Court Opinion

ID: 4064261
Source: CourtListenerOpinion
Date Created: 2016-09-29 21:24:12.73735+00
Date Added: 2024-06-11T14:05:53.054407
License: Public Domain

ACCEPTED
                                                                                                                                                               03-14-00340-CV
                                                                                                                                                                       4961132
                                                                                                                                                    THIRD COURT OF APPEALS
                                                                                                                                                               AUSTIN, TEXAS
                                                                                                                                                          4/20/2015 5:45:55 PM
                                                                                                                                                             JEFFREY D. KYLE
                                                                                                                                                                        CLERK

                                                                                                                                  FILED IN
                                                                                                                           3rd COURT OF APPEALS
                                                                                                                               AUSTIN, TEXAS
                                                                                                                           4/20/2015 5:45:55 PM
M EG AN N EA L                                                                                                                          (512) 475-4009
                                                                                                                             JEFFREY D. KYLE
A SSISTAN T A TTO RN EY G EN E RA L                                                                                megan.neal@texasattorneygeneral.gov
                                                                                                                                    Clerk

                                                            April 20, 2015

Honorable Jeffrey D. Kyle, Clerk                                                                                                Via Electronic Filing
Court of Appeals, Third District of Texas
P.O. Box 12547
Austin, TX 78711-2547

Re:      No. 03-14-00340-CV,

         Appellants, CPS Energy, Time Warner Cable Texas LLC, and Southwestern
         Bell Telephone Company d/b/a AT&T// Cross-Appellant Public Utility
         Commission of Texas,
         v. Appellee, Public Utility Commission of Texas// Cross Appellee, CPS
         Energy, Time Warner Cable Texas LLC, and Southwestern Bell Telephone
         Company d/b/a AT&T.

Dear Mr. Kyle:

        In preparation for oral argument in this case, we determined the Court does not
have jurisdiction to decide one of the issues. CPS Energy does not have standing to
question the Commission’s declarations regarding amendments to the applicable federal
regulation. (CPS Energy’s Appellant’s Point of Error No. 2; Findings of Fact 84-87;
Conclusion of Law 27.) Those amendments became effective on June 8, 2011—several
months after the time period for which the Commission determined the maximum
allowable pole-attachment rate. That period ended with CPS Energy’s test year 2009,
billing year 2010. Thus, the Court cannot review this issue.

       This Court and the Texas Supreme Court have held that statements about the
future are advisory and a party does not have standing to complain about them. The two
attached cases demonstrate these holdings. Please provide copies to the Court.

   PO S T OF F I C E BO X 12548, AU S T I N , TE X A S 78711-2548         TEL:     (512)463-2100              W W W .TEX A SAT T O R N E YGEN ER A L.G O V
                                                  A n Equa l Em pl o ym ent O pp or t unit y Em pl o ye r ·
Hon. Jeffrey Kyle                                                                    Page 2
April 20, 2015

       Thank you for your assistance.

                                           /s/ Megan Neal
                                          Megan Neal
                                          Assistant Attorney General
                                          State Bar No. 24043793
                                          (512) 475-4009 Tel.
                                          (512) 457-4639 Fax

cc:    Counsel of record w/ attachments
       Stephen Journeay - PUC

                                 Certificate of Service

       I certify that a true and correct copy of this document was electronically filed with
the Court of Appeals for the Third District of Texas. All counsel were served with a true
and correct copy of this document electronically or by email on the 20th day of April,
2015, to the following:

 Alfred R. Herrera                             Michael T. Sullivan
 Felipe Alonso III                             MAYER BROWN LLP
 HERRERA & BOYLE, PLLC                         71 S. Wacker Drive
 816 Congress Avenue, Suite 1250               Chicago, IL 60606
 Austin, TX 78701                              (312) 782-0600
 (512) 474-1492                                (312) 706-8689 (fax)
 (512) 474-2507 (fax)                          msullivan@mayerbrown.com
 aherrera@aherreraboylelaw.com
 falonso@aherreraboylelaw.com                  Joseph E. Cosgrove, Jr.
                                               Katherine C. Swaller
 Curt D. Brockman                              Thomas Ballo
 CPS Energy                                    AT&T LEGAL DEPARTMENT
 145 Navarro                                   816 Congress Avenue, Suite 1100
 P. O. Box 1771                                Austin, TX 78701
 San Antonio, TX 78296                         (512) 457-2304
 (210) 353-5689                                (512) 870-3420 (fax)
 (210) 353-6832 (fax)                          joseph.cosgrove.jr@att.com
 cdbrockmann@cpsenergy.com                     katherine.swaller@att.com
 Attorneys for CPS Energy                      thomas.ballo@att.com
Hon. Jeffrey Kyle                                               Page 3
April 20, 2015

 Valerie P. Kirk                   Paul A. Drummond
 Melissa Lorber                    Natalie L. Hall
 ENOCH KEVER PLLC                  AT&T LEGAL DEPARTMENT
 600 Congress Avenue, Suite 2800   1010 N. St. Mary’s, Rm 14Q
 Austin, TX 78701                  San Antonio, TX 78215
 (512) 615-1200                    (210) 351-4830
 (512) 615-1198 (fax)              (210) 886-2127 (fax)
 vkirk@enochkever.com              paul.drummond@att.com
 mlorber@enochkever.com            natalie.hall@att.com
 Attorneys for Time Warner         Attorneys for AT&T

                                   John Davidson Thomas
                                   Paul A. Werner
                                   James Aaron George
                                   SHEPPARD MULLIN RICHTER &
                                   HAMPTON LLP
                                   2099 Pennsylvania Ave., N.W.
                                   Suite 100
                                   Washington, D.C. 20006
                                   (202) 747-1900
                                   (202) 747-1901 (fax)
                                   dthomas@sheppardmullin.com
                                   pwerner@sheppardmullin.com
                                   ageorge@sheppardmullin.com
                                   Attorneys for Time Warner

                                    /s/ Megan Neal
                                    Megan Neal
                                                                                     Page 1
Not Reported in S.W.3d, 2014 WL 4058727 (Tex.App.-Austin)
(Cite as: 2014 WL 4058727 (Tex.App.-Austin))

                                               Judge Presiding.
Briefs and Other Related Documents             From the District Court of Travis County,
                                               126th       Judicial      District,     No.
Judges and Attorneys                           D–1–GN–10–003982, Stephen Yelenosky,
                                               Judge Presiding.
Only the Westlaw citation is currently
                                               Douglas Fraser, Assistant Attorney Gener-
available.
                                               al, Environmental Protection Division,
SEE TX R RAP RULE 47.2 FOR DESIG-              Kellie E. Billings, Assistant Attorney Gen-
NATION AND SIGNING OF OPINIONS.                eral, Environmental Protection & Admin.
                                               Law Division, Austin, TX, for Appellant.
MEMORANDUM OPINION
                                               Dane McKaughan, Greenberg Traurig,
       Court of Appeals of Texas,              LLP, Austin, TX, for Appellee.
                Austin.
  The RAILROAD COMMISSION OF
                                               Before Justices PURYEAR, GOODWIN,
           TEXAS, Appellant
                                               and FIELD.
                   v.
CENTERPOINT ENERGY RESOURCES
 CORP. d/b/a CenterPoint Energy Entex                  MEMORANDUM OPINION
 and CenterPoint Energy Texas Gas, Ap-         MELISSA GOODWIN, Justice.
                 pellee.                            *1 The Texas Railroad Commission
 The Railroad Commission of Texas, Ap-         (the Commission) appeals the trial court's
                 pellant                       reversal in part of its final orders in three
                   v.                          annual review proceedings under cost-
Texas Gas Service Company, a Division of       of-service adjustment (COSA) tariffs in-
        ONEOK, Inc., Appellee.                 volving essentially identical issues. Center-
 The Railroad Commission of Texas, Ap-         Point Energy Resources Corp. d/b/a
                 pellant                       CenterPoint Energy Entex and CenterPoint
                   v.                          Energy Texas Gas (CenterPoint) and Texas
CenterPoint Energy Resources Corp. d/b/a       Gas Service Company, a Division of
CenterPoint Energy Entex and CenterPoint       ONEOK, Inc. (Texas Gas) (the Utilities)
      Energy Texas Gas, Appellee.              sued for judicial review of final orders is-
                                               sued by the Commission denying the Utilit-
        Nos. 03–13–00533–CV,                   ies' recovery of certain expenses for meals,
  03–13–00534–CV, 03–13–00535–CV.              lodging, and other items and ordering cer-
            Aug. 14, 2014.                     tain guidelines for recovery of similar ex-
                                               penses in future COSA reviews. Because
From the District Court of Travis County,
                                               we conclude that the Utilities' claims are
98th      Judicial      District,    No.
                                               not ripe, we reverse the trial court's judg-
D–1–GN–10–003981, Stephen Yelenosky,
                                               ment and dismiss the Utilities' claims.
Judge Presiding.
From the District Court of Travis County,         FACTUAL AND PROCEDURAL
200th      Judicial     District,    No.                   BACKGROUND
D–1–GN–10–003983, Stephen Yelenosky,              In April 2010, the Utilities applied for

                © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                     Page 2
Not Reported in S.W.3d, 2014 WL 4058727 (Tex.App.-Austin)
(Cite as: 2014 WL 4058727 (Tex.App.-Austin))

cost-of-service adjustments to their rates      the Utilities could not produce itemized re-
pursuant to annual reviews authorized un-       ceipts. FN1 In its final orders, the Commis-
der their respective COSA tariffs for cer-      sion made certain findings of fact and con-
tain service areas. Rates for the affected      clusions of law concerning the disallowed
customers were initially determined in con-     expenses and included two “ordering para-
tested case hearings that resulted in the ad-   graphs” requiring the Utilities to meet cer-
option of tariffs with COSA clauses. A          tain evidentiary criteria for recovery of
COSA clause is a formula included in a          similar expenses in the future.FN2 The two
utility's tariff that allows adjustments to     ordering paragraphs provided:
customer charges without the necessity of a
full-blown “Statement of Intent” rate case.            FN1. The removal of the disputed
See Texas Coast Utils. Coal. v. Railroad               expenses did not result in any
Comm'n, 423 S.W.3d 355, 357, 374                       change to the Utilities' proposed ad-
(Tex.2014) (upholding authority of Com-                justments, and the record reflects
mission to adopt gas utility rate schedule             that the Utilities withdrew their re-
providing for automatic annual adjustments             quests for the questioned expenses.
based on increases or decreases in utility's
                                                       FN2. In each case, calculation er-
cost of service, i.e., COSA clause). The
                                                       rors not relevant to this appeal were
terms of a COSA clause vary depending on
                                                       corrected and a nunc pro tunc order
what is approved as part of the tariff in the
                                                       issued.
rate case. The tariffs in these cases provide
that the annual rate adjustment is to be de-      *2 IT IS FURTHER ORDERED that
termined by a calculation based on calen-         [the Utilities] shall not include any em-
dar year operating expenses, return invest-       ployee or contractor expenses from em-
ment, and certain taxes. If the resulting         ployee or contractor expense reports re-
change is positive, the amount charged            imbursement in future COSA filings that
goes up; if it is negative, the amount            cannot be supported by a detailed item-
charged goes down. The adjustment is              ized receipt which shows the specific
capped at 5% of the customer charge that          amounts and line item charges.
was in effect at the end of the preceding
calendar year in CenterPoint's tariffs and at     IT IS FURTHER ORDERED that [the
the percentage change in the Consumer             Utilities] shall identify and justify each
Price Index for All Urban Consumers in            meal expense that exceeds $25.00 per
Texas Gas's tariff. These were the first          person and any lodging expense over
COSA filings made by the Utilities under          $150.00 per person per night that [the
their respective tariffs.                         Utilities] propose[ ] to include in future
                                                  COSAs.
    A COSA tariff annual review is a
streamlined procedure that does not include         The Utilities filed motions for rehear-
a hearing; instead, the adjustment is de-       ing complaining that the findings of fact,
termined following staff review of the          conclusions of law, and ordering para-
evidence filed by the utility. In each of the   graphs concerning the disallowed expenses
present cases, the Commission questioned        were statements of new policy, not backed
and ultimately disallowed certain expenses      by any rule or guideline, and were there-
for meals, travel, and other items for which    fore made through unlawful procedure, ar-

                 © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                       Page 3
Not Reported in S.W.3d, 2014 WL 4058727 (Tex.App.-Austin)
(Cite as: 2014 WL 4058727 (Tex.App.-Austin))

bitrary and capricious, and not supported       future,” not an advisory opinion.
by substantial evidence. The Commission
denied the motions for rehearing, and the              FN3. The Commission also con-
Utilities filed suits for judicial review as-          tends that the Utilities lack standing
serting the same claims. See Tex. Util.Code            because in their motions for rehear-
§ 105.001(a) (any party to proceeding be-              ing, they did not challenge the
fore Commission entitled to judicial review            Commission's final decisions on
under substantial evidence rule). The Com-             rate adjustments and instead at-
mission filed motions to dismiss based, in             tacked only the underlying findings
part, on its contention that the Utilities             of fact and conclusions of law. This
were requesting advisory opinions because              Court has held that to have standing
their claims are not ripe. The trial court             to seek judicial review, one must be
denied the Commission's motions to dis-                aggrieved by the final order and not
miss and reversed the final orders, finding            merely by an underlying finding or
that the Commission acted arbitrarily and              conclusion, see GTE Sw. Inc. v.
capriciously by imposing a new policy in               Public Util. Comm'n of Tex., 37
the orders and that the policy was made                S.W.3d 546, 548 (Tex.App.-Austin
through unlawful procedure and was not                 2001, no pet.) (citing Champlin Ex-
supported by substantial evidence. These               ploration, Inc. v. Railroad Comm'n,
appeals followed.                                      627 S.W.2d 250,     252
                                                       (Tex.App.-Austin 1982, writ ref'd
               DISCUSSION                              n.r.e.)). However, the Utilities' mo-
    In its first issue, the Commission ar-             tions for rehearing expressly chal-
gues that the Utilities' claims are not ripe           lenged the ordering paragraphs as
and they therefore seek an impermissible               well as the findings and conclu-
advisory opinion.FN3 The Commission                    sions. We overrule the Commis-
contends that the Utilities request a prede-           sion's first issue as to this argument.
termination of a hypothetical matter that
could arise in the future, which is not a            “The courts of this state are not em-
matter fit for judicial consideration. The      powered to give advisory opinions[, and]
Utilities argue that the orders “expressly      [t]his prohibition extends to cases that are
appl [y] ... to future COSA proceedings,”       not yet ripe.” Patterson v. Planned Parent-
“mandate the manner in which all future         hood of Hous. & Se. Tex., Inc., 971 S.W.2d
rate adjustments filed pursuant to the ap-      439, 443 (Tex.1998) (citations omitted).
plicable COSA tariff will be resolved,” and     The ripeness doctrine “serves to avoid pre-
“fundamentally change the way in which          mature adjudication” and “focuses on
COSA adjustments are calculated in future       whether the case involves ‘uncertain or
COSA proceedings.” They further contend         contingent future events that may not occur
that the orders place “obligations and bur-     as anticipated, or indeed may not occur at
dens on [them] now, and that failure to         all.’ “ Perry v. Del Rio, 66 S.W.3d 239,
abide by these new obligations and burdens      250 (Tex.2001) (citations omitted). “A case
could bar recovery in a future COSA pro-        is not ripe when its resolution depends on
ceeding.” Thus, the Utilities contend, they     contingent or hypothetical facts, or upon
seek real relief and an opinion that will af-   events that have not yet come to pass.”
fect “all COSA cases [they] will file in the    Patterson, 971 S.W.2d at 443. “Ripeness is

                 © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                      Page 4
Not Reported in S.W.3d, 2014 WL 4058727 (Tex.App.-Austin)
(Cite as: 2014 WL 4058727 (Tex.App.-Austin))

both a question of timing, that is, when one    constitute a hardship on the Utilities. See
may sue, a question of discretion, or           Perry, 66 S.W.3d at 250; Atmos Energy,
whether the court should hear the suit, and     127 S.W.3d at 858. Whether there may be
not whether it can hear the suit.” Atmos        an actual controversy between the Utilities
Energy Corp. v. Abbott, 127 S.W.3d 852,         and the Commission is too uncertain and
858 (Tex.App.-Austin 2004, no pet.)             speculative to support the Utilities' conten-
(internal citations omitted) (citing Perry,     tion that their claims are ripe. Because the
66 S.W.3d at 249–50; Patterson, 971             Utilities complain of future enforcement,
S.W.2d at 442; City of Waco v. Texas Nat-       they must show that enforcement is
ural Res. Conserv. Comm'n, 83 S.W.3d            “imminent or sufficiently likely.” See Trin-
169, 177 (Tex.App.-Austin 2002, pet.            ity Settlement, 417 S.W.3d at 506; Rea v.
denied)). “In the administrative-law con-       State,      297 S.W.3d 379,     383
text, moreover, avoiding premature litiga-      (Tex.App.-Austin 2009, no pet.) (to estab-
tion over administrative determinations         lish ripeness, plaintiffs must demonstrate
prevents courts from ‘entangling them-          injury is imminent, direct, and immediate,
selves in abstract disagreements over ad-       not merely remote, conjectural, or hypo-
ministrative policies' while simultaneously     thetical); Atmos Energy, 127 S.W.3d at 856
allowing the agency to perform its func-        ; City of Waco, 83 S.W.3d at 175. A per-
tions unimpeded.” Trinity Settlement            ceived threat of enforcement does not cre-
Servs., LLC v. Texas State Secs. Bd., 417       ate a justiciable controversy. Compare Mitz
S.W.3d 494, 506 (Tex.App.-Austin 2013,          v. Texas State Bd. of Veterinary Med. Ex-
pet. denied) (quoting Patterson, 971            am'rs,       278 S.W.3d 17,      25
S.W.2d at 443). The determination of ripe-      (Tex.App.-Austin 2008, pet. dism'd), with
ness depends on “(1) the fitness of the is-     Beacon Nat'l Ins. Co. v. Montemayor, 86
sues for judicial decision; and (2) the hard-   S.W.3d 260, 267–68 (Tex.App.-Austin
ship occasioned to the party by the court's     2002, no pet.).
denying judicial review.” Atmos Energy,
127 S.W.3d at 858 (citing Perry, 66                  The Utilities attempt to characterize
S.W.3d at 250 (citing Abbott Labs. v.           their claims as ripe by arguing that the lan-
Gardner, 387 U.S. 136, 149, 87 S. Ct. 1507,      guage of the ordering paragraphs will re-
18 L. Ed. 2d 681 (1967); City of Waco, 83         quire them to meet evidentiary require-
S.W.3d at 177)). Ripeness should be de-         ments in all future annually required COSA
cided on the basis of all the information       filings and that the orders place
available to the court, and we may consider     “obligations and burdens” on them now.
intervening events that occur after the de-     Tellingly, however, the Utilities argue that
cision in the lower court. Perry, 66 S.W.3d     their failure to meet these obligations and
at 250; 13 Charles Alan Wright, Arthur R.       burdens could bar recovery in a future
Miller, & Edward H. Cooper, Federal             COSA proceeding. This perceived threat as
Practice & Procedure § 3532.1, at 136–37        to future COSA filings does not rise to the
(2d ed.1984).                                   level of imminent or likely injury so as to
                                                present a justiciable claim. See Mitz, 278
    *3 We do not believe the Utilities have     S.W.3d at 25 (contrasting actual initiation
affirmatively established that the issues       of administrative action suggesting immin-
they presented were fit for review and that     ent proceeding in that case with mere per-
the failure to address those issues would       ceived threat in Beacon Nat'l, 86 S.W.3d at

