### 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. 03-10-00526- CV

Of fi ce of P ubl ic Utility Counsel and the P ubl ic Utility Com m ission of T exas, Appellants

v. Texas-Ne w Mexico P ower Com pany, Ap pellee

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 98TH JUDICI AL DISTRICT NO. D-1 -GN-0 9-0 0007 1, H ONO RAB LE RHO NDA HURLEY , JUDGE P RESIDING

O P I N I O N

This is an administrative appea l of a final order of the Public Utility Commi ssion (the “Commissi on”) i n a contested case involving Texas-New Mexi co Power Company ’s (“TN MP”) revised competition tr ansition charg e (“ CTC”) interest rate

. TNMP f iled a suit for judicial revie w of the Commi ssion’s decision, which deter mined the eff

ective date of the revised interest rate

. The Offic e of Public Utility C o unsel (“O PC”) intervene d in support of t he C ommissi on’s order. The 1 trial court reve rsed the Commi ssion’s order , and the Commi ssion and OPC appeal ed

. W e wi l l

reve rse the tr ial court’s or der a nd rende r judg ment aff

irming the Commi ssion’s order.

Texas I ndustrial Energy Consumers and the Citi es of Dickinson, Fr iendswood, L a Marque , 1 L eague C ity , L ewisville, and Tex as C i t y (t h e “C ities”) also intervene d in the proceeding s below. The Citi es have filed an amicus curia e brief in thi s C o u rt i n s u pport of the Commi ssion’s deter mination.F ACTUAL AND P ROCEDURAL BACK GR OUND TNMP is a transmission and dist ri bution utilit y that was “unbundled” from a vertica lly integ rate d utilit y in the restruc turing of the Texas ma rket. See generally Tex. Util. Code Ann. §§ 11.001 -6 6

. 0 1 7 (W est 2007 & Supp. 2010) (hereina fter “PURA”). As a reg ulated uti lity , TNMP provides service s at rate s that rema in subject to traditional cost-of- service regulation by the Commi ssion under PURA. See id. One of the rate s and char g es set by the Commi ssion is TNMP’s CTC, the mechanism throug h which the utility rec overs its strande d costs, with interest. 2
I n TNMP’s true-up case , the Commi ssion deter mined the rate of interest to b e applied
to TNMP’s stranded costs from their inceptio n (January 1, 2002, when competition beg an) to the date of the t rue- up. I n its final t rue- up order , issued J uly 22, 200 5 , t h e C o mmissi on established a stranded- cost balanc e for TNMP of $128,820,365 as of J anuar y 1, 2002. The Com mission added interest (ca

rry ing char g es) of $39,166,214 to these stranded costs, calc ulated at an annual rate of 10.93%. The final net stranded- cost rec overy authorized by the Commi ssion was $110,603,855. See State v. Public Util. Comm’n , 246 S.W .3d 324, 331 (Tex. App.—Austin 2008, pet. filed).

On No vember 4, 2005, TNMP initiated Docke t No. 31994 (the “CTC Docke t ”) , which involved th e ca rr y i n g-c h arg e rate on its CTC as well as a number of other issues. The Commi ssion ref

err ed the matter to an administrative law judge (“A L J ”) at the State Offic e of Administrative Hea

ring s (“SOAH ”). Be fore the CTC Docke t proce eded to a hear ing on the merits,

See generally State v. Public Util. Comm’n , No. 08-0421, 2011 WL 923949, at *1-2 (Tex. 2 Mar. 18, 2011) (re viewing statutory scheme ). “Strande d costs” ref er to the portion of the book value of a utilit y ’s g ener ati o n as s et s t h at is projec ted to be unrec overe d throug h rate s that are based on marke t price s. Id. ; see also City of Corpus Christ i v. Public Uti l

. C o mm ’n , 51 S.W .3d 231, 237 (Tex. 2001). 2howeve r, TNMP and all parties except the Citi es enter ed into a no n -u n animous stipulation (or

indicated that they did not oppose the stipulation). Of rele vance to this a ppeal, the NUS provided 3 that “[i] ntere st on the stranded cost balanc e beg inning J uly 22, 2005 will be 10.93%. That interest
rate will prevail unless and until the Commissi on validly adopts a new rule [reg arding the intere st
rate ] at which time the terms of the ne w rule w ill apply .”

