to 2008. The

Rule 25.181 was further amende d eff ective Dec ember 1, 2010, but the amendment is not 4 applicable here

. See 35 Tex. Reg

. 7747 (2010). As stated previously , ref ere nces to rule 25.181 are to the rule a s it ex isted prior to the 2010 ame ndment. See 33 Tex. Reg. 3585 ( 2008). 4parties ultimately rea ched a stipu l at i o n t h at included the rec overy of approximately $2.7 milli on

throug h Enterg y ’s 2010 EECRF for ener g y eff iciency costs that Enterg y contende d that it incurre d prior to 2009. The Commi ssion, howeve r, did not allow Enterg y to incl u d e an adjustment in its 2010 EECRF for under- rec overe d ener g y eff iciency costs prior to J anuar y 1, 2009. I n its order , the Commi ssion’s conclusions of law included that it could not adopt a stipulation that did not comport with PURA and Commi ssion rules and that, “[u] nder PURA, a utilit y may not adjust its EECRF for

over- or under- collecte d ener g y -ef ficienc y costs rec overe d throug h base rate s rathe r than throug h an EECRF.” The Commi ssion ex plained:

The Commi ssion has previously conclude d that adjustments to an E E C RF under PUR A § 3 9

. 9 0 5(b-1) and P.U.C. Subst. R. 25.181(f) are allowed only for those periods when an EECRF was in place

. The adjustments are limit ed to those ener g y eff iciency costs for which the EECRF was set to rec over. En er gy -e ff iciency costs that wer e previously included in and collecte d throug h base rate s—prior to the est ab l i s h ment of an EECRF—ar e not proper ly included in such an adjustment. [Enterg y ]’s first EECRF was approve d in Aug ust 2008 to rec over ener g y -ef ficienc y cost incurre d in 2009. Thus, the ener g y -ef ficienc y costs incurre d prior to 2009 wer e proper ly rec overe d throug h base rate s, and are not rec overa bl e u n d er [Enterg y ]’s E E C R F. The Commi ssion aff irms its previous conclusion that under PUR A § 39.905(b-1) an d P.U.C. Subst. R. 25.181(f) , a utilit y may seek adjustment of its EECRF to ref

lect any over- or under- collection of ener g y -ef ficienc y -costs-r ecove ry fac tor reve nues from previous y ear s in which the utilit y has an EECRF in place , but not from pre -EECRF y ear s. (Footnotes omitted.)
Among its au t h ority for deny ing Enterg y ’s reque st, the Commi ssion cited State v. Public Utility Commission , 883 S.W .2d 190, 199 (Tex. 1994), to support its conclusion that an adjustment for pre2009 costs would violate the prohibition ag ainst retroa ctive rate making

. The Commi ssion also cited

a prior order conce rning a differ ent utilit y in w hich it ha d rea ched the same conclusion. Tex. Pub.

5Util Comm’n, Application of Oncor Elec. Co. for 2010 Energy Efficiency Cost Rec overy Factor ,

Docke t No. 36958, Orde r, at 1–2 (N ov. 23, 2009).

Enterg y filed a motion for rehe aring and t h en soug ht judicial revie w of the Commi ssion’s or der. See Tex. Util. Code Ann. § 15.001 (West 2007). The district c ourt aff irmed the Commiss ion’s final orde r. This appe al followed.

ANALYSIS
I n three issues, Enterg y challeng es the Commi ssion’s denial of Enterg y ’s reque st to adjust its 2010 EECRF rate schedule to r ecove r ener g y eff iciency costs incurre d prior to Enterg y ’s establishment of an EECRF. Enterg y contends that the district court’s judgme nt should be reve rsed beca use the Commi ssion’s decision to deny its reque st for en er gy eff iciency costs incurre d but

unrec overe d from 2005 to 2008 violates sections 39.905(b-1) and (b)( 3) of the utilit ies co d e, the Commi ssion’s decisio n co n fl icts with its statutory obliga tion to adopt rules and proce dures for establishing an EECRF that ensure s the timely rec overy of rea sonable costs expended on ener g y eff iciency prog rams, and the Commi ssion’s decision misapplies the rule against retroa ctive
rate making

. Scope and Stan dard of Revie w

The Commi ssion is “a cre ature of the legi s l at u re and has no inhere nt authority .” GTE-Southwest, Inc ., 90 1 S

. W

. 2 d at 406. As an administrative ag ency , the Commi ssion “may exercise only those specific power s that the law confe rs upon it in clea r and express lang uag e.” Id

. at 407. The Commi ssion may not “contr avene specific statutory lang uag e, . . . or impose additional burdens, condition s , or restric tions in excess of or inconsistent with the rele vant statutory

6provisions.” Citi es of Corpus Christ i v. Public Util. Comm’n , 188 S.W .3d 681, 690 (Tex.

