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HomeMy WebLinkAboutResolution - 2018-R0077 - Application For ERCOT - 02/08/2018Resolution No. 2018-R0077 Item No. 7.12 February 8, 2018 RESOLUTION WHEREAS, on September 1, 2017, the City of Lubbock through Lubbock Power & Light ("LP&L"), filed its Application For Authority to Connect a Portion of its System with the Electric Reliability Council of Texas ("ERCOT"), in Docket Number 47576, Public Utility Commission of Texas (the "Contested Case"); WHEREAS, the hearing on the merits in the Contested Case was held January 17-18, 2018; WHEREAS, at the conclusion of the Contested Case, the Public Utility Commission admonished the parties to come to agreement as to differences; WHEREAS, the parties have agreed upon a set of factors relating to the proposed connection of the Affected Load (as defined in the Stipulation attached hereto) into ERCOT, that they believe are fair and reasonable, and in the public interest; WHEREAS, by action on February 6, 2018, the Electric Utility Board of the City of Lubbock found the Stipulation to be in the best interest of the rate payers of LP&L, and authorized its execution; WHEREAS, the City Council of the City of Lubbock believes this Stipulation is in the best interest of the ratepayers of LP&L; NOW, THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the City of Lubbock's attorneys BE and are hereby authorized and directed to execute for and on behalf of the City of Lubbock through Lubbock Power & Light ("LP&L") that certain Stipulation, by and between LP&L and Intervenors in the Contested Case, substantially in the form as attached hereto and incorporated herein as though set forth fully herein in detail, and any documents related thereto. Passed by the City Council this 8th day of February, 2018. Daniel M. Pope, Mayor ATTEST: ebec a Garza, City Sec tary APPROVED AS TO CONTENT: kLtAa David McCalla, Director of Electric Utilities APPROVED AS TO FORM: L� Richard Casner, LP&L General Counsel DOCKET NO. 47576 APPLICATION OF THE CITY OF § BEFORE THE LUBBOCK THROUGH LUBBOCK § POWER AND LIGHT FOR § AUTHORITY TO CONNECT A § PUBLIC UTILITY COMMISSION PORTION OF ITS SYSTEM WITH § THE ELECTRIC RELIABILITY § COUNCIL OF TEXAS § OF TEXAS STIPULATION WHEREAS, on September 1, 2017, the City of Lubbock, through Lubbock Power & Light (LP&L), filed an Application for Authority to Connect a Portion of its System with the Electric Reliability Council of Texas (ERCOT), Docket No. 47576, initiating a proceeding to integrate a portion of its load into the ERCOT transmission system; and WHEREAS, ERCOT, Southwestern Public Service Company (SPS), the Office of Public Utility Counsel (OPUC), Southwest Power Pool, Inc. (SPP), Texas Industrial Energy Consumers (TIEC), Alliance for Retail Markets (ARM), CPS Energy (CPS), Oncor Electric Delivery Company, LLC (Oncor), Texas Energy Association for Marketers (TEAM), Sharyland Utilities, L.P. (Sharyland), AEP Texas Inc. (AEP), Lone Star Transmission LLC (Lone Star), Cross Texas Transmission, LLC (Cross Texas), Wind Energy Transmission Texas, LLC (WETT), FGE Power, and Golden Spread Electric Cooperative (Golden Spread) filed motions to intervene in this Docket, all of which were granted (all such parties collectively referred to as "Intervenors"); and WHEREAS, Public Utility Commission of Texas (Commission) Staff also appeared in this Docket; and WHEREAS, LP&L, Staff, OPUC, TIEC, ARM, and SPS (collectively, the "Signatories") participated in settlement discussions and all parties in Docket No. 47576 were provided notice of agreements -in -principle prior to the composition of this Stipulation; and WHEREAS, the Signatories agree that a negotiated, partial resolution of this proceeding on the basis set forth in this agreement (the "Stipulation") is in the public interest because it is a fair result that integrates LP&L's Affected Load into ERCOT, reasonably holds ERCOT and SPP customers harmless from the net impact of the transition, and will conserve the public's and the parties' resources, and eliminate controversy on the issues addressed herein; and WHEREAS, Signatories agree that this Stipulation resolves all issues related to impacts on the ERCOT and SPP markets resulting from the integration of a portion of LP&L's load into the ERCOT system; and WHEREAS, AEP, CPS, TEAM, Sharyland, Lone Star, FGE Power, WETT, Cross Texas, Oncor, Golden Spread, ERCOT, and SPP do not oppose the negotiated resolution set forth in this Stipulation; and WHEREAS, the Electric Utility Board and the City Council of the City of Lubbock must approve the signing of this Stipulation prior to its submission for approval by the Commission. NOW, THEREFORE, the Signatories stipulate and agree as follows: ARTICLE 1 — The Stipulation: Resolution of Material Issues The Signatories agree that the terms of this Stipulation are fair, reasonable, and in the public interest and that the Commission should enter an order materially consistent with this Stipulation and providing for its implementation. The Signatories agree to fully support this Stipulation in all respects. The Signatories stipulate to, and support the facts contained in, the proposed final order attached to this Stipulation as Exhibit A. The Signatories agree to use all reasonable efforts to obtain the prompt adoption of a final order in Docket No. 47576 by the Commission consistent with this Stipulation. The Signatories further agree to defend the terms of this Stipulation as set forth herein. The Signatories agree that this Stipulation has been entered into by the Signatories solely as a matter of compromise and settlement. While the Signatories support the Stipulation as being 2 reasonable under the circumstances and support its approval by the Commission, they do not necessarily agree that any components of this Stipulation would necessarily be the result if Docket No. 47576 were determined through a fully contested hearing. The Signatories agree that their request for the Commission to enter a final order consistent with the Stipulation is not intended to have precedential value with respect to any particular principle, treatment, or methodology that may underlie the Stipulation. The Signatories will cooperate to file this Stipulation on or about February 8, 2018. ARTICLE II — Definitions "Affected Load" shall be defined as the estimated 470 MW of load requested to be integrated into the ERCOT system in this proceeding. "Integration Date" shall be defined as the first date that the Affected Load is integrated into the ERCOT system. This date shall be June 1, 2021, or other date as may be required if the transmission facilities necessary to integrate the Affected Load into ERCOT are not operational by June 1, 2021, or if any other compliance or regulatory requirement is not complete by that date. ERCOT retains discretion to postpone the Integration Date if ERCOT system