                 © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                         Page 5
Not Reported in S.W.3d, 2014 WL 4058727 (Tex.App.-Austin)
(Cite as: 2014 WL 4058727 (Tex.App.-Austin))

267–68). And while we may consider inter-         party's business and places it in jeopardy of
vening events that occur after a decision in      sanction or penalty, that is sufficient to
the lower court, see Perry, 66 S.W.3d at          show a hardship. Id.; Atmos Energy, 127
250, the Utilities have not presented any         S.W.3d at 859.
evidence that the Commission has taken
any steps to impose the requirements on               Here, the ordering paragraphs require
them since issuing the final orders or that       the Utilities to present itemized receipts
there is any existing or continuing threat of     and identify and justify certain expenses if
liability or penalty. Cf. Mitz, 278 S.W.3d at     they want the Commission to allow their
25–26 (constitutional claim ripe for review       inclusion in the calculation of future ad-
considering continuing threat of civil and        justments. Documenting and justifying ex-
criminal liability against practitioners and      penses to be included in rate calculations
direct effect act had on business enter-          does not constitute “a significant change in
prise); Patel v. Texas Dep't of Licensing &       [the Utilities'] conduct.” See Abbott Labs.,
Regulation, No. 03–11–00057–CV, 2012              387 U.S. at 153; Mitz, 278 S.W.3d at 26;
Tex.App. LEXIS 6187, at *23,2012 WL               see also 18 C.F.R. pt. 201, General Instruc-
3055479 (Tex.App.-Austin July 25, 2012,           tions, (2) Records (A) (Federal Energy
pet. granted) (constitutional claims ripe         Regulatory Commission's (FERC's) Uni-
where appellants subject to continuing            form System of Accounts (USOA)
threat of civil and criminal liability, as well   (providing utilities shall keep books and re-
as administrative penalties and sanctions).       cords “so as to be able to furnish readily
Thus, the Utilities have not established that     full information as to any item included in
enforcement is imminent or sufficiently           any account” and support each entry shall
likely, see Trinity Settlement, 417 S.W.3d        “by such detailed information as will per-
at 506; Atmos Energy, 127 S.W.3d at 856;          mit ready identification, analysis, and veri-
City of Waco, 83 S.W.3d at 175, and we            fication of all facts relevant thereto”); 16
conclude that the Utilities' issues are not fit   Tex. Admin. Code § 7.310(a) (Railroad
for judicial review, see Perry, 66 S.W.3d at      Comm'n of Tex., System of Accounts
250; Atmos Energy, 127 S.W.3d at 858.             (requiring gas utilities to use FERC's
                                                  USOA for all operating and reporting pur-
    *4 To prevail, the Utilities must show        poses); Tex. Util.Code § 104.008(1) (in
that they would suffer hardship if judicial       proceeding involving rate change proposed
review is withheld until enforcement of the       by utility, utility has burden of proving rate
requirements in the ordering paragraphs.          change is just and reasonable); City of Am-
See Perry, 66 S.W.3d at 250; Atmos En-            arillo v. Railroad Comm'n, 894 S.W.2d
ergy, 127 S.W.3d at 858. Hardship is              491, 498 (Tex.App.-Austin 1995, writ
shown when the statute, rule, or policy at        denied) (in any proceeding to change rates,
issue “ ‘requires an immediate and signific-      utility bears burden of proof to show rate
ant change in the plaintiffs' conduct of their    change and components thereof, such as
affairs with serious penalties attached to        operating expenses, are just and reason-
noncompliance.’ “ Mitz, 278 S.W.3d at 26          able).
(quoting Abbott Labs. v. Gardner, 387 U.S.
136, 153, 87 S. Ct. 1507, 18 L. Ed. 2d 681              Moreover, the Utilities have not made
(1967)). When the requirement at issue has        the requisite showing of hardship. See
a direct and immediate impact on the              Perry, 66 S.W.3d at 250; Atmos Energy,

                  © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                       Page 6
Not Reported in S.W.3d, 2014 WL 4058727 (Tex.App.-Austin)
(Cite as: 2014 WL 4058727 (Tex.App.-Austin))

127 S.W.3d at 859–60. Significantly, they        the trial court's judgment. See Tex.R.App.
are not aggrieved by the Commission's dis-       P. 47.1 (appellate court opinions should be
allowance of undocumented expenses,              as “brief as practicable”), 47 .4
which did not result in any changes to their     (memorandum opinions should be “no
requested rates. Nor do they face any other      longer than necessary to advise the parties
sanction or penalty for noncompliance. See       of the court's decision and the basic reas-
Atmos Energy, 127 S.W.3d at 859                  ons for it”).
(concluding appellants were not in jeop-
ardy of sanction or penalty because viola-                     CONCLUSION
tion of statute carried no sanction or pen-          Having concluded that these cases are
alty). Likewise, here, the Utilities face no     not fit for judicial decision and that denial
sanction or penalty for failure to comply        of the requested relief will not constitute a
with the requirements because the ordering       hardship on the Utilities, we reverse the
paragraphs include no provision for sanc-        judgment and dismiss the Utilities' claims.
tions or penalties. Id.; cf. Mitz, 278 S.W.3d
                                                 Tex.App.-Austin,2014.
at 26 (appellants showed hardship where
                                                 Railroad Com'n of Texas v. CenterPoint
they faced continuing threat of civil and
                                                 Energy Resources Corp.
criminal liability). As noted above, the
                                                 Not Reported in S.W.3d, 2014 WL
Utilities argue that failure to meet the re-
                                                 4058727 (Tex.App.-Austin)
quirements could bar recovery in the fu-
ture. Even assuming future recovery of           Briefs and Other Related Documents (Back
some expenses is actually barred at some         to top)
point, the inability to recover all expenses
does not necessarily harm the Utilities. In      • 2014 WL 644359 (Appellate Brief) Brief
fact, even after the questioned expenses         of Appellee Centerpoint Energy Resources
were deducted because the Utilities were         Corp., d/b/a Centerpoint Energy Entex and
unable to present the required documenta-        Enterpoint Energy Texas Gas (Feb. 10,
tion, the Utilities' requested rates were not    2014) Original Image of this Document
affected, and the Commission approved            with Appendix (PDF)
their requested rates. Nor is it certain that    • 2014 WL 644360 (Appellate Brief) Brief
the Utilities will request the expenses at is-   of Appellee Texas Gas Service Company, a
sue in future COSA filings; in these cases,      Division of Oneok, Inc. (Feb. 10, 2014)
they withdrew the questioned expenses and        Original Image of this Document with Ap-
nonetheless received the requested rates.        pendix (PDF)
Thus, the Utilities are not faced with the       • 2014 WL 644361 (Appellate Brief) Brief
dilemma of compliance or sanction, and           of Appellee Centerpoint Energy Resources
they have failed to show the requisite hard-     Corp., d/b/a Centerpoint Energy Entex and
ship. See Perry, 66 S.W.3d at 250; Atmos         Centerpoint Energy Texas Gas (Feb. 10,
Energy, 127 S.W.3d at 859–60.                    2014) Original Image of this Document
                                                 with Appendix (PDF)
    *5 Because the Utilities have failed to      • 2013 WL 6712920 (Appellate Brief)
establish a justiciable controversy, we sus-     Amended Brief of Railroad Commission of
tain the Commission's first issue as to ripe-    Texas (Dec. 10, 2013) Original Image of
ness. We therefore do not reach the Com-         this Document with Appendix (PDF)
mission's second issue as to the merits of       • 2013 WL 6712921 (Appellate Brief)

                 © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                      Page 7
Not Reported in S.W.3d, 2014 WL 4058727 (Tex.App.-Austin)
(Cite as: 2014 WL 4058727 (Tex.App.-Austin))

Amended Brief of Railroad Commission of
Texas (Dec. 10, 2013) Original Image of
this Document with Appendix (PDF)              Attorneys
• 2013 WL 6712922 (Appellate Brief)
                                               Attorneys for Appellant
Amended Brief of Railroad Commission of
                                               • Fraser, Douglas Burt
Texas (Dec. 10, 2013) Original Image of
                                               Austin, Texas 78701
this Document with Appendix (PDF)
                                               Litigation History Report | Profiler
                                               Attorneys for Appellee
Judges and Attorneys(Back to top)              • McKaughan, Dane
                                               Austin, Texas 78701
Judges | Attorneys                             Litigation History Report | Profiler
Judges
• Field, Hon. Scott K.                         END OF DOCUMENT
State of Texas Court of Appeals, 3rd Dis-
trict
Austin, Texas 78701
Litigation History Report | Judicial Re-
versal Report | Judicial Expert Challenge
Report | Profiler
• Goodwin, Hon. Melissa Young
State of Texas Court of Appeals, 3rd Dis-
trict
Austin, Texas 78701
Litigation History Report | Judicial Re-
versal Report | Judicial Expert Challenge
Report | Profiler
• Puryear, Hon. David E.
State of Texas Court of Appeals, 3rd Dis-
trict
Austin, Texas 78701
Litigation History Report | Judicial Re-
versal Report | Judicial Expert Challenge
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• Yelenosky, Hon. Stephen Andrew
State of Texas District Court, 345th Dis-
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Austin, Texas 78701
Litigation History Report | Judicial Re-
versal Report | Judicial Expert Challenge
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                © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                           Page 1
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