App.—Austin 2005, pet. denied) (citation omitted).

The parties’ dispute conce rns statutory construction. We revie w matters of statutory 5 construction de novo. See Texas Mun. Power Agenc y v. Public Util. Comm’n , 253 S.W .3d 184, 192 (Tex. 2007). Of primary conce rn i n co n s t rui ng a statute is the express statutory lang uag e. See Galbraith Eng’g Consultant s, Inc. v. P o ch u ch a , 290 S.W .3d 863, 867 (Tex. 2009). We apply the plain meaning of the text unles s a d i ff er ent meaning is supplied by leg islative def i n i t i o n or is appar ent from the context or the plain meaning leads to absurd results. Marks

v. St. Luke’s Episcopal Hosp. , 319 S.W .3d 658, 663 (Tex. 2010) (citing City of Rock wall v. Hughes , 246 S.W .3d 621, 625–26 (Tex. 2008)). We consider the entire act, not isolated portions. 20801, Inc. v. Parke r , 249 S.W .3d 392, 396 (Tex. 2008).

Section 39.905

I n its first issue, Enterg y challeng es the Commi ssion’ s co nstruction of section 39.905(b-1) , contending that the Commi ssion’s construction conflicts with the plain lang uag e of the
statute. See Tex. Util . Code Ann. § 39.905(b- 1). Subsection (b-1) states:

The ener g y eff

iciency cost rec overy fac tor under Subsection (b)( 1) may not result in an over- rec overy of costs but may be adjusted eac h y ear to change rate s to enable

The utilit ies code g ener ally require s a court to r eview the Commi ssion’s decisions under 5 the substantial evidenc e rule. See Tex. Util. Code. Ann. § 15.001 (West 2007); Tex. Gov’t Code Ann. § 2001.174(2) (West 2008). The substantial evidenc e rule require s a court to reve rse or rema nd a case to the administrative ag ency for further proce eding s “if substantial rig hts of the appellant have been prejudice d beca

use the administrative finding s, i n ference s, conclusions, or decisions” are , among other g rounds, “not rea sonably supported by substantial evidenc e,” or are “a rb i trary or capri cious or char acte rized by abuse of discretion or clea rly unwar rante d exercise of discretion.” Tex. Gov’t Code Ann. § 2001.174(2)( E), (F ). 7utilit ies to match reve nues ag ainst ener g y eff iciency cos t s and any incentives to which they are g rante d. The fac tor shall be adjusted to ref lect any over- collection or under- collection of e nerg y eff iciency cost rec overy

reve nues in previous y ear s.

Id . § 39.905(b-1) . The Commission i nterpre ts this s ubsection to authorize adjustments for energ y eff iciency costs expended in EECRF y ear s, but not in y ear s prior to the establishment of an EECRF. Enterg y counter s that the second sentenc e in this subsection “expressly permits u t i l i t i es t o adjust their EECRFs to acc ount for the over- or under- collection of ener g y effi cienc y costs in ‘pre vious
y ear s’ – whether such costs wer e then rec overe d throug h base rate s or throug h an EECRF.” Enterg y focuse s on the words “pre vious y ear s,” urg ing that those wo rd s ar e not ambig uous and expressly include pre- EECRF y ear s. Enterg y also arg ues t h at the Commi ssion’s construction rende rs “pre vious y ear s” meaning less in the first y ear of EECRF rate schedule s and that the leg islature easily could have draf