conditions on the planned date of integration are such that ERCOT determines the integration of the Affected Load into ERCOT will be a risk to ERCOT system reliability. ARTICLE III — Terms of Integration of Affected Load into ERCOT A. The Signatories agree that the integration of the Affected Load into ERCOT, consistent with the terms of this agreement, is in the public interest, reasonably holds customers in ERCOT and SPP harmless, and should be approved. B. Starting upon the Integration Date, LP&L will pay a total of $22 million each year for five years to ERCOT wholesale transmission customers through a monthly credit as set out in the tariff proposed by Commission Staff witness Grant Gervais on page 9 of his Direct Testimony in Docket No. 47576; parties agree that this amount reasonably holds ERCOT customers harmless against the expected net impacts of LP&L's requested transition. LP&L 3 shall submit an initial application to establish the wholesale transmission credit rider no later than four months prior to the Integration Date. LP&L shall apply annually, or more frequently as needed, to update its wholesale transmission credit rate to incorporate any changes to the ERCOT 4CP billing units, so as to ensure the payment of the $22 million per year credit to wholesale transmission customers. C. The signatories agree that LP&L shall make a payment to SPS, and that amount shall be allocated to SPS's load, as follows: 1. On the Integration Date, LP&L will make a one-time payment of $24 million to SPS. The $24 million payment is LP&L's total hold -harmless amount for SPS's Texas retail, Wholesale transmission, and New Mexico retail jurisdictions. 2. SPS will allocate the $24 million payment among its Texas retail, Wholesale transmission, and New Mexico retail jurisdictions based on the 12-CP transmission load percentages (load ratio shares) for the 12 months ending with the Integration Date, as adjusted to remove the Affected Load. SPS Exhibit 3 at Attachment WLB-CR1 (Cross - Rebuttal Testimony of Wesley L. Berger) provides an example of this calculation. 3. SPS will provide its Texas retail customers in the Residential Service, Small General Service, Secondary General Service, and Small Municipal and School Service classes with their portion of the Texas retail amount of the hold -harmless payment through a three-month rate rider. SPS will provide its remaining Texas retail customer classes with their portion of the hold -harmless payment through a one -month rate rider. The payment will be allocated among SPS retail classes using the most recent Commission -approved TCRF baseline class allocation factor for SPS at the time SPS files an application for the bill credit. The bill credit rate will be designed for each class consistent with the rate design for transmission cost recovery for the class (energy charge credit for non -demand -metered classes, demand charge credit for demand -metered classes). Subject to Commission approval, SPS will provide the bill credits beginning on the first day of the fourth full calendar month after the date SPS receives the $24 million 4 payment from LP&L. SPS will make the necessary, timely filings with the Commission to request authority to provide the bill credit described in this paragraph. Interest will accrue on the unpaid credit to the Residential Service, Small General Service, Secondary General Service, and Small Municipal and School Service customer classes at an annual rate of 1.04% beginning on the first day of the fourth full calendar month after the date SPS receives the $24 million payment from LP&L. No interest will accrue on the unpaid credit to SPS's remaining Texas retail customer classes. 4. SPS will provide its Wholesale transmission customers (those transmission customers receiving network integration transmission service to serve load in the SPS zone) with the Wholesale transmission jurisdictional amount of the hold -harmless payment by filing a rate schedule at the Federal Energy Regulatory Commission (FERC). The rate schedule will provide for a one-time credit or payment by the end of the fourth full calendar month after the date SPS receives the $24 million payment from LP&L. No interest will accrue on the unpaid amount. 5. The Signatories agree that the combination of items C.1, 2, and 3 above reasonably holds SPS's Texas retail customers harmless against the net effect of LP&L moving the Affected Load to ERCOT. The Signatories agree that the combination of items C.1, 2, and 4 above reasonably holds the SPS Wholesale transmission load harmless against the net effect of LP&L moving the Affected Load to ERCOT. 6. SPS agrees that if any party seeks a make -whole or other similar payment relating to the transition of the Affected Load to ERCOT at FERC, SPS will oppose that request. Signatories will not seek a make -whole or other similar payment from LP&L at FERC. D. LP&L should be integrated into ERCOT using the transmission plan identified by ERCOT as Option 4ow in its Study of the Integration of the Lubbock Power & Light System into the ERCOT System, filed in Project No. 45633 on June 17, 2016 (ERCOT Integration Study). E. LP&L agrees that it may not disconnect the Affected Load from ERCOT unless and until LP&L obtains approval from the Commission and complies with any then -existing �1 rules governing the payment of an exit fee upon an entity being approved to depart ERCOT. Signatories further agree that, in the event of a future transfer of the Affected Load to any other Regional Transmission Organization/Independent System Operator, subject to the approval of the Commission, ERCOT shall make a recommendation regarding which portions of the Option 4ow transmission system should remain in the ERCOT system. F. LP&L intends to exercise its right to opt -in to retail competition for the Affected Load as soon as is practicable, but with a goal of doing so effective upon the Integration Date. Parties acknowledge that, once the City of Lubbock's City Council adopts the resolution described in PURA § 40.051(b), that statute mandates that the decision is irrevocable. G. LP&L agrees that it will comply with all ERCOT registration and qualification requirements established in the ERCOT Nodal Protocols, and will provide ERCOT with any information requested by ERCOT necessary to implement the integration of the Affected Load into ERCOT. LP&L further agrees that it will comply with all ERCOT protocols, guides, or any other ERCOT-promulgated authority, and will comply with the Commission's rules and applicable state law. H. LP&L agrees that, because it intends to opt -in to retail competition for the Affected Load, it does not request the establishment of a Non -Opt -In -Entity (NOIE) load zone. Parties agree that ERCOT is authorized to determine what zone the Affected Load should be placed within upon the Integration Date. I. Prior to the cutover of transmission