                                                        current data; and (6) in an opinion by Hecht,
Briefs and Other Related Documents                      J., the PUC was not required to reallocate
                                                        overpayments or underpayments of transition
Oral Argument Transcripts with Streaming                charges by any one class among all customers.
Media
                                                          Affirmed in part, reversed in part, and re-
                                                        manded.
Judges and Attorneys
                                                            Owen, J., dissented in part and filed opin-
        Supreme Court of Texas.
                                                        ion joined by Enoch and Baker, JJ.
 TXU ELECTRIC COMPANY, et al., Appel-
                lants,                                          *275 Opinion by Justice Owen
                  v.
   PUBLIC UTILITY COMMISSION OF                                         West Headnotes
       TEXAS, et al., Appellees.
                                                        [1] Electricity 145     8
               No. 00–0936.
           Argued Jan. 31, 2001.                        145 Electricity
           Decided June 6, 2001.                            145k2 Electric Companies
     Rehearing Overruled Aug. 30, 2001.                          145k8 k. Indebtedness, liens, and mort-
                                                        gages. Most Cited Cases
    Incumbent electric utility and intervenors              Public Utility Commission (PUC) could
appealed decision by the Public Utility Com-            employ a second present value test to determ-
mission (PUC) on financing for recovery of              ine whether tangible and quantifiable benefits
utility's regulatory assets and stranded costs          to ratepayers were provided by securitization
during deregulation to competitive market. The          through bonds secured by incumbent electric
250th District Court, Travis County, reversed           utility's transition charges to recover regulat-
and remanded in part. Appeal was taken. The             ory assets and stranded costs during deregula-
Supreme Court, Owen, J., held that: (1) the             tion to competitive market, but the PUC was
PUC could employ a second present value test            required to assume that, absent securitization,
to determine whether tangible and quantifiable          regulatory assets and stranded costs would be
benefits to ratepayers were provided by secur-          recovered through competition transition
itization through bonds secured by transition           charges in considerably less than forty years.
charges; (2) the PUC was required to assume             V.T.C.A., Utilities Code §§ 39.201, 39.262,
that, absent securitization, regulatory assets          39.301, 39.303(a).
and stranded costs would be recovered through
competition transition charges in less than             [2] Electricity 145     8
forty years; (3) it was not required to use the
                                                        145 Electricity
weighted average life of six years over which
                                                           145k2 Electric Companies
utility's transition bonds would be outstanding;
                                                               145k8 k. Indebtedness, liens, and mort-
(4) it lacked the discretion to consider utility's
                                                        gages. Most Cited Cases
regulatory assets on an asset-by-asset basis; (5)
                                                           Public Utility Commission (PUC) was not
it may apply the rate design methodology es-
                                                        required to use the weighted average life of six
tablished in an utility's last rate design case to
                                                        years over which incumbent electric utility's
the data in that rate case, rather than to more

                     © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                           Page 2
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

transition bonds would be outstanding for the           allocation factors that determine how transition
recovery of regulatory assets and stranded              charges are to be allocated among classes of
costs during deregulation to competitive mar-           customers in connection with deregulation to
ket; rather, to determine whether the amount            competitive market. V.T.C.A., Utilities Code
securitized would exceed the present value of           §§ 39.253(c-h).
the revenue requirement over the life of the
proposed transition bond associated with the            [5] Electricity 145      8
regulatory assets or stranded costs sought to be
                                                        145 Electricity
securitized, the PUC could take into account
                                                           145k2 Electric Companies
the actual timing of bond payments until the
                                                                145k8 k. Indebtedness, liens, and mort-
last payment is made on the oldest bond after
                                                        gages. Most Cited Cases
twelve years. V.T.C.A., Utilities Code §
                                                            Finding and conclusion by Public Utility
39.301.
                                                        Commission (PUC) on adjustment for loss on
[3] Electricity 145      8                              reacquired debt in future proceeding involving
                                                        electric utility were advisory and premature.
145 Electricity
    145k2 Electric Companies                            [6] Electricity 145      11.5(1)
         145k8 k. Indebtedness, liens, and mort-
                                                        145 Electricity
gages. Most Cited Cases
                                                            145k11.5 Discrimination and Overcharge
    Public Utility Commission (PUC) lacked
                                                                  145k11.5(1) k. In general. Most Cited
the discretion to consider incumbent electric
                                                        Cases
utility's regulatory assets on an asset-by-asset
                                                            Public Utility Commission (PUC) was not
basis in determining the amount to be securit-
                                                        required to reallocate overpayments or under-
ized through transition bonds for the recovery
                                                        payments of transition charges by any one
of regulatory assets and stranded costs during
                                                        class among all customers of incumbent elec-
deregulation to competitive market; rather, the
                                                        tric utility and thereby fully cross-collateralize
PUC was required to consider regulatory assets
                                                        responsibility for the transition to a competit-
in the aggregate to determine whether those as-
                                                        ive market; rather, it could engage in a non-
sets met the requirements for securitization
                                                        standard true-up of reallocating transition
and could not categorically exclude certain
                                                        charges among classes. V.T.C.A., Utilities
types of regulatory assets from securitization.
                                                        Code §§ 39.253, 39.307.
V.T.C.A., Utilities Code §§ 39.301, 39.303(a).
                                                        *276 Roy Q. Minton, Minton Burton Foster &
[4] Electricity 145      11.5(1)
                                                        Collins, Robert J. Hearon, Jr., Mary A. Keeney
145 Electricity                                         , Graves Dougherty Hearon & Moody, Austin,
   145k11.5 Discrimination and Overcharge               Robert A. Wooldridge, Robert M. Fillmore,
         145k11.5(1) k. In general. Most Cited          Howard V. Fisher, Worsham Forsythe
Cases                                                   Wooldridge, Dallas, for Appellant.
   (Formerly 145k11.3(1))
                                                        *277 Thomas K. Anson, Sheinfeld Maley &
    Public Utility Commission (PUC) may ap-
                                                        Kay, Geoffrey M. Gay, Lloyd Gosselink Blev-
ply the rate design methodology established in
                                                        ins Rochelle, Austin, Alan W. Harris, Dallas,
an incumbent electric utility's last rate design
                                                        Marianne Carroll, David B. Gross, Carroll &
case to the data in that rate case, rather than to
                                                        Gross, Andrew Kever, Bickerstaff Heath Smi-
more current data, in order to establish demand

                      © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                           Page 3
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

ley Pollan Kever & McDaniel, Mark C. Davis,                    appealed from the district court to this
Brickfield Burchette & Ritts, James K. Rourke                  Court).
, Thomas Lane Brocato, Suzi Ray McClellan,
Office of Public Utility Counsel, Steven Baron              We hold that: 1) in order to ensure that se-
, Office of Attorney General of Texas, John             curitization provides tangible and quantifiable
Cornyn, Attorney General of the State of                benefits to ratepayers greater than would have
Texas, Jeffrey S. Boyd, Karen Watson Kornell,           been achieved absent the issuance of transition
Douglas Fraser, Bryan L. Baker, Office of the           bonds,FN3 the Commission may apply a
Attorney General, Jonathan Day, Lino Men-               present value test in addition to the present
diola, Mayor Day Caldwell & Keeton, Diane               value and revenue requirement tests expressly
Barlow–Sparkman, Mark W. Smith, J. Kay                  set forth in sections 39.301 and 39.303(a) of
Trostle, Elizabeth H. Drews, James G. Boyle,            the PURA; 2) in applying an additional present
Law Office of Jim Boyle, Austin, for Appellee.          value test, the Commission should assume that
                                                        recovery of regulatory assets and stranded
                                                        costs absent securitization would occur in sub-
PER CURIAM.                                             stantially less than forty years; 3) the Commis-
    In 1999, the Legislature amended the Pub-           sion must consider regulatory assets that a util-
lic Utility Regulatory Act (PURA) to usher in           ity seeks to securitize in the aggregate to de-
deregulation of retail electric utility rates in        termine whether those assets meet the require-
Texas. FN1 As part of that plan, the Legis-             ments for securitization and cannot categoric-
lature concluded that, subject to certain restric-      ally exclude certain types of regulatory assets
tions, an existing utility like TXU Electric            from securitization; 4) section 39.253 permits
Company may recover amounts that the PURA               the Commission to apply the rate design meth-
defines as “regulatory assets” by using securit-        odology established in a utility's last rate
ization financing. Securitization is accom-             design case to the data in that rate case rather
plished through a financing order issued by the         than to more current data, in order to establish
Commission that authorizes a utility to issue           demand allocation factors that determine how
transition bonds. The transition bonds are re-          transition charges are to be allocated among
paid or secured by transition charges to rate-          classes of customers; 5) the Commission is au-
payers in a utility's service area. TXU reques-         thorized by section 39.307 to adopt a non-
ted the Commission to issue a financing order           standard true-up provision that reallocates
securitizing certain of its regulatory assets.          transition charges among classes of customers
The Commission authorized securitization of             in a manner that differs from the allocation
some but not all of those assets. A district            procedures set forth in section 39.253; 6) none
court reversed the Commission's order in part           of the other issues regarding allocation of
and remanded the case for further proceedings.          transition costs among classes of customers
TXU and others bring this direct appeal to our          has *278 merit; and 7) certain findings of fact
Court.FN2                                               and conclusions of law by the Commission are
                                                        advisory. Accordingly, we affirm the judgment
       FN1. Act of May 27, 1999, 76th Leg.,
                                                        of the district court in part, reverse it in part,
       R.S., ch. 405, 1999 Tex. Gen. Laws
                                                        and remand this case to the Commission for
       2543.
                                                        further proceedings. Justice Owen's concurring
       FN2. TEX. UTIL.CODE § 39.303(f)                  opinion is the opinion of the Court with re-
       (providing that review of financing or-          spect to the issues that it addresses, and Justice
       ders under the PURA are to be directly           Hecht's concurring opinion is the opinion of