ted the sec tion to include the limit ation that the Commiss ion has imposed. We be g in w ith the statute’s plain lang uag e. Reading the words “pre vious y ear s” in context, they follow the preposition “in” afte r the words “ene rg y eff iciency cost rec overy reve nues.” The plain meaning of the prepositional phrase “in previous y ear s” then is to qualify or limit “ene rg y eff iciency cost rec overy reve nues .” Had the leg islature inte n d ed a broade r cate g ory of reve nues, such as from base rate s, or “costs” expended prior to the establishment of an EECRF, it could have easily said so. See Hughes , 246 S.W .3d at 628–29 (dec lining to r ead additional words into statute in construing statute). We also find the subject and verb of the sentenc e—“f actor [EECR F] shall be adjusted”—sig nificant. See City of Marshall v. City of Unce rtain , 206 S.W .3d 97, 105 (Tex. 2009) (cour ts “‘pr esume that ever

y word of a statute has been included or excluded for a rea son’”) (citation

8omitt ed ). Be fo re the collection of reve nues from an EECRF may be “adjusted,” an EECRF

nece ssarily

had to be in existence. To support its a

rg ument that the leg islature did not intend to limi t “ previous y ear s”
to y ear s in which an EECRF was in place , Enterg y s ep ar at es t h e first sentenc e from the second
sentenc e i n s u bsection (b-1) , arg uing that the first sentenc e addre sses the future and the second
sentenc e the past. The Commi ssion’s construction, howeve r, harmonizes the first and second
sentenc es and g ives meaning to eac h word a

nd clause

. See Cit

y of San Antonio v. C ity of Boerne , 111 S.W .3d 22, 25 (Tex. 2003) (ef fec t must be g iven to e ach w ord and clause ). The first sentenc e ref ere nces the “ene rg y eff

iciency cost rec overy fac tor [ EECRF] under subsection (b)( 1),” and subsection (b)( 1) states the leg islature’s direc tive to the Commi ssion to “[establish] an ener g y eff iciency cost rec overy fac tor [EECR F] for ensuring timely and rea sonable cost rec overy for utilit y expenditures made to satisfy the g oal of this section.” Tex. Util. Code Ann. § 39.905(b)( 1). At the

same time that it authorized the Commi ssion to establish EECRFs, the leg islatur e am en d ed the benchma rk g oals for 2007, 2008, a nd 2009. Id . § 39.905(a) (3). Consist ent with its direc tive to the Commi ssion “for ensuring timely and rea sonable
cost rec overy

” to satisfy the leg islature’s g oals, the leg islature in the first sentenc e of subsection (b-1) authorized EECRFs to be adjusted eac h y ear so that prosp ec t ive reve nues could rea sonably approximate the projec ted costs as well as any incentives. The second sentenc e also addre sses the new EECRF rate structure , but it addre sses a further adjustment that do es not have to be made on an annual basis. The sec ond sentenc e re quires a r econc iliation adjustm ent but it provides uti lities wi t h t he option of not seeking this additional adjustment ever y y ear . I n this context, the plain

9lang uag e of “pre vious y ear s” has meaning in that it rec og nizes that this adjustment may be made for

more than one y ear

at a time to re concile a ctual re venues w ith energ y eff iciency costs. See Tex. Gov’t Code Ann. § 311.012(b) (West 2005) (“The singula r includes the plural and the p lur al includes the sing ular.” ); City of San Antonio , 111 S.W .3d at 29.

E n te r g y a r g u e s th at the Commi ssion’s construction contr a v e n e s s e c ti o n 3 9

. 9 0 5 ( b ) ( 3 )

. See Tex. Util. Code Ann. § 39.9 0 5 (b )( 3 ). Subsection (b)( 3) allows utilit ies to defe r costs of comply ing with section 39.905 when they are unable to establish an EECRF due to a rate fre eze. Id

. 6 Enterg y arg ues that, if the Commi ssion’s construction of subsection (b-1) is corr ect, it is impossibl e for a utilit y to rec over defe rre d costs under subsection (b)( 3) throug h an EECRF beca use the utilit y

wo u l d n o t h av e had an EECRF in place when it incurre d the defe rre d costs. Under the plai n lang uag e of section (b)( 3), howeve r, the subsection is an exception to the g ener al rule when a utilit y is not able to implement an EECRF to allow the utilit y to defe r its en er g y eff iciency costs and to adjust its first EECRF to rec over the ener g y eff iciency cost rec overy reve nues that should have been