facilities necessary to the integration of the Affected Load into ERCOT, it will be necessary for ERCOT and LP&L to exchange certain information about their respective systems. Signatories agree that, to facilitate this data exchange, LP&L may be treated by ERCOT as a Transmission Service Provider (TSP) and Distribution Service Provider (DSP) for purposes of permitting LP&L to amend its Standard Form Market Participant Agreement with ERCOT and that LP&L will be subject to all applicable requirements in the ERCOT Protocols, guides, or binding documents addressing the confidentiality of any data exchanged with ERCOT. LP&L agrees that it will take any action, or 0 provide any information, reasonably requested by ERCOT to effectuate the transition of the Affected Load to ERCOT. Exhibit B to this Stipulation is a listing of the compliance activities that ERCOT will require in advance of the Integration Date. The purpose of this list is not to define or limit the full scope of activities that may be required, but to specify a certain list of preparatory activities that are known at this time. Signatories acknowledge that the required activities may need to be modified as the Integration Date approaches. J. LP&L will seek no recovery of any of its legacy 230 kV facilities that are stranded because of the integration into ERCOT from wholesale transmission customers in ERCOT or from LP&L's retail ratepayers. K. LP&L agrees to pay the cost of the ERCOT integration studies filed in Docket No. 47576 by ERCOT and SPP. SPP's study costs are $172,479; ERCOT's are $81,562.50. These payments will occur no later than 60 days following the entry of an order that is consistent with this Stipulation. L. Consistent with the recommendation made by Commission Staff witness Grant Gervais on pages 10 and 11 of his Direct Testimony in this proceeding, LP&L will calculate and provide LP&L's 4CP Affected Load data for the calendar year before the calendar year of its expected Integration Date as soon as the data is available, but no later than six months prior to the Integration Date. M. Signatories agree that LP&L may submit an application to the Commission to establish wholesale transmission rates no less than eight months in advance of the anticipated Integration Date, such that LP&L may charge transmission rates beginning at the Integration Date if the Commission has approved a transmission rate at that time, provided that all assets included in the rate calculation are energized, used, and useful prior to the effective date of the transmission rate. LP&L's wholesale transmission rate application may include transmission assets that are not used and useful at the time of the application, but that will be energized, used, and useful prior to the effective date of the wholesale transmission rates. Other than this term, 7 this Stipulation does not in any way modify the normal requirements for inclusion of costs in, or the calculation of, wholesale transmission rates. N LP&L agrees to complete any and all required registrations with the Texas Reliability Entity (TRE); Signatories support the designation of THE as the Lead Reliability Entity if multiple reliability entities have authority over LP&L. O. If FERC sets an "exit fee" that is required of LP&L if its Affected Load transitions to ERCOT as described in this Agreement, Signatories agree that LP&L shall retain the discretion to determine whether it will pay such a fee, or to decline to complete the transition of the Affected Load to ERCOT. If LP&L decides to not complete the transfer of the Affected Load to ERCOT, LP&L will pay the relevant TSPs their reasonable and substantiated costs expended to date in preparing for the construction of Option 4ow transmission facilities, with the exception of any transmission infrastructure that the Commission determines would be used and useful to the provision of electric service in the absence of the Affected Load transferring to ERCOT. P. LP&L shall take no action that would cause a market participant within the ERCOT region that is not a "public utility" under the Federal Power Act or ERCOT itself to become a "public utility" under the Federal Power Act or become subject to the plenary jurisdiction of FERC. LP&L shall ensure that no commingling of energy between the SPP and ERCOT systems occurs during the period leading up to the Integration Date, during the physical disconnection of the Affected Load from SPP and interconnection of the Affected Load to ERCOT, and at all times thereafter. Q. Signatories agree that establishing a Commission project in which LP&L, ERCOT, and any other party can provide updates on the LP&L integration process, or raise issues arising from that process, would be beneficial. Signatories respectfully request that the Commission open such a project upon approval of this Stipulation. 0 ARTICLE IV — Miscellaneous Provisions This Stipulation is binding on each Signatory only for the purpose of settling issues in Docket No. 47576 and for no other purpose. The Signatories acknowledge and agree that a Signatory's support of the matters contained in this Stipulation may differ from its position or testimony in other proceedings before the Commission, in other fora, and in any and all proceedings not referenced in this Stipulation. To the extent that there is a difference, each Signatory does not waive its position in such other proceedings. Because this is a settlement agreement, a Signatory is under no obligation to take the same position as set out in this Stipulation in other proceedings not referenced in this Stipulation whether those proceedings present the same or a different set of circumstances. Except to the extent that this Stipulation expressly governs a Signatory's rights and obligations for future periods, neither this Stipulation nor any of the terms of this Stipulation shall be binding or precedential on any Signatory outside of this proceeding except for a proceeding to enforce the terms of this Stipulation. This Stipulation represents a compromise, settlement, and accommodation among the Signatories, and all Signatories agree that the terms and conditions herein are interdependent and no Signatory shall be bound by any portion of this Stipulation outside the context of the Stipulation as a whole. If the Commission does not accept this Stipulation as presented, the Signatories agree that any Signatory adversely affected by that modification or inconsistency has the right to withdraw its consent from this Stipulation within 10 days after an order is filed, thereby becoming released from all commitments and obligations. However, prior to exercising the right to withdraw under the preceding sentence, a Signatory shall file a motion for rehearing that explains how it is adversely affected by the modification or inconsistency and that requests the Commission to issue a revised order that removes the modification