                     © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                           Page 4
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

the Court with respect to the issues that it ad-        tion with the Public Utility Commission for a
dresses.                                                financing order in which TXU sought to secur-
                                                        itize $1.65 billion in regulatory assets and oth-
       FN3. All statutory references are to the         er costs and proposed to write off about $285
       Texas Utilities Code, unless otherwise           million in regulatory assets. The Commission
       indicated.                                       allowed TXU to securitize $363 million of reg-
                                                        ulatory assets. TXU and several of the forty-
Justice OWEN filed a concurring opinion, in
                                                        four parties who had intervened in the pro-
which Chief Justice PHILLIPS, Justice
                                                        ceedings before the Commission appealed to
HECHT, Justice ENOCH, Justice BAKER,
                                                        district court in Travis County. The district
Justice ABBOTT, Justice HANKINSON, and
                                                        court held that: 1) the Commission did not err
Justice JEFFERSON joined.
                                                        in applying a present value test in addition to
Justice HECHT filed a concurring opinion, in
                                                        the present value and revenue requirement
which Chief Justice PHILLIPS, Justice AB-
                                                        tests set forth in sections 39.301 and 39.303(a)
BOTT, Justice HANKINSON, and Justice
                                                        of the PURA; 2) the Commission had the dis-
JEFFERSON joined.
                                                        cretion to consider TXU's regulatory assets on
Justice OWEN filed a dissenting opinion, in
                                                        an asset-by-asset basis in determining whether
which Justice ENOCH and Justice BAKER
                                                        securitization would provide tangible benefits
joined.
                                                        to ratepayers; 3) the Commission should have
Justice O'NEILL did not participate in the de-
                                                        examined how long it would take TXU to re-
cision.
                                                        cover the regulatory assets at issue under the
Justice OWEN, joined by Chief Justice PHIL-
                                                        regulatory scheme established by the 1999
LIPS, Justice HECHT, Justice ENOCH,
                                                        amendments to the PURA rather than under
Justice BAKER, Justice ABBOTT, Justice
                                                        the previously existing regulatory scheme; 4)
HANKINSON, and Justice JEFFERSON, con-
                                                        the Commission was not required to use the
curring.
                                                        average life of the transition bonds that would
    In 1999, the Legislature determined that
                                                        be issued under the financing order in calculat-
partial deregulation of the electric power in-
                                                        ing the maximum amount that TXU could se-
dustry was in the public interest. To that end,
                                                        curitize; 5) the Commission's Finding of Fact
the Legislature amended the Public Utility
                                                        113 and references to that finding in Conclu-
Regulatory Act (PURA).FN1 In City of Corpus
                                                        sion of Law 41 and Ordering Paragraph 37, re-
Christi v. Public Utility Commission,FN2 also
                                                        garding future treatment of reacquired debt se-
decided today, we describe in some detail the
                                                        curitized under the financing order, are advis-
sections of the PURA that permit an electric
                                                        ory and have no res judicata effect; and 6) the
utility to securitize regulatory assets and stran-
                                                        Commission did not *279 err in its treatment
ded costs as part of the transition to market-
                                                        of certain rate design, allocation, and true-up
based retail electric rates. We need not repeat
                                                        issues.
that discussion here.
                                                            TXU, the Commission, the State of Texas,
       FN1. Act of May 27, 1999, 76th Leg.,
                                                        the Office of Public Utility Counsel, Texas In-
       R.S., ch. 405, 1999 Tex. Gen. Laws
                                                        dustrial Energy Consumers, Texas Retailers
       2543.
                                                        Association, the Steering Committee of Cities
       FN2. 51 S.W.3d 231 (Tex.2001).                   Served by TXU, the Coalition of Independent
                                                        Colleges and Universities, and Nucor Steel, a
   TXU Electric Company filed an applica-               division of Nucor Corporation, appealed dir-

                     © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                           Page 5
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

ectly to this Court pursuant to section                   coverable regulatory assets and stranded
39.303(f) of the PURA.                                    costs, as determined by the commission in
                                                          accordance with this chapter, through the re-
                         I                                financing or retirement of utility debt or
    [1] One of the principal issues in this ap-           equity. The commission shall ensure that se-
peal is how to determine the amount of regu-              curitization provides tangible and quantifi-
latory assets that a utility may securitize under         able benefits to ratepayers, greater than
the PURA. Section 39.303(a) says that when a              would have been achieved absent the issu-
utility applies to recover its regulatory assets          ance of transition bonds. The commission
and eligible stranded costs, the Commission               shall ensure that the structuring and pricing
shall adopt a financing order upon finding that           of the transition bonds result in the lowest
“the total amount of revenues to be collected             transition bond charges consistent with mar-
under the financing order is less than the rev-           ket conditions and the terms of the financing
enue requirement that would be recovered over             order. The amount securitized may not ex-
the remaining life of the stranded costs using            ceed the present value of the revenue re-
conventional financing methods and that the               quirement over the life of the proposed trans-
financing order is consistent with the standards          ition bond associated with the regulatory as-
in Section 39.301.” FN3 The parties disagree              sets or stranded costs sought to be securit-
about what constitute “the standards in Section           ized. The present value calculation shall use
39.301.” Specifically, the parties diverge on             a discount rate equal to the proposed interest
how the Commission is to carry out section                rate on the transition bonds. FN5
39.301's directive that it “shall ensure that se-
curitization provides tangible and quantifiable
benefits to ratepayers, greater than would have                FN5. Id.
been achieved absent the issuance of transition
                                                          § 39.303. Financing Orders; Terms
bonds.” FN4
                                                            (a) The commission shall adopt a financing
       FN3. TEX. UTIL.CODE § 39.303(a).
                                                          order, on application of a utility to recover
       FN4. Id. § 39.301.                                 the utility's regulatory assets and eligible
                                                          stranded costs under Section 39.201 or
                      A                                   39.262, on making a finding that the total
    Section 39.301 and the relevant parts of              amount of revenues to be collected under the
section 39.303 provide:                                   financing order is *280 less than the revenue
                                                          requirement that would be recovered over the
 § 39.301 Purpose                                         remaining life of the stranded costs using
                                                          conventional financing methods and that the
   The purpose of this subchapter is to enable
                                                          financing order is consistent with the stand-
 utilities to use securitization financing to re-
                                                          ards in Section 39.301.
 cover regulatory assets and stranded costs,
 because this type of debt will lower the car-              (b) The financing order shall detail the
 rying costs of the assets relative to the costs          amount of regulatory assets and stranded
 that would be incurred using conventional                costs to be recovered and the period over
 utility financing methods. The proceeds of               which the nonbypassable transition charges
 the transition bonds shall be used solely for            shall be recovered, which period may not ex-
 the purposes of reducing the amount of re-               ceed 15 years.

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51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

                     ***                                suance of transition bonds,” the Commission is
   (e) The commission shall issue a financing           required to ascertain the present value of the
 order under Subsections (a) and (g) not later          revenue requirements of the regulatory assets
 than 90 days after the utility files its request       without securitization, using the actual sched-
 for the financing order.FN6                            uled life of the assets under the regulatory
                                                        scheme as it existed before the 1999 amend-
       FN6. Id. § 39.303(a), (b), (e).                  ments to the PURA. The Commission main-
                                                        tains that it is then required to compare the
     All parties agree that there are at least two
                                                        outcome of that analysis with the present value
limitations on the maximum amount of regu-
                                                        computation specified in the final two sen-
latory assets or stranded costs that can be se-
                                                        tences of section 39.301 to see if securitization
curitized. One limitation is found in the last
                                                        results in a greater benefit to ratepayers.
two sentences of section 39.301. They require
a present value test. The present value test ex-             The revenue requirement over the forty-
pressly set forth in section 39.301 examines            year remaining life of the assets that TXU
the revenue requirement over the life of the            seeks to securitize was about $2.467 billion.
bonds, which under the PURA cannot exceed               Using the interest rates that TXU expected
fifteen years.FN7                                       would apply to the transition bonds, the reven-
                                                        ue requirement of the bonds was about $124
       FN7. Id. § 39.302(6).
                                                        million less than $2.467 billion. Using TXU's
    Another limitation on the amount that may           “worst case” scenario for interest rates, the
be securitized is the revenue requirement test          revenue requirement of the bonds was about
required by section 39.303(a). All parties agree        $100,000 less than the $2.467 billion. TXU
that under that provision, the total revenues to        thus meets the revenue requirement test.
be collected under the financing order, includ-         However, the Commission argues that when
ing the costs of issuing and servicing the              the present value of transition charges collec-
bonds, must be less than the revenue require-           ted over the twelve-year life of the transition
ment using conventional financing methods               bonds is compared with the present value of
over the remaining life of the assets, which in         payment for the regulatory assets over their
this case is presently up to forty years. There is      *281 forty-year life through utility rates, it can
no present value test component in determin-            be seen that securitization will harm, not bene-
ing whether the total revenue requirement is            fit, ratepayers. The Commission's financing or-
met. The revenue requirement in total dollars           der in this case reflects that if a remaining life
over the life of the bonds is compared with the         of up to forty years for the regulatory assets is
revenue requirement in total dollars over the           used in a present value analysis, the increased
remaining life of the regulatory assets.                cost to ratepayers could be $204 million. Some
                                                        of the intervenors assert that increased costs
    The Commission and other parties to this            could be as much as $500 million, using a
appeal have taken the position that there is a          forty-year life without taking into account oth-
third limitation on the amount that may be se-          er benefits that there might be to ratepayers.
curitized. They contend that in order for the
Commission to discharge its obligation to                   TXU takes the position that the Commis-
“ensure that securitization provides tangible           sion is not authorized to engraft onto the
and quantifiable benefits to ratepayers, greater        PURA's securitization provisions a present
than would have been achieved absent the is-            value test that is different from or in addition