I n fac t, during the pendenc y of the CTC Docke t, the Commi ssion was in the proce ss of amendin g i t s t ru e-up rule, 16 Tex. Admin. Code § 25.263, which provided a new formula for computing the stranded- cos t interest rate

. The Commi ssion completed the rulemaking afte r the 4 NUS was signe d and filed bu t befor e the NUS went befor e the Commi ssion for revie w. The eff ective da te of the ne w rule w as Jul y 20, 2006. After a hear ing on the NUS, the AL J rec ommended in its proposal for decision that the Commi ssion reje ct the stipulation. I n its final order dated November 2, 2006 (the “CTC Orde r”) , the Commiss ion declined to adopt t he AL J ’s proposal for decision and ins tead a dopted the NUS. I n the CTC Orde r, the Commi ssion made ref ere nce to the new rule and deter mined that, “[u] nder the
terms of the NUS, the new version of the rule sets the interest rate on the stranded- cost balanc e from the date the rule is ef

fec tive.” I n addition, the Commi ssion made the following fac t findings:

T h e p ar ties variously ref

er to this ag ree ment as a non-unanimous stipulation and a non- 3 unanimous settlement. For clar ity , we will re fer

to it as the “NUS.” Specifica lly , the Commi ssion proposed an amendment to rule 25.263( l )(3) to c hang e the 4 interest rate on the utilit ies’ CTC balanc es from the utilit y ’s cost of capital established in the utilit y ’s unbundled cost-of- service case to the utilit y ’s most rec ently authorized or repor ted cost of debt, and to require the transmission and distribution utilit ies, like TNMP, to apply fo r revised car rying char g es on their CTC balanc es. See City of Dickinson v. Public Util. Comm’n , 284 S.W .2d 449, 451 (Tex. App.—Austin 2009, no pet.). 316A. The NUS sets the interest rate of 10.93% until the Commi ssion validly adopts a new rule, a t which time the terms of the new r ule will apply

.

. . . . 41. The NUS sets an interest rate of 10.93%, which is subject to chang e when the Commi ssion validly

adopts a ne w rule se tting the inter est rate

. 41A. P.U.C. Subst. R. 25.263( l )(3) was revised, eff ective J uly 20, 2006, and establishes a f

ormula for

deter mining intere st on post-true-up ba lance s.

I n Orde ring Parag raph No. 1 of the CTC Orde r, the Commi ssion approve d TNMP’s application to se t the CTC “ as modified by the NUS.” The Commi ssion f urther order ed TNMP to file a tariff that confor

med to the decisions contained in the CTC Orde r and that updated the interest amounts approve d there in. TNMP did not appeal from the Commission’s final CTC Order.

I n acc ordanc e with the new rule, which require d eac h transmission and distribution utilit y to file an application to adjust the carry ing costs on its CTC within 30 day s of t he effec tive date of the rule, TN MP ini tiated Docke t No. 33106 (the “I ntere st Rate Docke t”). In its final order in t h e I ntere st Rate Docke t, the Commi ssion approve d TNMP’s rec ommended CTC interest rate revision of 8.31%. This Court considere d the rate pay er cities’ challeng es to the 8.31% interest rate in City of Dickinson v. Public Utility Commission , 284 S.W .2d 449 (Tex. App.—Austin 2009, no pet.), ultimately aff

irming the Commi s s i o n ’s d eter mination, see id. at 454. There afte r, TNMP initiated the proce eding that is the subject of this appea l, D ocket No. 35038 (the “Ta riff Docke t”). The instant disp ute a

r is in g f r o m th e T ariff Docke t proce eding s conce rns exactly when the new 8.31% interest rate went into eff ect. TNMP argued that t h e n ew rate would only g o into eff ect on the entry of a final order in the Tarif f Docke t, and that any ear lier effec t i v e d ate would

4result in impermissible retroa ctive rate making

. The Commi ssion Staff took the position that the new

rate went into eff

ect on De cembe r 27, 2007—the da te claimed by Staff as the eff

ective date of the Commi ssion’s final decision in the I ntere st Rate Docket. OPC urg ed that, in acc ordanc e with the CTC Orde r adopting the NUS, the new rate went into eff ect on the eff

ective date of the revised rule, J uly 20, 2006. At the Tarif

f Docke t hear ing, eac h party introduced ev i d en ce in support of its
respe ctive position. The AL J ’s proposal for d ecision rec ommended the Commi ssion Staff’s proposed date. The Commi ssion de clined to a dopt the AL J ’s interpre tation, however , and instead conclude d that the CTC Orde r had adopted the ag ree ment of the parties reg arding the eff ective date of the interest rate chang e and applied the revised interest rate from J uly 20, 2006, when the revised rule went into eff

ect. I t memorialized these fi n d i n gs by an order dated October 22, 2008 (the “Eff ective Da t e Orde r”)

. TNMP soug ht judicial revie w of the Effe ctive Date Orde r, and the trial
court reve rsed “the Commi ssion’s decision to set a retroa ctive eff ective date [of] J uly 20, 2006 for the 8.31% c arr

ying c harg e rate.” The Commi ssion and OPC now appea l.