or inconsistency. If the Commission removes the modification or inconsistency, the Signatory shall not be entitled to withdraw its consent from this Stipulation. The Signatories agree that neither oral nor written statements made during the course of the settlement negotiations may be used as an admission or concession of any sort nor as X evidence in any proceeding in any forum. If the Commission does not adopt an order consistent with the terms of this Stipulation, the Signatories agree that the terms of this Stipulation were made during the course of settlement negotiations and may not be used as an admission or concession of any sort nor as evidence in any proceeding in any forum. This obligation shall continue and be enforceable, even if this Stipulation is terminated. This written Stipulation contains the entire understanding and agreement of the Signatories regarding the issues addressed herein arising in Docket No. 47576, and supersedes all other written and oral exchanges, or arrangements or negotiations among them or their representatives regarding the subjects contained herein; and neither this Stipulation, nor any of the terms of this Stipulation, may be altered, amended, waived, terminated, discharged, or modified, except by a writing properly executed by the Signatories. The Signatories mutually agree that they enter into this Stipulation for their exclusive benefit and the benefit of their respective lawful successors. The Signatories agree that nothing in this Stipulation shall be construed to confer any right, privilege, or benefit on any person or entity other than the Signatories and their respective lawful successors. This Stipulation assumes the legality of the treatments and methodologies set out herein. Should any treatment or methodology used be declared illegal by either the Commission or a court, the Signatories agree to negotiate in good faith to substitute a treatment or methodology with the same economic effect of that declared illegal. The titles assigned to each Article are for convenience only, are not part of this Stipulation, and shall not be considered in the resolution of any dispute or question arising with respect to this Stipulation. Each signing representative warrants that he or she is duly authorized to sign this Stipulation on behalf of the Signatory he or she represents, subject to approval by local regulatory authorities. Facsimile copies of signatures are valid for purposes of evidencing execution. The Signatories may sign individual signature pages to facilitate the circulation and filing of the original of this Stipulation. 10 IN WITNESS WHEREOF, this Stipulation has been executed, approved, and agreed to by the Signatories hereto in multiple counterparts, each of which shall be deemed an original, on the date indicated below by the Signatories hereto by and through their undersigned duly authorized representatives. This Stipulation shall be effective and binding, as to each Signatory, as of the date of execution of each Signatory. DATE: LLOYD GOSSELINK ROCHELLE & TOWNSEND, P.C. 816 Congress Avenue, Suite 1900 Austin, Texas 78701 Telephone: (512) 322-5800 Facsimile: (512) 472-0532 LAMBETH TOWNSEND State Bar No. 20167500 ltownsend@lglawfirm.com CHRISTOPHER L. BREWSTER State Bar No. 24043570 cbrewster@lglawfirm.com WILLIAM A. FAULK, III State Bar No. 24075674 cfaulk@lglawfuin.com ATTORNEYS FOR THE CITY OF LUBBOCK d/b/a LUBBOCK POWER & LIGHT 11 PUBLIC UTILITY COMMISSION OF TEXAS LEGAL DIVISION Margaret Uhlig Pemberton Division Director Katherine Lengieza Gross Managing Attorney KENNEDY R. MEIER State Bar No. 24092819 ERIKA N. GARCIA State Bar No. 24092077 KEVIN R. BARTZ State Bar No. 24101488 1701 N. Congress Avenue P.O. Box 13326 Austin, Texas 78711-3326 Office: (512) 936-7290 Facsimile: (512) 936-7268 OFFICE OF PUBLIC UTILITY COUNSEL LAURIE BARKER Special Counsel State Bar No. 12128690 1701 N. Congress Ave., Suite 9-180 P.O. Box 12397 Austin, Texas 78711-2397 Office: (512) 936-7500 Facsimile: (512) 936-7525 LAW OFFICES OF STEPHEN J. DAVIS, P.C. 301 Congress Avenue, Suite 1050 Austin, Texas 78701 Office: (512) 479-9995 Facsimile: (512) 479-9996 STEPHEN J. DAVIS State Bar No. 05447750 ATTORNEY FOR ALLIANCE FOR RETAIL MARKETS 12 3693/00/7565893 THOMPSON & KNIGHT LLP 98 San Jacinto Blvd., Suite 1900 Austin, Texas 78701 Office: (512) 469-6100 Facsimile: (512) 469-6180 PHILLIP G. OLDHAM State Bar No. 00794392 Katherine L. Coleman State Bar No. 24059596 Michael McMillin State Bar No. 24088034 ATTORNEYS FOR TEXAS INDUSTRIAL ENERGY CONSUMERS XCEL ENERGY SERVICES INC. Stephen Fogel State Bar No. 07202010 816 Congress Avenue, Suite 1650 Austin, Texas 78701-2471 Office: (512) 236-6922 Facsimile: (512) 236-6935 WINSTEAD PC 401 Congress Avenue, Suite 2100 Austin, Texas 78701 Office: (512) 370-2867 Facsimile: (512) 370-2867 RON H. MOSS State Bar No. 14591025 Kristina Rollins State Bar No. 24033012 Leila Melhem State Bar No. 24083492 ATTORNEYS FOR SOUTHWESTERN PUBLIC SERVICE COMPANY 13 EXHIBIT A - PROPOSED ORDER DOCKET NO.47576 APPLICATION OF THE CITY OF § BEFORE THE LUBBOCK THROUGH LUBBOCK § POWER AND LIGHT FOR § AUTHORITY TO CONNECT A § PUBLIC UTILITY COMMISSION PORTION OF ITS SYSTEM WITH § THE ELECTRIC RELIABILITY § COUNCIL OF TEXAS § OF TEXAS AGREED PROPOSED ORDER This Order addresses the application of the City of Lubbock, by and through Lubbock Power & Light (LP&L), for authority to connect a portion of its system with the Electric Reliability Council of Texas (ERCOT). Public Utility Commission of Texas (Commission) Staff, Office of Public Utility Counsel (OPUC), Texas Industrial Energy Consumers (TIEC), Southwestern Public Service Company (SPS), and Alliance for Retail Markets (ARM) (collectively, the "Signatories") filed an unopposed Stipulation (Stipulation) in this proceeding. ERCOT, AEP Texas Inc. (AEP), CPS Energy (CPS), Texas Energy Association for Marketers (TEAM), Sharyland Utilities, L.P. (Sharyland), Lone Star Transmission, LLC (Lone Star), FGE Power, Wind Energy Transmission Texas, LLC (WETT), Cross Texas Transmission, LLC (Cross Texas), Oncor Electric Delivery Company, LLC (Oncor), Golden Spread Electric Cooperative (Golden Spread), and Southwest Power Pool (SPP), do not join in the Stipulation but do not oppose it. The Stipulation and LP&L's application in this proceeding, as modified by the Stipulation, is approved. Consistent with all of the terms of the Stipulation, the Commission adopts the following findings of fact and conclusions of law: I. Findings of Fact 1. LP&L is a municipally -owned electric utility that is currently connected solely to the SPP transmission system. 2. Approximately 470 MW of LP&L's load —the "Affected Load" —is currently served under a wholesale supply contract that expires on June 1, 2019 and will be served under a short-term supply contract that expires June 1, 2021. 