                     © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                           Page 7
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

to the present value test expressly set forth in        sections 39.301 and 39.303(a) best comports
section 39.301. TXU contends that the only              with the express provisions of the PURA. We
computations that the Legislature intended to           agree with the district court that the Commis-
be performed in determining the amount to be            sion is authorized to impose a second present
securitized are the two computations to be per-         value test in determining the amount of regu-
formed under sections 39.301 and 39.303(a),             latory assets or stranded costs that can be se-
which are the present value calculation re-             curitized, but in determining present value
quired by the last two sentences of section             “absent the issuance of transition bonds,” the
39.301 and the total revenue test under section         Commission should use a remaining life for
39.303(a). TXU contends that the requirement            the assets that is far less than forty years. The
that ratepayers receive a tangible and quantifi-        PURA contemplates that the transition to “a
able benefit from securitization is measured by         fully competitive electric power industry” FN8
these tests and other considerations. TXU says          will span considerably less than forty years.
that there are quantifiable benefits to ratepay-
ers from securitizing the $1.65 billion of regu-               FN8. Id. § 39.001(a).
latory assets because to meet the total revenue
                                                                                 B
test in section 39.303(a) and the present value
                                                            We begin our analysis with the text of sec-
test set forth in the last two sentences of sec-
                                                        tion 39.301. As indicated above, the sentence
tion 39.301, TXU would write off and never
                                                        that gives rise to the controversy says, “The
recover from ratepayers approximately $285
                                                        commission shall ensure that securitization
million in regulatory assets.
                                                        provides tangible and quantifiable benefits to
    The district court adopted somewhat of a            ratepayers, greater than would have been
middle ground. It concluded that the Commis-            achieved absent the issuance*282 of transition
sion had the discretion to apply a second               bonds.” FN9 The first question that must be
present value test to determine whether secur-          answered in order to satisfy this statutory re-
itization provides “tangible and quantifiable           quirement is what would happen to the regulat-
benefits” within the meaning of section 39.301          ory assets at issue if they were not securitized.
. But the district court differed with the Com-
                                                               FN9. Id. § 39.301.
mission about how the second present value
test should be calculated. The district court               The PURA provides that if a utility does
concluded that the phrase “absent the issuance          not securitize all or some of its regulatory as-
of transition bonds” in section 39.301 required         sets and stranded costs, they can be recovered
the Commission to base its second present               through nonbypassable “competition transition
value calculation “on the asset recovery period         charge[s].” FN10 Section 39.201(k) gives the
that exists under the new regulatory scheme”            Commission discretion to determine the length
of the PURA. More specifically, the district            of time over which regulatory assets and stran-
court held that the Commission's second                 ded costs may be recovered by this method.
present value test could not “lawfully be based         FN11 All parties, including the Commission,
upon the recovery periods under the earlier             agree that the Commission could shorten the
system of rate regulation that provided for as-         remaining life over which regulatory assets
set lives up to 40 years.”                              and stranded costs will be recovered to a time
                                                        period far less than the remaining life of up to
   For the reasons considered below, we con-
                                                        forty years that those assets and costs would
clude that the district court's construction of
                                                        have had absent the 1999 amendments to the

                     © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                            Page 8
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

PURA. The determination of the appropriate              ition charges. Each electric utility was required
recovery period would occur in a rate proceed-          to file by April 1, 2000 proposed tariffs that in-
ing that is separate from securitization.               cluded any expected competition transition
                                                        charges. All or any part of a utility's regulatory
       FN10. Id. § 39.201.                              assets that are not securitized can be recovered
                                                        through competition transition charges.FN12
       FN11. Id. § 39.201(k).
                                                        Section 39.201(k) sets forth the factors that the
    A large part of the regulatory assets that          Commission is to consider in determining the
TXU seeks to securitize are Statement of Fin-           length of time over which stranded costs, in-
ancial Accounting Standard (SFAS) 109 as-               cluding regulatory assets, will be recovered.
                                                        FN13 The PURA indicates that a *283 consid-
sets. SFAS 109 assets essentially represent
amounts that TXU would have recovered un-               erable portion of these costs are to have been
der the former regulatory scheme from rate-             recovered within the two-year period after cus-
payers over a period of forty years to pay fed-         tomer choice begins on January 1, 2002.FN14
eral income taxes that it will owe in connec-           Section 39.201(l ) provides for a true-up pro-
tion with expenditures it made in the past that         ceeding in January 2004 in which adjustments
were capitalized instead of expensed. The               may be made to recover “any remaining stran-
Commission asks this Court to authorize a               ded costs.” FN15 The Commission may extend
present value test for these assets based on a          the collection period for competition transition
remaining life of forty years even though the           charges, if necessary.FN16 This indicates that
Commission knows that in all probability, un-           the recovery period for the competition trans-
der section 39.201(k), it will shorten the re-          ition charge initially set by the Commission
maining life to something far less than forty           will be a relatively short period of time, and
years. Notwithstanding the Commission's re-             that any extension will likewise be a relatively
cognition of this fact, it maintains that the dis-      short period of time. Section 39.262 contem-
trict court erred in requiring it to use a remain-      plates that if, during the 2004 true-up proceed-
ing life of less than forty years because amount        ing, there are stranded costs in addition to
of any reduction to the forty-year recovery             those previously estimated, those remaining
period has yet to be determined. The Office of          costs can be added to the amounts to be re-
Public Utility Counsel similary argues says             covered by competition transition charges, or
that “the essential problem with the lower              at the utility's option, securitized through
court's position is that neither TXU, the Dis-          bonds that cannot have a life longer than fif-
trict Court, or anyone else can state with any          teen years.FN17 The fact that a utility may se-
level of precision over what period the non-            curitize remaining stranded costs and regulat-
securitized assets will be recovered.”                  ory assets, but over a period of time not to ex-
                                                        ceed fifteen years,FN18 indicates that the Le-
    Although there may be some uncertainty as           gislature had something considerably less than
to precisely how much the Commission would              forty years in mind for the transition to “a fully
shorten the recovery period for the regulatory          competitive electric power industry.” FN19
assets at issue if they were not securitized, that
uncertainty does not justify the use of a forty-               FN12. See id. § 39.201(i).
year life. The PURA contemplates a far shorter
                                                               FN13. Section 39.201(k) provides:
recovery period for regulatory assets and other
stranded costs that are not securitized but are                  (k) In determining the length of time
instead recovered through competition trans-                     over which stranded costs under Sub-

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51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

         section (h) may be recovered, the                     FN16. Id.
         commission shall consider:
                                                               FN17. Section 39.262(c) provides:
         (1) the electric utility's rates as of the
         end of the freeze period;                               (c) After January 10, 2004, at a
                                                                 schedule and under procedures to be
         (2) the sum of the transmission and                     determined by the commission, each
         distribution charges and the system                     transmission and distribution utility,
         benefit fund fees;                                      its affiliated retail electric provider,
                                                                 and its affiliated power generation
         (3) the proportion of estimated stran-                  company shall jointly file to finalize
         ded costs to the invested capital of the                stranded costs under Subsections (h)
         electric utility; and                                   and (i) and reconcile those costs with
                                                                 the estimated stranded costs used to
         (4) any other factor consistent with
                                                                 develop the competition transition
         the public interest as expressed in this
                                                                 charge in the proceeding held under
         chapter.
                                                                 Section 39.201. Any resulting differ-
         Id. § 39.201(k).                                        ence shall be applied to the nonby-
                                                                 passable delivery rates of the trans-
       FN14. Section 39.102(a) provides that                     mission and distribution utility, ex-
       customer choice begins, with certain                      cept that at the utility's option, any or
       exceptions not material here, on Janu-                    all of the remaining stranded costs
       ary 1, 2002. Id. § 39.102(a).                             may be securitized under Subchapter
                                                                 G.
       FN15. Section 39.201(l) says:
                                                                 Id. § 39.262(c). The recovery period
         Two years after customer choice is                      for transition charges under the
         introduced, the stranded cost estimate                  PURA's securitization scheme is lim-
         under this section shall be reviewed                    ited to fifteen years by section
         and, if necessary, adjusted to reflect a                39.303(b), and the life of transition
         final, actual valuation in the true-up                  bonds is similarly limited to fifteen
         proceeding under Section 39.262. If,                    years by section 39.302(6). Id. §§
         based on that proceeding, the compet-                   39.303(b), 39.302(6).
         ition transition charge is not suffi-
         cient, the commission may extend the                  FN18. Id. § 39.303(b).
         collection period for the charge or, if
         necessary, increase the charge. Al-                   FN19. Id. § 39.001(a).
         ternatively, if it is found in the true-
                                                            Statements made by PUC Commissioners
         up proceeding that the competition
                                                        at an open meeting in this case are consistent
         transition charge is larger than is
                                                        with our understanding of the Legislature's in-
         needed to recover any remaining
                                                        tent. Those Commissioners indicated that com-
         stranded costs, the commission
                                                        petition transition charges, which would be the
         may:....
                                                        method for recovering regulatory assets and
         Id. § 39.201(l).                               stranded costs absent securitization, would be
                                                        collected over a period of time that would be

