HomeMy WebLinkAboutRES 12-180 RESOLUTION NO. 12-180
A RESOLUTION OF THE CITY COUNCIL OF BEAUMONT,
TEXAS,JOINING WITH OTHER ENTERGY SERVICE AREA
CITIES IN SUPPORT OF A SETTLEMENT IN PRINCIPLE
REGARDING THE TRANSFER OF OPERATIONAL
CONTROL OF ENTERGY'S TRANSMISSION SYSTEM TO
THE MIDWEST INDEPENDENT TRANSMISSION SYSTEM
OPERATOR, INC. IN PUBLIC UTILITY COMMISSION
DOCKET NO. 40346.
WHEREAS, on or about April 30, 2012 Entergy Texas, Inc. ("Entergy") filed an
Application for Approval to Transfer Operational Control of its Transmission Assets to the
Midwest Independent Transmission System Operator, Inc. ("MISO")with the Public Utility
Commission of Texas ("PUC" or "Commission"); and,
WHEREAS, MISO, as a regional transmission system operator, is an independent
entity that exercises control over the regional transmission system and is intended to
perform certain functions such as maintaining and managing reliability and providing for
economic dispatch of generation resources; and,
WHEREAS, Entergy has determined that the net benefits to Texas retail customers
of Entergy from transitioning to MISO is approximately $170 to $225 million over the first
ten years, or approximately $17 to $22.5 million per year on average; and,
WHEREAS, City has intervened at the Commission with the Steering Committee of
Cities to review ETI's proposal and make certain recommendations regarding the public
interest; and,
WHEREAS, the consulting expert retained by the Steering Committee of Cities
recommends that a transfer of operational control of Entergy's transmission system to
MISO is in the public interest so long as certain conditions are met; and,
WHEREAS, the consulting expert retained by the Steering Committee of Cities
recommended that the transfer of operational control of Entergy's transmission system
must be conditioned on 1.) All Entergy Operating Companies join MISO;2.) ETI receiving
sufficient transmission rights (ARR allocations)to hedge against the congestion charges
for importing current and future energy requirements into Texas; 3.) an analysis as to what
modifications to the System Agreement would be necessary in order to permit the greatest
reasonable benefits to be received from joining MISO to be accrued for Texas customers;
and,
WHEREAS, Entergy has agreed to the terms recommended by the Steering
Committee of Cities as demonstrated by the attached Settlement in Principle
("Settlement"); and,
WHEREAS, the City of Beaumont finds that transfer of operational control of
Entergy's transmission system to MISO is in the public interest subject to the conditions
set forth in the Settlement; and,
WHEREAS, the Entergy Service Area Cities' Steering Committee has authorized
the approval of the attached Settlement and recommends settlement to the Cities;
NOW THEREFORE, BE IT RESOLVED BY THE
CITY COUNCIL OF THE CITY OF BEAUMONT:
Section 1. That the statement and findings set out in the preamble to this
resolution are hereby in all things approved and adopted.
Section 2. The City of Beaumont hereby reaffirms its support for the settlement
terms in the Settlement in Principle attached.
Section 3. The meeting at which this resolution was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act, Texas Government
Code, Chapter 551.
Section 4. This resolution shall become effective from and after its passage.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 21st day of
August, 2012.
t�or Becky ArKes -
ATTEST:
Cti ruw0a;
Tina Broussard, City Clerk
SETTLEMENT IN PRINCIPLE
The following settlement in principle("Settlement")is entered into to resolve all issues in
controversy between Entergy Texas, Inc., ("ETI" or "Company"), the Staff of the Public Utility
Commission of Texas ("Staff'), and any other party that agrees to this term sheet (together,
"Signatories") in PUCT Docket No. 40346, The Settlement is subject to completion of a
definitive written settlement agreement acceptable to the Signatories and issuance of a final order
by the Public Utility Commission of Texas("Commission")in Docket No. 40346 consistent with
the Signatories' definitive written settlement agreement.
1. MISO Public Interest Determination and Other Statutory Requirements—Based on the
terms and conditions set out in this Settlement,the Signatories agree that ETI's application to
transfer operational control of its transmission facilities to the Midwest Independent
Transmission System Operator ("MISO") Regional Transmission Organization ("RTO")
meets the requirements of Sections 39.915(b) and 39.262(m) of the Public Utility Regulatory
Act("PURA") and is in the public interest, subject to all conditions stated in this agreement.