3. On December 9, 2015, LP&L submitted a proposed transmission solution that would integrate the Affected Load into ERCOT to the Regional Planning Group. 4. On February 18, 2016, the Commission initiated Project No. 45633, Project to Identijy Issues Pertaining to Lubbock Power & Light's Proposal to Beconie Part of the Electric Reliability Council of Texas, to consider issues relating to LP&L's requested integration of a portion of its load into ERCOT. Interested parties filed comments in that Project, and a workshop was held on May 3, 2016. 5. On June 17, 2016, ERCOT filed its Study of the Integration of the Lubbock Power & Light system into the ERCOT system in Project No. 45633. That study identified a transmission integration solution —designated Option 4ow—that would present the lowest societal costs once capital costs and production cost effects were considered. 6. On July 19, 2016, Commission Chairman Donna Nelson filed a memorandum memorializing a Commission discussion at the June 29, 2016 Open Meeting in which the issues to be analyzed by ERCOT and SPP in a Commission -requested study were specified. 7. On June 30, 2017, ERCOT and SPP filed their respective studies in Project No. 45633, and a Joint Executive Summary on July 7, 2017. 8. On September 1, 2017, LP&L filed its Application for Authority to Connect a Portion of its System with ERCOT (Application), and was assigned Docket No. 47576. That Application included LP&L's Transition to ERCOT Study, submitted in response to the Commission's guidance as described above. 9. On September 21, 2017, the Commission's Administrative Law Judge (ALJ) issued Order No. 4, finding LP&L's Application in this docket to be sufficient, specifying the notice that would be required, and setting certain deadlines. 2 10. ERCOT, SPS, OPUC, SPP, TIEC, ARM, CPS, Oncor, TEAM, Sharyland, AEP, Lone Star, Cross Texas, WETT, FGE Power, and Golden Spread all filed motions to intervene, which were granted (all such parties collectively referred to as "Intervenors"), along with Commission Staff. 11. On September 29, 2017, the Commission adopted its preliminary order that listed issues to be addressed in this docket. 12. On September 27 and October 3, 2017, respectively, SPP and ERCOT filed their studies of the proposed integration with the Commission. The Joint Executive Summary referenced in Finding of Fact No. 7 was included as part of SPP's filing. 13. On October 16, 2017, in support of its Application, LP&L filed the testimony of David McCalla, Neil Copeland, James Daniel, and Dr. Mandhir Sahni. Dr. Mehriar Tabrizi later adopted Dr. Sahni's testimony in a submittal on November 15, 2017. 14. On October 31, 2017, LP&L provided proof of notice, through an Affidavit, attesting that as required by Order No. 4, LP&L provided notice of its Application to (a) owners of the interconnection points identified in Option 4ow; (b) to retail electric providers, other utilities, cooperatives, municipally -owned utilities, and other affected Texas electric market participants, by means of ERCOT and SPP market participant notices; (c) any municipalities and county governments within Lubbock's service area; and (d) LP&L ratepayers served by the portion of LP&L's system that would be transferred to ERCOT. 15. The following intervenors filed direct testimony on November 28, 2017: A. ERCOT filed the Direct Testimony of Jeffrey Billo, Ted Hailu and Carrie Bivens; B. SPP filed the Direct Testimony of Antoine Lucas; C. SPS filed the Direct Testimony of William A. Grant and Wesley L. Berger; D. OPUC filed the Direct Testimony of William Starnes; E. ARM filed the Direct Testimony of Derek M. Mauzy; F. Sharyland filed the Direct Testimony of William O. Bojorquez; and G. TIEC filed the Direct Testimony of Charles S. Griffey. 3 16. On November 28, 2017, Oncor, WETT, FGE Power, and TEAM each filed statements of position. 17. On December 6, 2017, this case was referred to the State Office of Administrative Hearings (SOAH) for the consideration and resolution of all discovery disputes. 18. Commission Staff filed the Direct Testimony of John Poole, Alicia Maloy, and Grant Gervais on December 12, 2017. 19. Cross Texas filed a statement of position on December 13, 2017. 20. On December 22, 2017, ERCOT filed the Rebuttal Testimony of Jeffrey Billo. 21. On January 2, 2018, LP&L filed rebuttal testimony from the following witnesses: David McCalla, Mayor Daniel Pope, Neil Copeland, James Daniel, Dr. Mehriar Tabrizi, and Pat Wood III. 22. On January 9, 2018, statements of position were filed by Commission Staff, OPUC, Golden Spread, AEP, Lone Star, and CPS. 23. On January 2, 2018, SPP filed the Cross -Rebuttal Testimony of Antoine Lucas and SPS filed Cross -Rebuttal Testimony of Wesley L. Berger. 24. On January 11, 2018, a Prehearing Conference was held in which evidence was admitted and various procedural matters determined. 25. On January 17, 2018, LP&L submitted the Supplemental Rebuttal Testimony of Mayor Daniel Pope, in which LP&L presented two resolutions —one from City Council, and one from Lubbock's Electric Utility Board —indicating the City of Lubbock's intent that LP&L opt -in to retail competition. 26. On January 17, 2018, the Commission convened a hearing on the merits to consider the Application, which was completed on January 18, 2018. 27. On February 8, 2018, a Stipulation was filed indicating the Signatories' agreement and the terms of the agreement. On the same date, parties filed an Agreed Proposed Order for the Commission's consideration. 4 The Stipulation 28. The Signatories agree that the integration of the Affected Load into ERCOT, consistent with the terms of the Stipulation, is in the public interest, reasonably holds customers in ERCOT and SPP harmless, and should be approved. 29. The Signatories agree that the date of integration of the Affected Load into ERCOT (the Integration Date) shall be June 1, 2021, or other date as may be required if the transmission facilities necessary to integrate the Affected Load into ERCOT are not operational by June 1, 2021, or if any other compliance or regulatory requirement is not complete by that date. The Signatories agree that ERCOT retains discretion to postpone the Integration Date if ERCOT system conditions on the planned date of integration are such that ERCOT determines the integration of the Affected Load into ERCOT will be a risk to ERCOT system reliability or adequacy. 30. As agreed in the Stipulation, starting upon the Integration Date, LP&L will pay a total of $22 million each year for five years to ERCOT wholesale transmission customers through a monthly credit as set out in the tariff proposed by Commission Staff witness Grant Gervais on page 9 of his Direct Testimony in Docket No. 47576; parties agree that this amount reasonably holds customers in the ERCOT region harmless against the expected net impacts of LP&L's requested transition. LP&L shall submit an initial application to establish the wholesale transmission credit rider no later than four months prior to the Integration Date. The signatories to the Stipulation agree that LP&L shall apply annually, or more frequently as needed, to update its wholesale transmission credit rate to incorporate any changes to the ERCOT 4CP billing units, so as to ensure the payment of the $22 million per year credit to wholesale transmission customers. 