DISCUSSIO N On appea l, the Commi ssion and OPC argue that, in issuing the Effe ctive Date Orde r, the Commi ssion proper ly interpre ted its 2006 CTC Orde r to require that the revised- rule interest rate apply g oing forwa

rd from J uly 20, 2006. They urg e that beca use this interpre tation of the CTC Orde r is rea sonable and s u p p o rt ed by the lang uag e of that prior order , this Court should defe r to the Commi ssion’s interpretation in construing the E ffe ctive Da te Orde r under revie w.

5Stan dard of Revie w This case conce rns a suit for judicial revie w of a final ag ency decision in a contested

case . I n g ener al, we r eview the Commi ssion’s final order under the substantial evidenc e st andar d of revie w descr ibed in section 2001.174 of the Texas Administrative Procedur e Act. See Tex. Util. Code Ann. § 15.001 (West 2007); Tex. Go v ’t Code Ann. § 2001.174 (West 2008). Under the substantial evidenc e rule, we g ive signific ant defe renc e to the ag ency in its field of expertise. Railroad Comm’n v. Torch Operating Co. , 912 S.W .2d 790, 792 (Tex. 1995); AEP Tex. North Co.

v. Public Util. Comm’n , 297 S.W .3d 435, 447 (Tex. App.—Austin 2009, pet. denied)

. We presume that the Commi ssion’s order is supported by substantial evidenc e, and the complaining parties have the burden to overc ome this presumption. City of El Paso v. Public Util. Comm’n , 883 S.W .2d 179, 185 (Tex. 1994).

Any questions of statutory construction are revie wed de novo, althoug h an ag ency ’s interpre tation of the statute it administers is entitled to s er i o u s consi deration so long as it is

rea sonable and does not conflict with the statu t e’ s lang uag e. First Am. Titl e Ins. Co. v. Combs , 258 S.W .3d 627, 631-32 (Te x . 2008). A court apply ing the substantial evidence rule may reve rse the age ncy ’s order when the age ncy has m ade a prejudicia l error

of law, inc luding a

violation of a constitutional or statutory provision, or when the order i s “ar bitrary or capricious or c hara cter ized by abuse of discretion or cl ea rl y unwar rante d exercise of discretion.” Tex. Gov’t Code Ann. § 2001.174(2). I n construing o rder s of an administrative age ncy , we apply the s ame rules as when

we i n t erpr et statutes; the ultimate object of construction is to asce rtain the intent of t h e

6administrative bo d y . R a i lroad Comm’n v. Home Transp. Co. , 670 S.W .2d 319, 325 (Tex.

App.—Austin 1984, no writ); see Boswell v. B r a z o s E l ec
. Power Co-op., Inc. , 910 S.W .2d 593, 599-600 (Tex. App.—For t Worth 1995, writ denied) ; Armak Tex. Move rs, Inc. v. Railroad Comm’n , 7 9 7 S.W .2d 383, 388 (Tex. App.—Austin 1990, no writ); Airport Coach Serv., Inc. v. C i t y o f Fort W orth , 51 8 S

. W

. 2 d 566, 574 (Tex. Civ. App.—Ty ler 1974, writ ref ’d n.r.e.) (op. on reh’ g ). Be cause an administrative ag ency is a cre ature of the leg islature, it possesses “only those power s that the L eg islature expressly confe rs upon it” and “any implied power s that are rea sonably nece ssary to

car ry out the express responsibilities g iven to it by the L eg islature.” Public Util. Comm’n v. City Pub. Serv. Bd. , 53 S.W .3d 310, 315 (Tex. 2001). An ag ency may not, howeve r, “i n the g uise of implied power s, exercise what is eff ective l y a n ew power , or a power contra ry to a st atute, on the theory that such exercise is expedient for the ag ency ’s purpose.” CenterPo i n t E n ergy Entex

v. Railroad Comm’n , 208 S.W .3d 608, 615 (Tex. App.—Austin 2006, pet. dism’d). There fore , any questions re gar d i ng the scope of the ag ency ’s authority must be resolved in view of the statutory lang uag e confe rring that authority , see In re City of George town , 53 S.W .3d 328, 331 (Tex. 2001), which we revie w de novo, see City of San Antonio v. City of