The Signatories further agree that ETI has resolved any and all issues that could be raised in
this proceeding concerning the application and implementation of PURA Section 39.457 as it
concerns ETI's application in this docket and those contracts that are subject to PURA
Section 39.457.
2. Timing and Extent of Entergy Operating Company Participation in MISO—ETI agrees
that if all of the Entergy Operating Companies ("EOCs")do not join MISO by December 31,
2013, ETI will not transfer operational control of its transmission assets to MISO, without
first making a new filing with the Commission pursuant to PURA Section 39.915 and
allowing the Commission the statutory timeframe to issue a determination concerning that
filing under PURA Section 39.915(b).
3. Status of Entergy System Agreement("ESA")—As a condition of ETI joining MISO, and
unless otherwise directed by the Commission,ETI agrees to give notice by October 31, 2013
to exit the ESA pursuant to Section 1.01 of the ESA, provided the following conditions are
met: 1) issuance of a final order by the Commission in Docket No. 40346 determining that if
ETI joins MISO,ETI's continued participation in the ESA is not in the public interest;2) ETI
has determined, by October 31, 2013, that all of the EOCs will be integrated into the MISO
RTO by December 19, 2013. The Signatories further agree that for good cause shown the
Commission may extend these deadlines. The Signatories agree to include in a Proposed
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EXHIBIT"A"
SETTLEMENT IN PRINCIPLE
Order language supporting such conditions. The Signatories further agree that the notice to
exit the ESA is subject to the following additional requirements:
a. ESA Transition Study—The Signatories agree that the Commission will direct a
study regarding the determination of the impact of ETI leaving the ESA and the
earliest feasible date to do so (ESA Transition Study). ETI agrees that it will
cooperate in providing requested input and data. The ESA Transition Study may
include, but shall not be limited to, identification of options and recommendations for
achieving an orderly transition out of the ESA and integrating into MISO including
solving operational issues, economic impacts, contract issues, and optimal exit
timing. The ESA Transition Study will be performed pursuant to the following
requirements:
i. The scope, assumptions,and parameters of the study will be established by the
Commission, with cooperation of ETI, on an expedited basis, but on a
schedule mutually convenient to ETI and Staff.
ii. The ESA Transition Study will be performed by independent consultants
selected by the Commission and paid for by ETI. ETI shall timely pay the
reasonable costs of the services of such consultants as determined by the
Commission. The amount that ETI shall be responsible to pay shall not
exceed $750,000. ETI shall be entitled to seek recovery of these costs. ETI,
Staff and Cities agree to support full and timely recovery in retail rates of the
costs of the independent consultants, and the other Signatories do not oppose
recovery of reasonable and necessary costs of the independent consultants as
determined by the Commission. The ESA Transition Study will not be
considered to represent the views of any specific Signatory.
iii. The target completion date for the ESA Transition Study will be determined
after the framework and scope of the ESA Transition Study are determined,
but the date will be set so as to provide sufficient time for Commission review
of the ESA Study prior to the October 31, 2013 deadline for ETI's issuance of
notice to exit the ESA.
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SETTLEMENT IN PRINCIPLE
iv. Upon submission of the ESA Transition Study for Commission review, within
a reasonable period of time, ETI shall, and other parties may, file a response
to the study and its conclusions.
The Commission's consideration of the ESA Transition Study shall not affect its
determination, subject to the conditions specified in this Settlement, that ETI's
membership in MISO is in the public interest.
b. ETI's notice to exit the ESA must be filed with and accepted by the FERC in order
for it to be effective.
c. ETI agrees to not seek to rescind its notice to exit the ESA without the support of the
Commission, and the Signatories further acknowledge in this connection that ETI's
position is that the Company may not unilaterally rescind the notice once it is given
and that Staff does not share that position.
d. The Signatories acknowledge that Staff has continuing reservations regarding ETI's
continuing participation in the ESA upon integration into MISO, and that the
Commission may desire ETI to accelerate its exit from the ESA (or termination of the
ESA). The Signatories agree that the provisions of this Settlement calling upon ETI
to issue notice of exit from the ESA are not intended nor are to be construed as in any
way diminishing any desire expressed by the Commission to bring about an earlier
withdrawal of ETI from the ESA. Therefore, ETI further agrees to exercise
reasonable best efforts to:
i. engage the various Operating Companies and their retail regulators in
searching for a consensual means of allowing ETI to exit the System
Agreement prior to the end of the mandatory 96-month notice period;
ii. in addition to the study addressed in 3.a. above and in cooperation with the
Staff, perform reasonable technical analyses to assist the Commission in its
evaluation of the timing for exiting the ESA;
iii. consult with the Staff on an ongoing basis regarding efforts to exit the ESA
prior to the expiration of the 96-month notice period.
e. The Signatories agree that, if the Commission directs ETI to withdraw from the ESA,
ETI may seek recovery in retail rates of its costs to effectuate that withdrawal. The
Signatories reserve the right to contest such costs.