31. The Signatories agree that LP&L shall make a payment to SPS, and that amount shall be allocated to SPS's load, as follows: 5 A. On the Integration Date, LP&L will make a one-time payment of $24 million to SPS. The $24 million payment is LP&L's total hold -harmless amount for SPS's Texas retail, Wholesale transmission, and New Mexico retail jurisdictions. B. The Stipulation states that SPS will allocate the $24 million payment among its Texas retail, Wholesale transmission, and New Mexico retail jurisdictions based on the 12-CP transmission load percentages (load ratio shares) for the 12 months ending with the Integration Date, as adjusted to remove the Affected Load. SPS Exhibit 3 at Attachment WLB-CR1 (Cross -Rebuttal Testimony of Wesley L. Berger) provides an example of this calculation. C. The Stipulation states that SPS will provide its Texas retail customers in the Residential Service, Small General Service, Secondary General Service, and Small Municipal and School Service classes with their portion of the Texas retail amount of the hold -harmless payment through a three-month rate rider. The signatories agree that SPS will provide its remaining Texas retail customer classes with their portion of the hold - harmless payment through a one -month rate rider. The payment will be allocated among SPS retail classes using the most recent Commission -approved TCRF baseline class allocation factor for SPS at the time SPS files an application for the bill credit. The Stipulation states that the bill credit rate will be designed for each class consistent with the rate design for transmission cost recovery for the class (energy charge credit for non -demand -metered classes, demand charge credit for demand -metered classes). Subject to Commission approval, the Stipulation states that SPS will provide the bill credits beginning on the first day of the fourth full calendar month after the date SPS receives the $24 million payment from LP&L. The Stipulation requires SPS to make the necessary, timely filings with the Commission to request authority to provide the bill credit described in this paragraph. According to the Stipulation, interest will accrue on the unpaid credit to the Residential Service, Small General Service, Secondary General Service, and Small Municipal and School Service customer classes at an annual rate of 0 1.04% beginning on the first day of the fourth full calendar month after the date SPS receives the $24 million payment from LP&L. No interest will accrue on the unpaid credit to SPS's remaining Texas retail customer classes. D. The Stipulation requires SPS to provide its Wholesale transmission customers (those transmission customers receiving network integration transmission service to serve load in the SPS zone) with the Wholesale transmission jurisdictional amount of the hold -harmless payment by filing a rate schedule at the Federal Energy Regulatory Commission (FERC). The rate schedule will provide for a one-time credit or payment by the end of the fourth full calendar month after the date SPS receives the $24 million payment from LP&L. According to the Stipulation, no interest will accrue on the unpaid amount. E. The Signatories agree that the combination of items 3 LA, B, and C above reasonably holds SPS's Texas retail customers harmless against the net effect of LP&L moving the Affected Load to ERCOT. The Signatories agree that the combination of items 31.A, B, and D above reasonably holds the SPS Wholesale transmission load harmless against the net effect of LP&L moving the Affected Load to ERCOT. F. SPS agrees that if any party seeks a make -whole or other similar payment relating to the transition of the Affected Load to ERCOT at FERC, SPS will oppose that request. Signatories will not seek a make -whole or other similar payment from LP&L at FERC. 32. As agreed in the Stipulation, LP&L shall be integrated into ERCOT using the transmission plan identified by ERCOT as Option 4ow in its Study of the Integration of the Lubbock Power & Light System into the ERCOT system, filed in Project No. 45633 on June 17, 2016 (ERCOT Integration Study). 33. As set forth the in the Stipulation, LP&L agrees that it may not disconnect the Affected Load from ERCOT unless and until LP&L obtains approval from the Commission and complies with any future rule of the Commission that may govern the payment of an exit 7 fee upon an entity being approved to depart ERCOT. Signatories further agree that, in the event of a future transfer of the Affected Load to any other Regional Transmission Authority/Independent System Operator, ERCOT shall make a recommendation to the Commission regarding which portions of the Option 4ow transmission system should remain in the ERCOT system. 34. The Stipulation recognizes that LP&L intends to exercise its right to opt -in to retail competition for the Affected Load as soon as is practicable, but with a goal of doing so effective upon the integration of the Affected Load into ERCOT. The Stipulation acknowledges that, once the City of Lubbock's City Council adopts the resolution described in PURA § 40.051(b), l that statute mandates that the decision is irrevocable. 35. The Stipulation requires LP&L to comply with all ERCOT registration and qualification requirements established in the ERCOT Nodal Protocols and provides ERCOT with any information requested by ERCOT necessary to implement the integration of the Affected Load into ERCOT. The Stipulation requires LP&L to comply with all ERCOT protocols, guides, or any other ERCOT-promulgated authority, and to comply with the Commission's rules and applicable state law. 36. The Stipulation recognizes that because LP&L intends to opt -in to retail competition for the Affected Load at the earliest practicable date, LP&L does not request the establishment of a Non -Opt -In -Entity (NOIE) load zone. The Stipulation acknowledges that ERCOT is authorized to determine in what zone the Affected Load should be placed upon the date that the Affected Load is integrated into ERCOT. 37. The Stipulation recognizes that, prior to the cutover of transmission facilities necessary to the integration of the Affected Load into ERCOT, it will be necessary for ERCOT and LP&L to exchange certain information about their respective systems. Signatories agree that, to facilitate this data exchange, LP&L may be treated by ERCOT as a Transmission Public UtilityRegulatory Act, Tex. Util. Code Ann. 11.001-58.302 West 2016 & Su 2017 , g Y §§ ( PP• ) §§ 59.001-66.016 (West 2007 & Supp. 2017) (PURA). 