Boerne , 111 S.W .3d 22, 25 (Tex. 2003).
The Effec tive Date O rder Properly Interprets the CTC Order

I n the Effective Date Order, the Commi ssion deter mined t h at its prior C TC Orde r, by “adopting the ag ree ment of the parties in the NUS,” establi shed the eff ective date of TNMP’s revised CTC interest rate as J uly 20, 2006. As evidenc e that this was in fac t its prior deter mination, the Commi ssion pointed to f indings of fac t 41 and 41A in the CTC Orde r, and made the following additional finding s of fa ct:
78. The non-unanimous settlement (NUS) ad opted by the Commi ssion in Application of TNMP Power Company to Adjust the Competition Transit ion Charge Pursuant to PURA § 39.262( g) , Docke t No. 31994 (Nov. 2, 2006), states in Article I I , para g raph D as follows: “I ntere s t on the stranded cost balanc e beg inning J uly 22, 2005 will be 10. 9 3 %. T h at interest rate will preva il unless and until the Commission validl y adopts a ne w rule at which time the terms of the ne w rule w ill apply .” 9. I n adopting the NUS, the Commi ssion stated in its order [t he CTC Orde r] that “[u] nder the terms of the NUS, th e new version of the rule sets the interest rate on the stranded- cost balanc e from the date the rule is effective .” Docke t No. 31994, Orde r at 4 (N ov. 2, 2006). [Emphasis in original.] 10. Finding of fac t 41 in the Commi ssion’s o rd er in Docke t No. 31994 states: “The NUS sets an intere st rate of 10.93%, which is subject to chang e whe n the Commiss ion validly

adopts a ne w rule se tting the inter est rate .” 11. Finding of fac t 41A in the Commi ssion’s order in Docke t No. 31994 states: “P.U.C. Subst. R. 25.263(l)(3) was revis ed , eff ective J uly 20, 2006, and establishes a f

ormula for

deter mining intere st on post-true-up ba lance s.”

Ba sed on these findings, t he C ommissi on conclude d in the Effective Date Or d er t h at, “[ p]ursuant
to the non-unanimous settlement and the Commi ssion’s order adopting that settlement

. . . , the eff ective date of a new interest rate on C TC balanc es revised pursuant to P.U.C. Subst. R. 25.263( l )(3) (ef

fec tive J uly

20, 2006), is the ef

fec tive date of

that rule.” I n its suit for judicial revie w of the Effe ctive Date Orde r, TNM P challeng ed the Commi ssion’s conclusion that the CTC Orde r had adopted J uly 20, 2006 as the eff ective date for the

new interest rate , char acte rizing it as an “eg reg ious misconstruction of the NUS (and the 2006 CTC Orde r).” Acc ording to T

NMP, the parties to the NUS ag ree d only that the “ter ms” of the new rule would apply when the Commi ssion adopted a new rule. TNMP further asser ts that beca

use the CTC Orde r simply repe ated the ag ree ment of the parties to the NUS, the Effe ctive Date Orde r “amounted
8to an amendment of [t he] 2006 CTC Orde r,” allowing the Commi ssion to confe r itself the authority

to set a “r etroa ctive” e ffe ctive date

.

The Commi ssion argues that the CTC Orde r repr esents the Commi ssion’s approva l of t he parties’ NUS. We ag ree . Thus, in adopting the NUS, the C ommissi on was entitl ed to, and did, interpre t the eff

ective- date lang uag e contained in the NUS and to formulate a rea sonable reme dy
to eff ectuate the terms of that ag ree ment. See AEP Tex. North , 297 S.W .3d at 447 (stipulation and
ag ree ment enter ed into by parties lost its char ac t er as private contra ct and assumed char acte r of administrative order when it beca me basis for Commi ssion’s decision) (citing In re Entergy Corp. , 142 S.W .3d 316, 323-24 (Tex. 2004)); see also Public Util. Comm’n v. Southwestern Bell Tel. Co. , 960 S.W .2d 116, 119-20 (Tex. App.—Austin 1997, no pet.) (PURA confe rs on Commi ssion power
to a cce pt a