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SETTLEMENT IN PRINCIPLE
L Schedule MSS-4 Contracts—Prior to December 31, 2012, ETI will provide to the
Signatories its position on the effect of exiting the ESA on the Company's ESA
Schedule MSS-4 contracts associated with the following EOC generating facilities:
Sabine, Lewis Creek, Willow Glen, Nelson Units 3 and 4, Perryville, and Calcasieu
(collectively, the "ESA Transition Study Contracts"). ETI's position on the ESA
Transition Study Contracts may be considered in conjunction with the ESA
Transition Study regarding the impact of ETI leaving the ESA and the earliest
feasible date to do so. The Signatories reserve their right to take any position they
may desire regarding the effect of exiting the ESA on the ESA Transition Study
Contracts.
For all other Schedule MSS-4 contracts to which ETI is a party--which are
River Bend, Carville, Dow, and EAI WBL--ETI's position is that exit from the ESA
is not intended to affect the terms, pricing, or energy entitlements under these
contracts, and the pricing under these contracts will continue to be based on a cost-
based formula fled at and approved by the FERC.
g. ESA Reporting—ETI agrees to file with the Commission the following reports and
information regarding the ESA, with the details and timing of such reports to be
determined in cooperation with the Staff,
i. Monthly Infra-System Bill (which includes detail for each individual EOC's
monthly payments and receipts under ESA Schedules MSS-1, MSS-2, and
MSS-3);
ii. MISO Settlement Statements;
iii. A plan and periodic status reports regarding ETI's exit from the ESA;and
iv. Filings made at the FERC regarding the ESA.
4. MISO Governance (E-RSC)—ETI agrees that as a condition of joining MISO it will
support retention of the Entergy Regional State Committee's ("E-RSC's") current level of
authority during the five year transition period (as defined in Attachment FF of the MISO
tariff) in MISO as follows:
a. The E-RSC shall retain authority to direct the EOCs, upon unanimous vote, to
exercise their rights as Transmission Owners in MISO to add projects to the MISO
Transmission Expansion Plan.
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SETTLEMENT IN PRINCIPLE
b. The E-RSC shall retain authority, upon unanimous vote, to direct the EOCs, as
Transmission Owners in MISO,to propose to modify the usual MISO cost allocation
methodology among the EOCs' transmission pricing zones with respect to new
transmission projects, other than Multi-Value Projects ("MVPs"), that are situated
entirely within MISO South, and are approved during the five year transition period
for cost allocation that MISO proposed to FERC and that FERC has conditionally
approved. Any modifications to the cost allocation methodology would require
FERC approval.
c. ETI further agrees that it will use reasonable efforts in working with the other Entergy
Operating Companies (who ETI expects will work with their respective retail
regulators) and the Commission in considering an extension of such authority beyond
the five year transition period.
5. MISO Governance (OMS)—Provided that nothing in this agreement shall limit MISO's
ability to expand upon or modify the implementation of the governance provisions herein as
a result of the ongoing governance discussions in the MISO stakeholder process and among
the OMS and ERSC, MISO agrees that prior to the expiration of the five-year transition
period, it will file with FERC to provide the Organization of MISO States (OMS) with rights
as follows:
a. MISO will include alternative tariff sheets and justification proposed by the OMS in
any cost allocation filing in which MISO seeks to amend or otherwise modify the
regional transmission cost allocation methodologies or formulae, where OMS has an
alternative proposal to a major element or elements of the MISO proposal. Inclusion
of the alternative tariff sheets and justification .proposed by the OMS will be
contingent upon the alternative proposal meeting the qualifying circumstances set
forth below:
i. MISO is filing a new proposal seeking to amend the existing cost allocation
methodology accepted by FERC for any of its regional transmission cost
allocation methodologies.
ii. At the conclusion of MISO's stakeholder process developing a proposal
seeking to amend the existing cost allocation methodology:
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SETTLEMENT IN PRINCIPLE
1. OMS disagrees with one or more components of the proposed MISO
filing;
2. OMS provides an alternative approach to such component
memorialized in the form of alternative Tariff provisions; and
3. The required supermajority or special majority of OMS members
requests MISO to include the OMS's alternate Tariff sheets in MISO's
filing seeking FERC acceptance of MISO's proposal referenced above.
iii. If the qualifying circumstances are met, MISO will include the OMS's
alternative proposal in MISO's section 205 filing to modify the cost allocation
methodology. The OMS's alternative proposal will be included along with
MISO's proposal in the MISO filing in the following manner:
1. The OMS's alternative proposal will be included in the filing in
addition to, not in lieu of, the MISO proposal and will be identified as
being requested by the OMS.