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51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

unlikely to exceed fifteen years and that *284                   on the transition bonds.
could be as few as eight years. Those state-
ments are not binding, but they indicate that                    Id. § 39.301.
the Commission understands that the Legis-
                                                            The Commission's method of calculating
lature did not intend for the transition to a fully
                                                        present value takes into account the actual tim-
competitive market to be protracted.
                                                        ing of bond payments until the last payment is
    We therefore conclude that the district             made on the oldest bond. The Commission
court did not err in holding that the Commis-           concluded, and we agree, that accounting for
sion could employ a present value test in addi-         the actual timing of payments is necessary to
tion to the present value test expressly set forth      determine present value. TXU's averaging
in section 39 .301, but that the Commission             method does not mathematically account for
must assume that absent securitization, regu-           transition charges that will be collected until
latory assets and stranded costs would be re-           the last of the series of transition bonds ma-
covered through competition transition charges          tures twelve years from the date of issuance.
in considerably less than forty years.
                                                                              III
                        II                                  [3] Another significant issue presented is
    [2] The financing order in this case ap-            whether, in determining the amount to be se-
proved the issuance of a series of transition           curitized, the Commission must consider the
bonds with differing maturity dates TXU ex-             regulatory assets or other stranded costs to be
plains that this was designed to allow its regu-        securitized in the aggregate or, instead, may
latory assets to be securitized at the lowest           conduct an asset-by-asset analysis. We con-
overall interest rate on the best possible terms,       clude that the Commission must consider regu-
and no one takes issue with that assertion. The         latory assets in the aggregate for the same
bonds' maturity dates range from one to twelve          reasons expressed in Corpus Christi.FN21
years after their issuance. TXU contends that
                                                               FN21. 51 S.W.3d at 231 – 255.
in performing the present value test set forth in
the last two sentences of section 39.301,FN20               Briefly, what is at issue in this case are reg-
the Commission should have used the                     ulatory assets that do not currently earn a re-
weighted average life over which the bonds              turn. The majority of TXU's regulatory assets
will be outstanding, which would be approxim-           fall into this category. Among TXU's regulat-
ately six years, rather than twelve years. We           ory assets that earn no return are approxim-
approve of the Commission's methodology.                ately $1.45 billion in SFAS 109 assets. As ex-
                                                        plained above, these assets essentially repres-
       FN20. The last two sentences of section
                                                        ent amounts that TXU would have recovered
       39.301 provide:
                                                        under the former regulatory scheme from rate-
         The amount securitized may not ex-             payers to pay federal income taxes that it will
         ceed the present value of the revenue          owe, when it recovers through rates, expendit-
         requirement over the life of the pro-          ures it made in the past that were capitalized
         posed transition bond associated with          instead of expensed.
         the regulatory assets or stranded costs
                                                            Some of TXU's regulatory assets do earn a
         sought to be securitized. The present
                                                        return, as much as 13.637 percent. The pro-
         value calculation shall use a discount
                                                        posed interest rate on TXU's transition bonds
         rate equal to the proposed interest rate

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51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

was 7.24 percent. Accordingly,*285 there was            bonds” FN27 authorizes the Commission to
considerable room to aggregate some of TXU's            “maximize” benefits to ratepayers by refusing
regulatory assets that earned no return with            to securitize certain types of regulatory assets
regulatory assets that earn a relatively high rate      when 100 percent of regulatory assets are
of return and still have a net benefit to ratepay-      “qualified costs” under the PURA.FN28
ers from securitization.
                                                               FN22. Id.
The State of Texas, the Office of Public Utility
Counsel, and Texas Industrial Energy Con-                      FN23. TEX. UTIL.CODE § 39.303(a).
sumers have taken the position that to maxim-
                                                               FN24. Id. § 39.302(5).
ize the benefit of securitization to ratepayers,
all regulatory assets that do not earn a rate of               FN25. Id. §§ 39.302(4), 39.201(i)(1).
return should be declared ineligible for securit-
ization. The State and those aligned with it on                FN26. Id. §§ 39.303(a), 39.301.
these issues contend that each regulatory asset
must be analyzed on a stand-alone basis to de-                 FN27. Id. § 39.301.
termine if securitization of that asset benefits
                                                               FN28. Id. § 39.302(4).
ratepayers. As we explain in Corpus Christi,
the PURA does not support that position.FN22            The district court erred in concluding that the
The PURA says that all regulatory assets are to         Commission has the discretion to consider reg-
be securitized on application of a utility, sub-        ulatory assets on an asset-by-asset basis. Be-
ject to the requirement that “the total amount          cause the Commission did not consider the
of revenues to be collected under the financing         regulatory assets and other costs that TXU
order” meets certain requirements.FN23 The              sought to securitize in the aggregate, the Com-
PURA defines “regulatory asset” with spe-               mission must do so on remand.
cificity.FN24 Regulatory assets are defined
with reference to a utility's 1998 Securities and                            IV
Exchange Commission Form 10–K, which lists              [4] A number of parties have challenged the
regulatory assets. A utility is entitled to secur-      manner in which the Commission allocated
itize 100 percent of its regulatory assets,FN25         transition charges among customer classes.
subject only to the tests in sections 39.303(a)         TXU proposed and the Commission adopted
and 39 .301.FN26 The present value test in              seven regulatory asset recovery classes for
section 39.301 ensures that a utility will not re-      purposes of collecting transition charges.
cover a return on these assets higher than the          Those classes and the regulatory asset alloca-
return it would receive under the existing regu-        tion factors assigned to each under section
latory scheme. Neither the present value test           39.253 are:
nor the requirement in section 39.301 that the
Commission “ensure that securitization
provides tangible and quantifiable benefits to
ratepayers, greater than would have been
achieved absent the issuance of transition

        Class:                                                                       Allocation Factor:
        Residential                                                                            41.2705%
        General Service—Secondary                                                              44.7323%

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51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

        General Service—Primary                                                                 5.8982%
        High Voltage Service                                                                    2.7875%
        Lighting Service                                                                        0.6836%
        Instantaneous Interruptible                                                             1.8568%
        Noticed Interruptible                                                                   2.7711%
        Total                                                                                 100.0000%
                                                               FN29. Id. § 39.253(c)-(h).
    Nucor Steel is in the Instantaneous Inter-
ruptible regulatory asset recovery class. Nucor                FN30. 51 S.W.3d at 257.
Steel is a nonfirm, also known as an interrupt-
ible, customer on TXU's system. A utility may                  FN31. Tex. Util.Code § 39.253(c)-(e).
interrupt service to an interruptible customer
                                                               FN32. Id. § 39.253(c).
for specified reasons, typically during periods
of high demand from other customers on that                    FN33. Id. § 39.253(g).
utility's system. Texas Industrial Energy Con-
sumers *286 (TIEC) is a voluntary association                  FN34. Cf. Corpus Christi, 51 S.W.3d at
of companies that operates industrial facilities               259.
in TXU's service area. Nucor Steel and TIEC
take issue with how the Commission determ-                  We conclude in Corpus Christi and in this
ined the percentage of transition costs each            case that the PURA is unclear in this regard.
                                                        FN35 In such a situation, we give some defer-
customer class would bear. Nucor Steel and
TIEC assert that the Commission should have             ence to the Commission as long as its inter-
used the more current, 1999 data rather than            pretation of a code provision is a reasonable
the data used in TXU's most recent rate-design          one and does not conflict with the code's lan-
case, which was 1997 data.                              guage.FN36 The Commission construed sec-
                                                        tion 39.253 to mean that the methodology used
    The pertinent section of the PURA is                in a utility's last rate design case is to be ap-
39.253(c)-(h).FN29 As we explain in greater             plied to the data used in that rate case. That is
detail in Corpus Christi,FN30 the allocation of         a reasonable construction of the PURA that
stranded costs under section 39.253 has two             does not contradict any of its language, and we
basic components. One is determined by ap-              agree with the Commission's construction.
plying the same “methodology used to allocate
the costs of the underlying assets in the electric             FN35. Id.
utility's most recent commission order address-
                                                               FN36. See Stanford v. Butler, 142 Tex.
ing rate design.” FN31 The other is the energy
                                                               692, 181 S.W.2d 269, 273 (1944)
consumption of the respective classes FN32
                                                               (observing that courts will ordinarily
“based on the relevant class characteristics as
                                                               adopt and uphold a construction placed
of May 1, 1999, adjusted for normal weather
                                                               upon a statute by a department charged
conditions.” FN33 The question presented here
                                                               with its administration if the statute is
is whether the Commission should apply the
                                                               ambiguous or uncertain, and the con-
same methodology used in TXU's last rate
                                                               struction is reasonable); Texas Ass'n of
design case to the data used in that rate case, or
                                                               Long Distance Tel. Cos. v. Pub. Util.
whether the Commission is free to choose
                                                               Comm'n, 798 S.W.2d 875, 884
more recent data.FN34

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51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

       (Tex.App.—Austin 1990, writ denied)                     customers shall be allocated stranded
       (observing that construction of a statute               costs equal to 150 percent of the
       by an administrative agency charged                     amount allocated to that class”).
       with its enforcement is entitled to great
       weight, particularly if the statute is am-           TIEC says that in determining how much
       biguous, so long as the agency's con-            of the transition costs should be allocated to
       struction is reasonable and does not             the industrial classes, the Commission should
       contradict the plain language of the             have excluded load lost when customers
       statute); TEX. GOV'T CODE §                      switched to sources of power that exempt them
       311.023(6) (providing that in constru-           from paying transition charges.FN39 Again,
       ing a statute, whether or not the statute        for the reasons we consider in Corpus Christi,
       is considered ambiguous on its face, a           we reject that argument.FN40
       court may consider the administrative
                                                               FN39. See id. § 39.262(k).
       construction of the statute).
                                                               FN40. 51 S.W.3d at 259 – 261.
                      V
    Several parties who are also parties in Cor-                                VI
pus Christi raise many of the same issues in                 [5] Several parties to this appeal, including
both cases.FN37 Our decision in CP & L re-              the Commission, contend that the district court
solves each of these issues, and we will not            erred when it held that the Commission's Find-
lengthen this opinion by reiterating all the            ing of Fact 113 and references to that finding
reasons for our holdings. We instead briefly            in Conclusion of Law 41 and Ordering Para-
summarize each issue and our disposition.               graph 37 were “advisory and superfluous to
                                                        the Order and therefore [have] no res judicata
       FN37. Those parties include the Office
                                                        effect.” The finding of the Commission that is
       of Public Utility Counsel, Texas Indus-
                                                        at issue concerned loss on reacquired debt.
       trial Consumers, and Nucor Steel, who
       filed an amicus brief with this Court in             TXU reacquired preferred stock and high-
       Corpus Christi.                                  cost debt before the maturity date of that debt
                                                        by paying a premium. The loss TXU sustained
    Certain of TXU's customers assert that the
                                                        in those transactions is included in the defini-
Commission failed to follow section 39.253 in
                                                        tion of regulatory assets under the PURA, and
allocating transition costs to the *287 non-firm
                                                        the Commission allowed TXU to include loss
industrial customer classes. They contend that
                                                        on reacquired debt as part of the amount secur-
the Commission erred in applying the 150 per-
                                                        itized in the financing order. This same loss on
cent demand allocator required by section
                                                        reacquired debt is also reflected as an increase
39.253(d) FN38 to all the transition costs
                                                        in TXU's cost of capital, and that in turn in-
rather than first subtracting the transition costs
                                                        creases TXU's rate of return. The Commission
allocated to residential customers. We hold in
                                                        and others were concerned that TXU would
this case, as we do in Corpus Christi, that sec-
                                                        enjoy a double recovery of its losses. Respond-
tion 39.253 is ambiguous in this regard and
                                                        ing to that concern, the Commission concluded
that the Commission's construction is a reason-
                                                        that loss on reacquired debt “should not be re-
able one and should be accorded deference.
                                                        moved from [TXU's] cost-of-capital calcula-
       FN38. TEX. UTIL.CODE § 39.253(d)                 tion for purposes of the annual report submit-
       (requiring that “[n]on-firm industrial           ted pursuant to PURA § 39.257,” but that in-