nd act upon a g ree ment betwee n parties, a nd power to inter pret ag ree ment when dispute subsequently

arises) . There fore , our inquiry must conce rn not the l ang uag e of the NUS itself, but
t h e i n t er p re tation of the NUS that the Commi ssion adopted and memorialized in the CTC Orde r (fr om which TNMP never appea led) and subsequently interpre ted in the Effe ctive Date Orde r. See City of Abilene v. Public Util. Comm’ n , 146 S.W .3d 742, 747 & n.7 (Tex. A pp.—Austin 2004, no pet.) (“A g encie s are entitled to interpre t their own order s, for administrative purposes, so long as the
ag ency does not use t he occasion t o interpre t as a means to amend the prior order.”) (citing Home Transp. Co. , 670 S.W .2d at 325); see also Chocolate Bayou W ater Co. & Sand Supply v. Texas Natural Res. Conservation Comm’n , 124 S.W .3d 844, 853 (Tex. A pp.—Austin 2003, pet. denied) (prohibiting collater al attack on final ag ency order afte r time for appea l has passed)

. And in construing the Effective Date Order, which in turn construes the CTC Orde r, we must give “g reat

9weig ht” to the Com mi s s io n ’ s interpre tation, just as we g ive g reat weig ht to an ag ency ’s interpre tation of its own rules and r eg ulations. AEP Tex. North , 297 S.W .3d at 447.

Acc ording ly , we conclude that at the time it issued the CTC Orde r, the Commi ssion interpre ted the NUS to require the interest rate to chang e “fr om the date the [new] rule is eff ective,” and that such an interpre tation was rea sonable. The CTC Orde r’s fac t finding s and order ing
para g raphs are consistent with that conclusion, which is further bolstered by the lang uag e in the CTC Orde r (quoting the NUS) that “unless and until the Commi ssion validly ad opts a new rule,” the former 10.93% rate would apply

. As the Commissi on points out, t he “unle ss-and-until lang uag e”

can rea sonably be construed to mean that the 10.93% rate “ce ases to a pply on the date the Revised Rule become s eff

ective. Thus, if the revised rate does not a pply as of that date, there is no interest
rate for stranded costs in the interim.” See Tex. Gov’t Code Ann. § 311.023(5) (West 2005) (cour ts

m ay consider “conse quence s of a particula r construction” when construing statutes); A E P T ex
. North , 297 S.W .3d at 447 (cour ts construe order s of administrative ag encie s acc ording to same rules as whe n interpre ting statutes) (citing Home Transp. Co. , 670 S.W .2d at 325).

Read toge ther, the rele vant portions of the CTC Orde r, including the finding s of fac t, comport wit h the C o m m i s s i on’s conclusion in the Effective Date Order that the C ommissi on had intended the eff

ective date of the revised rate to be J uly 20, 2006, and thus set the new interest rate as of that date. There fore , beca use t here is no inconsistency betwee n the CTC and Effe ctive Da te O r d e rs, the Commi ssion did not improperly “ame nd” the prior order by its subsequent interpre ta ti o n . See City of

Abilene , 146 S.W .3d at 747 (re cog nizi ng that ag ency is entitled to interpre t its own order ,

10so long as it does not use occa sion as means to amend prior order ). TNMP maintains, howeve r, that 5 the Commi ssion’s interpre tation of its prior order is unrea sonable and should not be adopted beca use it would result in retroa ctive rate making

. Specifica lly , TNMP argues that re t ro ac t i ve rate making

occur red w hen the Commission recog nized an eff ective date for the CTC re vised interest rate that

was ear lier than the date on which the revised interest rate was numerica lly calc ulated. We disag ree .
The Com m ission ’s Interpretation Does Not Result in Retroactive Ratemaki ng

We note from t h e o u t s et that “[t] he rule ag ainst retroa ctive rate making is often misunderstood and misapplied.” State v. Public Util. Comm’n , 883 S.W .2d 190, 199 (Tex. 1994). The rule prohibits the Comm ission fr om se tting future rate s to a llow a utilit y to r ecoup past losses

or to ref und to customers excess utilit y profits. Id. “Restated, the rule prohibits a utilit y commission from making a retrospe ctive inquiry to deter mine whether a prior rate was rea sonable and imposing

a surcha rg e when rate s wer e too low or a ref und when rate s wer e too hig h.” Id. I n short, “the rule
ag ainst retroa ctive rate making only require s that [ut iliti es], the Commi ssion, and courts abide by an administrative deter

mination that a particula r rate is just and rea sonable.” CenterPoint Energy Entex , 208 S.W .3d at 623.