2. OMS is responsible for supporting the justness and reasonableness of
their alternative proposal.
3. MISO will include such justification as well as any testimony or other
supporting documentation provided by OMS in MISO's filing as so
requested by OMS, contingent upon OMS providing any supporting
language in a time frame that is consistent with MISO's schedule for
the filing.
iv. The inclusion of the OMS alternative proposal in MISO's filing is intended to
ensure the OMS alternative proposal receives the same presumption as the
MISO proposal and is subject to the same legal standard of review as the
MISO proposal.
b. MISO also agrees that, upon the integration of all Entergy Operating Companies,
MISO will file with FERC to:
i. Expand the retail representation on the Advisory Committee to include a retail
regulator from the E-RSC;
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SETTLEMENT IN PRINCIPLE
ii. Create a new retail regulator committee that reports directly to the MISO
Board of Directors ("Board") in the same way that the Advisory Committee
and Transmission Owner's Committee reports to the Board today.
e. MISO also agrees to codify the advisory role of the OMS regarding transmission
planning.
b. MISO Cost/Benefit Review—The Signatories agree that the PUCT will conduct a
supplemental review of ETI's continued MISO membership prior to the end of five years
from the date that the Company achieves integration into MISO or December 31, 2018,
whichever occurs first. In connection with this supplemental review, one year prior to that
date, ETI will submit a filing that includes a study analyzing the costs and benefits to date of
MISO participation and a forward-looking cost/benefit analysis, which affords the
opportunity for meaningful stakeholder input.
a. MISO Costs/Benefit Periodic Reports—ETI agrees to work in cooperation with
Staff to develop an appropriate framework for periodic analyses and reporting of the
costs and benefits of ETI membership in MISO.
7. Auction Revenue Rights ("ARRs"}--The Signatories agree that ETI will work with Staff,
and receive stakeholder input, to analyze proposed MISO rule changes regarding ARRs to
determine whether the proposed revisions to the rules for ARR allocations are expected to
provide a reasonable allocation of ARRs to ETI, consistent with FERC standards. The
Signatories further agree that the Commission's determination that the transfer of control to
MISO is in the public interest shall be conditioned on the potential impact to ETI ratepayers
of:
a. the outcome of the proceedings for the establishment of MISO tariff and/or business
practices, and/or FERC orders, addressing the manner in which ARRs can be
nominated by ETI and the other EOCs and other Load Serving Entities in the Entergy
footprint; and
b. the projected ARR allocation to ETI.
Based on its consideration of these matters, the Commission may take further action as it
deems appropriate, including determining whether changed circumstances justify
reconsideration of its public interest determination.
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SETTLEMENT IN PRINCIPLE
ARR Reporting--ETI agrees that it will share the results of its analysis of projected
ARR allocations to the Entergy Operating Companies with the Staff, the Cities, and the
outside counsel and outside consultant that have represented TIEC in Docket No. 40346, as
Highly Sensitive information subject to the Docket No. 40346 Protective Order, after MISO
files its proposed ARR tariff provisions with the FERC. ETI further agrees that it will
consult with Staff on an ongoing basis, during the MISO stakeholder process and when the
new tariff changes are filed for FERC review, to analyze the MISO ARR tariff and business
practice changes to determine whether the proposed revisions are expected to provide a
reasonable allocation of ARRs to the Company,consistent with FERC standards.
8. Cost Recovery The Signatories agree that it is not necessary to address at this time cost
recovery issues related to: 1) the level of ARR allocation received by ETI; or 2) the cost of
transmission upgrades for integrating ETI into MISO, if any, which are not included in the
Company's cost/benefit analysis in Docket No. 40346. The Signatories reserve their right to
address such issues in a future appropriate rate setting proceeding.
9. Bundled Rate Exemption—ETI agrees that it will not unbundle transmission or seek to
make changes to transmission service for retail ratemaking without prior PUCT approval.