Section 39.905(b)( 3) states: 6 (b) T h e co m mission shall provide oversig ht and adopt rules and proce dures to ensure that the utiliti es ca n achie ve the g oal of this section, including : (3) providing a utilit y that is unable to establish an ener g y eff iciency cost re cover y fac tor in a timely manner due to a rate fre eze wit h a mecha nism to enable the utility

to: (A) defe r the c osts of comply ing w ith this section; and (B ) rec over t h e defe rre d costs throug h an ener g y eff iciency cost rec overy fac tor on the expiration of the rate fre eze period;

. . . . Tex. Util . Code Ann. § 39.905(b) (3). 10collecte d while the utilit y was in a base rate fre eze. The Commi ssion’s c onstruction of subsection

(b-1) then does not conf

lict with subsection (b)(3)

. The Commi ssion’s construction al s o i s consistent with the statutory scheme as a whole. See Parker , 249 S.W .3d at 396 (in construing statutes, courts consider entire act, not isolated portions). I n enac ting a new rate schedule and authori z i n g a rec onciliation under the new rate schedule betwee n reve nues and costs, we presume that the leg islature acte d wi t h ref ere nce to the established base rate scheme

. See Tex. Util . Code Ann. § 36.051; Ack er v. Tex as W

ater Comm’n , 79 0 S .W.2d 299, 301 (Tex. 1990) (“A s tatute i s presumed to have been enacte d by the l eg islature with complete knowledg e of the exis ting law and with re fer ence to it.”). The leg islature then was

awa re that, prior to the establishment of an EECRF, a utilit y ’s ener g y ef fi ciency costs would continu e t o b e ac counted for in its base rate s and that there would be no rec onciliation betwee n
actua l reve nues and costs. See Tex. Ut i l

. Code Ann. § 36.051; GTE-Southwest, Inc ., 901 S.W .2d
at 407; Public Utility Comm’n , 883 S.W .2d at 199 (“F undamental in the utilit y rate making proce ss is the principle that utilit y rate s are set for the future, and not the past.”). Allowing the rec overy of
costs expended for y ear s in which a utilit y was re co v er i n g co s ts under a base rate would be inconsistent with this statutory scheme

. Fur ther, under Enterg y ’s proposed construc t i o n , a utilit y would be aut h o ri z ed o n an open-e nded basis to adjust its EECRFs to rec over “costs” that wer e

acc ounted for in a

utilit y ’s prior ba se ra tes, a sig nificant de parture from the statutory scheme

. See Presidio Ind. Sch. Dist. v. Scott , 309 S.W .3d 927, 931 (Tex. 2010) (citation omitted) (“Courts must not give the words use d by the L eg islature an ‘ exagg era ted, forc ed, or c onstrained mea ning.’ ”). As part of its first issue and in its second issue, Enterg y arg ues that the Commi ssion’s construction is unrea sonable and not entitled to defe renc e beca use it defe ats o n e o f the stated

11purposes o f the statute by deny ing Enterg y the rig ht to rec over costs incurre d to administer

statutorily -manda ted ener g y eff iciency prog rams. See Railroad Comm’n v. Texas Citi zens for a Safe
Future & Clean W

ater , 336 S.W .3d 619, 624 (Tex. 2011) (citations omitted) (ad m i n istrative
ag ency ’s “interpr etation of statute it is char g ed with enfor cing is entitled to ‘ser ious consideration,’

so long as the construction is rea sonable and does not conflic t with the statute’s lang uag e”)

. The leg is l at u re direc ted the Commi ssion in section 39.905(b)( 1) to establish an EECRF “for ensuring timely and rea sonable cost rec overy for utilit y expenditures made to satisfy the g oal of this section.” Tex. Util. Code Ann. § 39.905(b)( 1). Although the 2007 amendments beca me eff ective September 1, 2007, the Commiss ion did not adopt its new rule 25.181 until 2008, and the f irst EECRFs were
not implemented until J anuar y 1, 2009. Enterg y arg ues that, under the Commi ssion’s construction, utilit ies cannot rec over their 2008 expenditures beca use of the Commi ssion’s ina ction and that the leg islature could not have intended for utilit ies to be unable to r ecove r their 2008 costs incurre d to satisfy the leg islature’s g oals for that y ear simply beca use the Commi ssion was unable to amend its rules prior to Ma