TNMP argues that we should consider the fac t that it continued to collect interest at the 5 10.93% rate when it filed its compliance tariff in November 2006, afte r the CTC Orde r was issued, and appar ently no other party objected. The intent or interpre tation of TNMP, or o f t h e other participa nts in the CTC Docke t, does not control our analy sis, howeve r. I ndeed, the most that could be inferr ed from TNMP’s subsequent conduct and the alleg ed inaction on the part of the other parties is that the effec tive date langua g e in the C TC Orde r was ambig uous. Assuming without deciding that the CTC Orde r was amb i g uous, we would be constraine d to adopt the interpre tation of the Commi ssion so long as it wa s n o t unrea sonable. Fiess v. State Farm Lloyds , 202 S.W .3d 744, 747-48 (Tex. 2006). As we will addre ss further , the Commi ssion’s interpre tation is rea sonable and does not, as TNMP asser

ts, result in impermissibl e re troac tive rate making

.

11Her e, the rate at issue was set by the 2006 CTC Orde r. Prior to that order , there wer e

no CTC rate s set for TNMP an d TNMP was not authorized to char g e a CTC. There fore , as the 6 Commi ssion argues, there could be no retrospe ctive inquir y i n t o the rea sonablene ss of any CTC
rate s and, thus, no rec oupment o f p as t l o s s es o r ref und of excess profits in those rate s. Cf. State , 883 S.W .2d at 199. The chang e in the interest rate resulted from the prospec tive application of the formula adopted under the Commi ssion’s new rule, not from an evalua tion of the adequa cy , or inadequa cy , of the stranded cost interest rate established for TNMP in its tr u e- u p ca s e. The 7 Effe ctive Date Orde r does not amount to a determination by the Commiss ion that prior ra tes wer e

unre as o nable; rathe r, it mere ly implemented the CTC Orde r. Be cause the Commi ssion did not
eng ag e in retroa ctive rate making in the CTC Docke t, the Effe ctive Date Orde r did not result in
retroa ctive ratemaking

.

Finally , TNMP argues that the Commi ssion’s order ado pting amende d rule 25.263( l )(3) prohibits the Commi ssion from setting an eff ective date for the revised interest rate that is ear lier than the date of an order deter mining what the rate would be. I n that order , the

This fac t distinguishes the instant case from that of a “similarly situated” utilit y that TNMP 6 argues was trea ted more favor ably by th e Commi ssion. We also note that the eff ective- date lang uag e of the NUS adopted by the Commi ssion in TNMP’s CTC Orde r is unique to this case , and contro l s t h e o u t come here

. See Application of AEP Texas Central Company For a Competition Transit ion Charge Pur

s u a n t t o PUC Subst. R. 25.263( n) , Docke t No. 32758, available at http:// intercha

ng e.puc.sta te.tx .us/W ebApp/I nterc hang e/applica tion/dbapps/login/pg L og in.asp at Docke t No. 32758, I tem 189.

Moreove r, as the Commi ssion and OPC point out, no statute or rule requires t h e 7 CTC revised interest rate to have been numerica lly quantified befor e the eff ective date of the revised rate

. On the contra

ry , the history of stran d ed -c o s t rec overy illust rate s that interest char g es become eff

ective long befor e the date principal stranded cost amounts or stranded cost interest rate s are ever quantified. 12Commi ssion rec og nized that the CTC is a “rate” as define d under PURA, and that PURA authorizes

the Commi ssion to chang e rate s on a prospec tive basis. Having deter mined, howeve r, that the CTC Orde r revised TNMP’s CTC interest rate prospec tively from the eff ective date of the amende d rule,

we find no inconsistency betwee n the order adopting the amend ed ru l e and the Effe ctive Date Orde r’s implementation of the CTC Orde r.

I n light of the fore g oing, we sustain the Commi ssion’s and OPC’s issues on appea l.

CONCLUSION Having sustained the Commi ssion’s and OPC’s issues on appea l, we reve rse the judgme nt of the trial cour t and re nder judg ment aff irming the Commi ssion’s order.

J . Woodfin J ones, Chief Just ice Be fore Chief J ustice Jones, J ustices Henson a nd Goodwin Reverse d and Rende red Filed: May

11, 2011

13