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51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

stead an adjustment should be made in future            Commission should assume that recovery of
proceedings.FN41 In the Financing Order,                regulatory assets and stranded costs absent se-
Finding of Fact 113, the Commission said that:          curitization would occur in substantially less
                                                        than forty years; 3) the Commission must con-
       FN41. Tex. Pub. Util. Comm'n, Applic-            sider regulatory assets that a utility seeks to se-
       ation of TXU Electric Company for                curitize in the aggregate to determine whether
       Financing Order to Securitize Regulat-           those assets meet the requirements for securit-
       ory Assets and Other Qualified Costs,            ization and cannot categorically exclude cer-
       Docket No. 21527 (May 2, 2000).                  tain types of regulatory assets from securitiza-
                                                        tion; 4) section 39.253 permits the Commis-
 [A]n adjustment should be made in the true
                                                        sion to apply the rate design methodology es-
 up proceeding under PURA § 39.262 to ac-
                                                        tablished in a utility's last rate design case to
 count for the effect of securitizing the loss on
                                                        the data in that rate case rather than to more
 reacquired debt on [TXU's] cost of capital.
                                                        current data, in order to establish demand al-
 This treatment is necessary to comply with
                                                        location factors that determine how transition
 the Legislature's mandate in PURA §
                                                        charges are to be allocated among classes of
 39.262(a) that a utility and its affiliates “may
                                                        customers; 5) none of the other issues regard-
 not be permitted to overrecover stranded
                                                        ing allocation of transition costs among classes
 costs” by using any of the methods provided
                                                        of customers has merit; and 6) certain findings
 in Chapter 39 [§ 39.262(a) ]. In addition, any
                                                        of fact and conclusions of law by the Commis-
 determinations regarding the effect of secur-
                                                        sion are advisory.
 itizing loss on reacquired debt on the calcula-
                                                        Justice HECHT, joined by Chief Justice PHIL-
 tion of stranded costs should not be made in
                                                        LIPS, Justice ABBOTT, Justice HANKINSON
 this docket but should be made in [TXU's]
                                                        , and Justice JEFFERSON, concurring.
 cost unbundling case under PURA § 39.201.
 FN42                                                       We join fully in the Court's judgment and
                                                        in JUSTICE OWEN's concurring opinion. This
       FN42. Id. (footnote omitted).                    is the opinion of the Court regarding the valid-
                                                        ity of the “non-standard true-up” included in
    We agree with the district court that this          the Public Utility Commission's financing or-
was an advisory and premature finding.*288              der for TXU Electric Company.
Whether an adjustment is required in a true-up
or other future proceeding should await resolu-             [6] The financing order for TXU contains a
tion in that proceeding.                                non-standard true-up procedure essentially
                                                        identical to the one in the financing order for
                    *****                               Central Power and Light Company, which we
    For the reasons considered above, we con-           approve today in City of Corpus Christi v.
clude that: 1) in order to ensure that securitiza-      Public Utility Commission, 51 S.W.3d 231
tion provides tangible and quantifiable benefits        (Tex.2001). A Commission witness testified
to ratepayers greater than would have been              that if any TXU customer class experienced a
achieved absent the issuance of transition              decrease in power usage of more than six to
bonds, the Commission may apply a present               nine percent, that class would be “at risk for a
value test in addition to the present value and         cascading loss scenario.” The arguments for
revenue requirement tests expressly set forth in        and against that procedure in this case are the
sections 39.301 and 39.303(a) of the PURA; 2)           same as those made in Corpus Christi with one
in applying an additional present value test, the       exception. Nucor Steel, one of TXU's largest

                     © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                           Page 15
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

customers, argues that any overpayments or
underpayments of transition charges by any
one class should be reallocated among all               Judges and Attorneys(Back to top)
TXU's customers, thereby fully cross-
                                                        Judges | Attorneys
collateralizing responsibility for the transition
as TXU proposed to the Commission. Without              Judges
deciding whether the Commission was em-
powered to depart this far from the allocation          • Abbott, Hon. Michael
requirements of section 39.253, we easily con-          State of Texas Municipal Court, City of Vidor
clude that the Commission was not required to           Vidor, Texas 77662
adopt this approach instead of the somewhat             Litigation History Report | Judicial Reversal
more restricted non-standard true-up. For the           Report | Profiler
same reasons explained in our concurring
opinion in that case, we approve of the non-            • Enoch, Craig T.
standard true-up procedure in this case.
                                                        Litigation History Report | Judicial Reversal
Justice OWEN, joined by Justice ENOCH and               Report | Profiler
Justice BAKER, dissenting.
                                                        • Hankinson, Hon. Deborah G.
    The financing order for TXU contains a
non-standard true-up provision that is virtually        Litigation History Report | Judicial Reversal
identical to the non-standard true-up provision         Report | Profiler
at issue in *289City of Corpus Christi v. Pub-
lic Utility Commission,FN1 which the Court              • Hecht, Hon. Nathan L.
also decides today. For the reasons set forth in        State of Texas Supreme Court
my dissent in that case, I also dissent from the        Austin, Texas 78701
Court's approval of the non-standard true-up            Litigation History Report | Judicial Reversal
procedure in TXU's financing order.                     Report | Judicial Expert Challenge Report |
                                                        Profiler
       FN1. 51 S.W.3d 231 (Tex.2001).
                                                        • Jefferson, Hon. Wallace B.
Tex.,2001.                                              Litigation History Report | Judicial Reversal
TXU Elec. Co. v. Public Utility Com'n of                Report | Profiler
Texas
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex.          • O'Neill, Hon. Alice
Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126               State of Texas Municipal Court, City of Hous-
                                                        ton
Briefs and Other Related Documents (Back to             Houston, Texas 77002-1553
top)                                                    Litigation History Report | Judicial Reversal
                                                        Report | Judicial Expert Challenge Report |
• 00-0936 (Docket) (Sep. 11, 2000)
                                                        Profiler
Oral Argument Transcripts with Streaming
                                                        • Owen, Hon. Priscilla Richman
Media (Back to top)
                                                        United States Court of Appeals, Fifth Circuit
• 2001 WL 36161699 (Oral Argument) Oral                 New Orleans, Louisiana 70130-3408
Argument (Jan. 31, 2001)                                Litigation History Report | Judicial Reversal

                     © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.
                                                                                           Page 16
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

Report | Judicial Expert Challenge Report |             • Cornyn, John
Profiler                                                Washington, District of Columbia 20510
                                                        Litigation History Report | Profiler
Attorneys                                               • Davis, Mark C.
                                                        Austin, Texas 78701-2415
Attorneys for Appellant                                 Litigation History Report | Profiler
• Fillmore, Hon. Robert M.
Unknown State                                           • Day, Jonathan
Litigation History Report | Profiler                    Houston, Texas 77002
                                                        Litigation History Report | Profiler
• Hearon, Robert J. Jr.
Austin, Texas 78701                                     • Drews, Elizabeth H.
Litigation History Report | Profiler                    Austin, Texas 78701-4093
                                                        Litigation History Report | Profiler
• Keeney, Mary A.
Austin, Texas 78701                                     • Gay, Geoffrey M.
Litigation History Report | Profiler                    Austin, Texas 78701
                                                        Litigation History Report | Profiler
• Minton, Roy Q.
Austin, Texas 78701-2198                                • Gross, David B.
Litigation History Report | Profiler                    Ridgeland, Mississippi 39157-8766
                                                        Litigation History Report | Profiler
Attorneys for Appellee
• Anson, Thomas K.                                      • Kever, Andrew
Austin, Texas 78701                                     Austin, Texas 78701
Litigation History Report | Profiler                    Litigation History Report | Profiler
• Baker, Bryan Lawrence                                 • Mendiola, Lino III
Austin, Texas 78701                                     Austin, Texas 78701
Litigation History Report | Profiler                    Litigation History Report | Profiler
• Baron, Steven                                         • Rourke, James K. Jr.
Austin, Texas 78763                                     Austin, Texas
Litigation History Report | Profiler                    Litigation History Report | Profiler
• Boyd, Hon. Jeffrey S.
Unknown State
Litigation History Report | Profiler
• Brocato, Thomas L.
Austin, Texas 78701
Litigation History Report | Profiler
• Carroll, Marianne
Austin, Texas 78701-4093
Litigation History Report | Profiler

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                                                                                           Page 17
51 S.W.3d 275, Util. L. Rep. P 26,789, 44 Tex. Sup. Ct. J. 854, 44 Tex. Sup. Ct. J. 1126
(Cite as: 51 S.W.3d 275)

END OF DOCUMENT

                     © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.