y 2008. That utiliti es we re una

ble to obtain an EECRF be fore J anuar y 1, 2009, howeve r, is
not dispositi ve. We presume that t h e l egi slature was awa re of the time that it would take for the Commi ssion to adopt rules for EECRFs and of the “re g ulatory lag ” in setting rate s. See Public Util. Comm’n , 883 S.W .2d at 193 n.3, 199 (discussi ng “re g ulatory lag ” in rese tting rate s “due to the inhere nt inability in the reg ulatory proce ss to allow for immediate rate decr ease s or incre ases” and “re cog niz[ ing] that reg ulatory lag is ordinarily an element of the risk associate d with investment in

a utilit y ”); Ack

er , 790 S.W .2d at 301 (pre sume leg islature awa re of law and acting with ref ere nce to it). Furthe r, prior to its establishment of an EE CRF, a utility could have soug ht to chang e its base

12rate s if they wer e not suffic ient beca

use of incr ease d ener g y

eff iciency g oals. See Tex. Util. Code Ann. §§ 36.101–.111.

Enterg y also arg

ues that the Commi ssion’s construction of section 39.905(b-1) is not

e n ti tl e d to defe renc e beca

use it is direc tly contra

ry to its contempora

neous construction of the s ta tu te

. I n its order , howeve r, the Commi ssion cited a separ ate order conce rning a differ ent utilit y in which it had rea ched the same c onclusion. See Tex. P ub. Util. Com m’n, Application of Oncor Elec. Co. for 2010 Energy Efficiency Cost Rec overy Factor , Docket No. 36958, Orde r, at 1–2. Fur ther, the plai n lang uag e of the Commi ssion’s rule adopting the proce dures for establishing an EECRF is consistent with its co n s t ruction of the statute. See 16 Tex. Admin. Code § 25.181; Rodriguez

v. Servic e Lloyds Ins. Co. , 997 S.W .2d 248, 254 (Tex. 1999) (cour ts revie w administrative rules in the same ma

nner a s statutes). Rul e 25.181 states that a utilit y may rec over its ener g y eff iciency prog ram costs throug h an EECRF, base rate s, or defe rr ed u n t i l t h e costs may be included in an EECRF. 16 Tex. Admin. Code § 25.181(f) (1), (2), & (7). The rule also states: “Ea ch y ear , a utilit y with a n EECRF shall apply

to adjust the EECRF in order to .

. . minimi ze a ny over- or under- collection of

ener g y eff iciency costs resulting

from the use of the EECRF .” Id. § 25.181(f) (4) (empha sis added)

. The rule further require s that a utilit y ’s application to establish or chang e an EECRF to “conta in the
actua l reve nues a t t r ibutable to the EECRF for any period for which the utilit y seeks to adjust the EECRF for an under- or o ver- rec overy of EECR F reve nues ,” see id. § 25.181(f) (9)( C) (empha ses added) , and place s the burden on the utilit y to prove that the “ca lculations of any under- or

over- rec overy of EECRF reve nues is consistent with this section.” Id. § 25.181(f) (11)( B) (empha sis added)

. Consist ent with the Commi ssion’s construction of section 39.905(b-1) , the plain lang uag e

13of rule 25.181 makes clea r that the rec onciliation adjustment is betwee n reve nues and costs incurre d under a n EECRF. We conclude that the Commi ssion’s construction of s ection 39.905(b-1) comports with the plain lang uag e of the statute. We overr ule Enterg y ’s first and se cond issue.

Retroactive Ratemaki ng

I n its th i rd i s s ue, Enterg y urg es that its interpre tation of section 39.905 that would allow Enterg y to adjust its EECRF to ref lect under- rec overie s of its ener g y eff iciency prog ram costs from pre- EECRF y ear s would not constitute retroa ctive rate making or violate the constitutional prohibition on retroa ctive laws. See Tex. Const. art. I , § 16; Pub l i c Util. Comm’n , 883 S.W .2d
at 199. Be cause we have conclude d th at t h e Commi ssion’s construction of section 39.905(b-1) comports wit h the pl ain l ang uag e of the s tatu t e, we need not addre ss this issue. See Tex. R. App. P. 47.1.

CONCLUSION

For these re as o n s , we affirm the district court’s judgment affirming the final order of the Commission.

__________________________________________ Melissa Goodwin, Jus tice Be fore J ustices Pury ear , Rose and Goodwin Affir med Filed: Aug ust 8, 2012

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