0 Service Provider (TSP) and Distribution Service Provider (DSP) for purposes of permitting LP&L to amend its Standard Form Market Participant Agreement with ERCOT and that LP&L will be subject to all applicable requirements in the ERCOT Protocols, guides, or binding documents addressing the confidentiality of any data exchanged with ERCOT. LP&L agrees that it will take any action, or provide any information, reasonably requested by ERCOT to effectuate the transition of the Affected Load to ERCOT. Exhibit B to the Stipulation is a preliminary listing of the compliance activities that ERCOT will require in advance of the Integration Date. The Signatories acknowledge that the purpose of this list is not to define or limit the full scope of activities that may be required, but to specify a certain list of preparatory activities that are known at this time. Signatories acknowledge that the required activities may need to be modified as the Integration Date approaches. 38. The Stipulation requires that LP&L will seek no recovery of any of its legacy 230 kV facilities that are stranded because of the integration into ERCOT from wholesale transmission customers in ERCOT or from LP&L's retail ratepayers. 39. The Stipulation requires LP&L to pay the cost of the ERCOT integration studies filed in Docket No. 47576 by ERCOT and SPP. SPP's study costs are $172,479; ERCOT's are $81,562.50. The Stipulation states that these payments will occur no later than 60 days following the entry of an order that is consistent with this Stipulation. 40. The Stipulation requires that, consistent with the recommendation made by Commission Staff witness Grant Gervais on pages 10 and 11 of his Direct Testimony in this proceeding, LP&L will calculate and provide LP&L's 4CP Affected Load data for the calendar year before its expected Integration Date as soon as the data is available, but no later than six months prior to the Integration Date. 41. The Stipulation states that LP&L may submit an application to the Commission to establish wholesale transmission rates no less than eight months in advance of the anticipated Integration Date, such that LP&L may charge transmission rates beginning at 6 the Integration Date if the Commission has approved a transmission rate at that time, provided that all assets included in the rate calculation are energized, used, and useful prior to the effective date of the transmission rate. Signatories agree that LP&L's wholesale transmission rate application may include transmission assets that are not used and useful at the time of the application, but that will be energized, used, and useful prior to the effective date of the wholesale transmission rates. Other than this term, the Stipulation does not in any way modify the normal requirements for inclusion of costs in, or the calculation of, wholesale transmission rates. 42. The Stipulation requires LP&L to complete any and all required registrations with the Texas Reliability Entity (TRE); Signatories support the designation of THE as the Lead Reliability Entity if multiple reliability entities have authority over LP&L. 43. If FERC sets an "exit fee" that is required of LP&L if the Affected Load transitions to ERCOT as described in the Stipulation, Signatories agree that LP&L shall retain the discretion to determine whether it will pay such a fee, or to decline to complete the transition of the Affected Load to ERCOT. If LP&L decides to not complete the transfer of the Affected Load to ERCOT, the Stipulation requires LP&L to pay the relevant TSPs their reasonable and substantiated costs expended to date in preparing for the construction of Option 4ow transmission facilities, with the exception of any transmission infrastructure that the Commission determines would be used and useful to the provision of electric service in the absence of the Affected Load transferring to ERCOT. 44. The Stipulation bars LP&L from taking any action that would cause a market participant within the ERCOT region that is not a "public utility" under the Federal Power Act or ERCOT itself to become a "public utility" under the Federal Power Act or become subject to the plenary jurisdiction of FERC. The Stipulation requires LP&L to ensure that no commingling of energy between the SPP and ERCOT systems occurs during the period leading up to the Integration Date, during the physical disconnection of the 10 Affected Load from SPP and interconnection of the Affected Load to ERCOT, and at all times thereafter. 45. Through the Stipulation, the Signatories request that a Commission project be initiated in which LP&L, ERCOT, and any other party can provide updates on the LP&L integration process, or raise issues arising from that process. 46. The Signatories agreed that the terms of the Stipulation are fair, reasonable, and in the public interest, agreed to support the prompt adoption of the final order in this docket consistent with the Stipulation, and agreed to defend the terms of the Stipulation. II. Conclusions of Law The Commission adopts the following conclusions of law: 1. As a municipally -owned electric utility, LP&L will be an "electric utility" under PURA § 35.001. 2. The Commission has jurisdiction over this matter pursuant to PURA § 35.004(d), addressing the pricing of transmission service, PURA § 39.151(d), relating to the Commission's authority over the operations of ERCOT, and PURA § 14.001, relating to the Commission's general powers. 3. As the designated independent organization under § 39.151(a) of PURA, ERCOT has the authority to, among other things, take those actions necessary to ensure the reliability and adequacy of the ERCOT system in the course of effectuating the integration. 4. SOAH exercised jurisdiction over this docket for purposes of discovery pursuant to PURA § 14.053 and Tex. Gov't Code Ann § 2003.049.2 5. LP&L provided sufficient notice of this proceeding. 6. This docket was processed in accordance with the requirements of PURA, the Administrative Procedure Act, Tex. Gov't. Code Ann. Chapter 2001, and the Commission's rules. '- Administrative Procedure Act, Tex. Gov't Code Ann. §§ 2003.001-.914 (West 2016 & Supp. 2017). 11 7. The migration of the Affected Load from SPP to ERCOT, under the terms of the Stipulation, is reasonable and in the public interest. 8. The requirements for information disposition under 16 Tex. Admin. Code § 22.35 have been met in this case. III. Ordering Paragraphs 1. The Stipulation is approved, and LP&L's Application in this proceeding is approved, as modified by the Stipulation. 2. LP&L shall be integrated into the ERCOT system using the transmission plan identified by ERCOT as Option 4ow in its Study of the Integration of the Lubbock Power & Light system into the ERCOT system, filed in Project No. 45633 on June 17, 2016 (ERCOT Integration Study). 