ETI, while it is a transmission owner in MISO, commits to take all reasonable steps to
qualify for the exemption for bundled retail load from MISO Schedule 9 transmission
charges under the MISO Open Access Transmission, Energy and Operating Reserve Markets
Tariff. ETI also commits, while a transmission owner in MISO, to oppose any efforts by
MISO transmission owners or others to modify the MISO Open Access Transmission,
Energy and Operating Reserve Markets Tariff and/or the MISO Transmission Owners
Agreement in a manner that would subject ETI to MISO Schedule 9 transmission charges for
bundled retail load.
10.Transmission Congestion Reporting—ETI agrees that it will provide regular periodic
updates to the Commission which detail its ongoing efforts, through its own transmission
planning and its participation in the MISO transmission expansion planning process, to
proactively identify, advocate and pursue construction of transmission upgrades that are
reasonably forecasted to provide a net economic benefit toward reducing ETI's cost to
provide reliable electric service to its retail customers.
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SETTLEMENT IN PRINCIPLE
11. SPS Acknowledgement—The Signatories acknowledge that Southwestern Public Service
Company ("SPS") requested that the Commission use its membership in the SPP Regional
State Committee and the MISO Organization of MISO States to encourage both SPP and
MISO to investigate: 1) implementing a joint reserve sharing or contingency reserve co-
optimization arrangement that would pool the resources of both SPP and MISO into a larger
coordinated reserve sharing pool; and 2) modifying the existing SPP/MISO JOA to enable
improved operational and planning coordination between SPP and MISO to accommodate
ETI's membership in MISO.
12.Additional Provisions—After ETI joins MISO, it shall remain responsible and accountable
for the operation of its systems, including but not limited to: the manner in which it
participates in any MISO-administered market; how it offers its generation into the MISO
Day Ahead and Real Time Markets; how it offers load into the MISO Day Ahead market;
bidding and scheduling; any actions it takes to supply its retail loads; any actions it takes to
procure fuel, capacity and/or energy; the prudent administration and management of its
energy supply contracts; the prudent administration and management of its energy supply
transactions with MISO; its obligation to ensure that the charges and credits received from
MISO are correct and accurate; appropriate management of nominating ARRs, conversion to
or use of FTRs and appropriate crediting of ARR and FTR receipts, and any resource
adequacy market transactions.
Staff shall have complete access to information and full rights to conduct audits of
costs incurred by or credited to ETI and to conduct prudence reviews, as needed, in
connection with these and related activities within ETI's control, including activities
associated with transitioning to an operating within membership in MISO. These audits and
prudence reviews rights are not intended to make ETI responsible for activities required by a
valid FERC tariff and which are undertaken by MISO that are therefore beyond ETI's
control. Ensuring that MISO charges and credits to ETI are correct and accurate, however,
will be the explicit responsibility of ETI to the extent that it is reasonably possible for ETI to
do so consistent with the information that is available to it. ETI must undertake all
reasonable efforts to verify the correctness and accuracy of these charges and credits which
will include all reasonable efforts to obtain the information necessary to verify the accuracy
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SETTLEMENT IN PRINCIPLE
of these charges and credits. ETI must also validate that the charges and credits it receives
are being assessed pursuant to the MISO tariff.
ETI shall provide Staff a list and description of the principles observed, practices and
protocols utilized by ETI in its capacity and energy procurement, including but not limited
to: the manner of offering in generation and bidding and scheduling load into the Day Ahead
and Real Time Markets, ARR nominations and all other material aspects of any MISO-
administered market interaction, when requested. ETI will maintain contemporaneous
documentation of the activities listed in the previous sentence. The scope of the
documentation and the extent to which each and every departure from established protocols
must be documented and justified will be determined on a cooperative basis between Staff
and the Company. This condition is not intended to alter FERC or Commission jurisdiction.
Executed as shown below:
II
Dated this_day of August,2012.
PUBLIC UTILITY COMMISSION
OF TEXAS STAFF
By:
Date:August_,2012
ENTERGY TEXAS,INC.
By:
Date: August 2012
STEERING COMMITTEE OF CITIES
SERVED BY ETI
By:
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SETTLEMENT IN PRINCIPLE
Date: August 2012
MIDWEST INDEPENDENT TRANSMISSION
SYSTEM OPERATOR,INC.
By:
Date:August_, 2012
EAST TEXAS ELECTRIC COOPERATIVE,INC.
By:
Date: August 2012
SOUTHWESTERN PUBLIC SERVICE COMPANY
By:
Date: August
By:
Date: August 2012
By:
Date: August_,2012
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SETTLEMENT IN PRINCIPLE
By:
Date: August 2012
i
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