Opinion ID: 895266
Heading Depth: 2
Heading Rank: 2

Heading: Control Premium Valuation-Panel Fee

Text: The PUC convened the valuation panel under Section 39.262(h )( 3) to help determine the market value of transferred generation assets under the PSV method. The PUC retained J.P. Morgan to serve as the valuation panel and approved its $5.2 million fee. J.P. Morgan insisted that CenterPoint guarantee payment of the fee on behalf of Texas Genco . Texas Genco and CenterPoint (then Texas Genco’s corporate parent) ultimately signed a contract agreeing to be jointly obliged for the fee, and CenterPoint ultimately paid it. As part of the fee negotiations, CenterPoint sought agreement that PUC staff would support recovery by CenterPoint of the valuation-panel fee. PUC staff agreed not to contest such recovery. The PUC allowed CenterPoint to recover this fee from ratepayers through the CTC. It found the fee reasonable, and also noted in the Order that “[t]he true-up applicants were required to incur this expense by the Commission, and the expense was necessary for the resolution of the case.” TIEC argues the valuation-panel fee must be borne by Texas Genco , the company receiving the transferred generation assets, and the PUC exceeded its authority in allowing CenterPoint to recoup the fee through its retail customers. TIEC argues that this sentence from Section 39.262(h )( 3) prohibits cost-shifting and requires Texas Genco to incur the fee alone: “The costs and expenses of the panel, as approved by the commission, shall be paid by each transferee corporation.” The PUC and CenterPoint respond that Section 39.262(h)(3) only specifies that the transferee (as opposed to the PUC or someone else) is initially responsible for paying the valuation-panel fee, but the statute does not limit how the transferee satisfies that obligation or prohibit the PUC from allowing CenterPoint to recover the fee through its rates. They contend that since CenterPoint guaranteed the fee and ultimately paid it, it can recoup it under Section 36.061(b )( 2), applicable generally to ratemaking proceedings. Under this provision, the PUC may allow recovery of “reasonable costs of participating in a proceeding under this title not to exceed the amount approved by the regulatory authority.” 6 2 So does “shall be paid by the transferee corporation” in Section 39.262(h )( 3) mean Texas Genco must exclusively underwrite the fee, or does it merely require Texas Genco to cover the fee in the first instance, while letting other law (including Section 36.061(b)(2)) determine how that obligation is ultimately funded or perhaps recouped through rates like other rate-case expenses? The court of appeals’ careful analysis persuades us that CenterPoint and the PUC, whose reasonable construction of PURA merits “serious consideration,” 6 3 have the better argument: [B]y providing that the transferee corporations “shall pay” valuation panel expenses, the legislature did not intend to preclude those expenses ultimately being recovered through rates under PURA 36.061(b)(2). [Section 39.262(h)(3)], in other words, reflects not a mandate that such expenses be borne exclusively by transferee corporations, as TIEC suggests, but merely an expectation that the expenses would be “paid” by transferee corporations in the same manner that parties to rate proceedings routinely pay legal expenses, consultant fees, and myriad other “costs of participating in a proceeding” that are potentially eligible for later recovery under PURA section 36.061(b)(2). 6 4 It is true, as TIEC contends, that state-agency powers are limited, and agencies may not “on a theory of necessary implication from a specific power, function, or duty expressly delegated, erect and exercise what really amounts to a new and additional power or one that contradicts the statute, no matter that the new power is viewed as expedient for administrative purposes.” 6 5 But that admonition is inapposite here. PURA nowhere discusses the interplay between Sections 36.061(b )( 2) and 39.262(h)(3), much less suggests any conflict between them. Contrast that to other examples within PURA where the Legislature acknowledged potential conflicts and clarified which provision would control. 6 6 PURA’s drafters knew how to resolve perceived inconsistences , and absent any indication that lawmakers desired one PURA provision to prevail over another, we must presume they wanted both sections here to be fully effective. TIEC argues principally that Section 39.262(h )( 3) must control because its specific focus on valuation panels gives it a precision that Section 36.061(b)(2)’s ordinary cost-recovery regime lacks. But the specific-controls-over-general maxim “applies only when overlapping statutes cannot be reconciled.” 6 7 Here, we can construe the two provisions in a way that harmonizes rather than conflicts. 6 8 Section 39.262(h)(3) does not restrict, or even address, how the transferee corporation fulfills its panel-fee obligation. It nowhere prohibits, even implicitly, a transferor corporation from covering a transferee’s upfront obligation to pay the valuation-panel fee and later seeking recovery as a “reasonable cost[ ] of participating in a proceeding” under Section 36.061(b)(2). In short, the provisions do not collide because they govern different subjects — initial payment of the valuation-panel fee (Section 39.262(h)), and separately, the PUC’s authority to permit the recoupment of certain rate-case expenses (Section 36.061(b )( 2)). True, one provision has a narrower focus, but they are easily harmonized, as the PUC did here. TIEC’s construction would create a conflict where none need exist. We agree with the court of appeals’ analysis.