3. ERCOT shall have the discretion to determine the ERCOT Load Zone that LP&L's load will be placed within upon integration. 4. In the event of a future transfer of LP&L's load out of the ERCOT system, subject to Commission approval, ERCOT shall make a recommendation regarding which portions of the transmission facilities built pursuant to this integration shall remain in the ERCOT region. 5. The integration of LP&L's system into the ERCOT system shall not occur unless and until LP&L has provided all information and taken all actions ERCOT deems necessary to facilitate the integration, including but not limited to the information and actions specified in Findings of Fact Nos. 35, 37, and 39. ERCOT is authorized to amend LP&L's Standard Form Market Participant Agreement to add the designations for Transmission Service Provider (TSP) and Distribution Service Provider (DSP) prior to the Integration Date in order to facilitate the exchange of confidential information between LP&L and ERCOT. 12 6. ERCOT retains the discretion to postpone the date(s) of integration if ERCOT system conditions on the planned date(s) of integration are such that ERCOT deems it a risk to ERCOT system reliability or adequacy to permit integration on that date(s). 7. Commission Staff shall open a separate Commission project in which LP&L, ERCOT, and any other party can provide updates to the Commission on the LP&L integration process or raise issues arising from that process. 8. LP&L shall take no action that would cause a market participant within the ERCOT region that is not a "public utility" under the Federal Power Act or ERCOT itself to become a "public utility" under the Federal Power Act or become subject to the plenary jurisdiction of FERC. LP&L shall ensure that no commingling of energy between the SPP and ERCOT systems occurs during the period leading up to the Integration Date, during the physical disconnection of the Affected Load from SPP and interconnection of the Affected Load to ERGOT, and at all times thereafter. 9. LP&L shall submit an initial application to the Commission to establish the ERCOT wholesale transmission credit rider no later than four months prior to the Integration Date. 10. The entry of this Order consistent with the Stipulation does not indicate the Commission's endorsement of any principle or methodology that may underlie the Stipulation. Entry of this Order shall not be regarded as a binding holding or precedent as to the appropriateness of any principle or methodology underlying the Stipulation. 11. All other motions, requests for entry or specific findings of fact or conclusions of law, and any other requests for general or specific relief, if not expressly granted, are denied. SIGNED AT AUSTIN, TEXAS the _day of , 2018. PUBLIC UTILITY COMMISSION OF TEXAS DEANN T. WALKER, CHAIRMAN 13 BRANDY MARTY MARQUEZ, COMMISSIONER ARTHUR C. WANDREA, COMMISSIONER 14 EXHIBIT B — LP&L/ERCOT PREPARATORY ACTIVITIES PRIOR TO INTEGRATION DATE Prior to the Integration Date, LP&L must provide ERCOT with information that includes, but is not limited to: I. A detailed transition plan that sets forth all actions and timelines necessary to effectuate the integration, including but not limited to LP&L's plan as to how it will: A. Meet all requirements in the ERCOT Protocols and other binding documents necessary to qualify and register as an ERCOT market participant for each market participant type applicable to LP&L; and B. Register its load and generation resources, if any, according to a schedule that allows LP&L to complete all necessary actions prior to LP&L's integration into the ERCOT System; II. A detailed plan that demonstrates to ERCOT that no commingling of electricity or of transmission or distribution assets between the ERCOT System and SPP will occur during or after the integration. Information required to be included in this plan may include but is not limited to: A. Commitments by LP&L to coordinate as necessary with both ERCOT and SPP before and during the integration; B. Timelines for providing ERCOT with any required modeling information; C. A requirement to provide any necessary telemetry information; D. A requirement to provide any information necessary for outage coordination; E. Commitments to ensure LP&L's operators complete any required training prior to the integration; F. To the extent that LP&L acts as its own Transmission Operator, a commitment to register as a Transmission Operator with Texas Reliability Entity, Inc. at a time sufficiently prior to the integration; and G. A commitment to provide any other information deemed necessary by ERCOT in the course of preparing for the integration; III. A power system analysis demonstrating that the reliability of the ERCOT System can be maintained throughout the integration; IV. A subsynchronous resonance (SSR) study, to be completed by LP&L; V. Any information required to be provided by registered ERCOT market participants, particularly Transmission and Distribution Service Providers, pursuant to ERCOT Protocols, including but not limited to: A. Information necessary for ERCOT's planning and network operations models; B. Outage information; C. Information necessary for the design, installation, and testing of Wide Area Network (WAN) communication circuits for voice and data communications; D. Real-time telemetry data with respect to LP&L's transmission system and generation resources as required under the ERCOT Protocols; E. Information necessary for metering of Distributed Generation with an installed capacity greater than the Distributed Generation registration threshold (currently I MW); and F. To the extent LP&L is planning to participate in the ERCOT market for any period of time as a Non Opt -in Entity (NOIE): 1. A one -line diagram necessary to define LP&L's NOIE transmission system and associated meter points, including interconnection points and generation resources behind NOIE meter points; 2. ERCOT polled settlement (EPS) meter design proposals of EPS metering facilities required to provide meter data for LP&L's NOIE load metering points; and 3. Information necessary for the correction of EPS meter data for NOIE transmission losses; VI. To the extent there are generation resources within LP&L's certificated service territory that are transitioned to the ERCOT System, LP&L will be required to provide EPS meter design proposals required to provide meter data for such generation resources; VII. To the extent LP&L may retain ownership of generation resources that are transitioned to the ERCOT System, all information necessary to comply with ERCOT's generation resource interconnection process; and VIII. Any and all information necessary to effectuate LP&L's proposed opt -in to retail competition. This includes, but is not limited to, the information set forth in ERCOT's "Opt -in Checklist" found on ERCOT's website at: http://www. ercot. com/content/services/rq/re/reg/Opt-In_Checklist. doc.