The Federal Energy Regulatory Commission (FERC) approved a final order requiring Texas Utilities Electric Co. (TU) and its affiliate, Southwestern Electric Service Co., to provide network transmission service to Tex-La Electric Cooperative of Texas Inc. (Docket No. ER94-1385-000). Network service allows multiple points of receipt and delivery at a single system rate. Tex-La, a customer of Texas Utilities and a bulk-power supplier for seven distribution cooperatives in Texas, is seeking to buy power from third parties and transmit the power over TU's transmission system. This marks the first time the FERC has issued a final order directing transmission service wholly within the Electric Reliability Council of Texas (ERCOT).
The FERC rejected TU's proposal to apply a distance-sensitive rate method. It called the method "unduly discriminatory," noting that it was not comparable to TU's pricing for its own uses and that the utility employs an average-system-cost, postage-stamp rate for all other firm transmission uses. As the order states: "The bottom line is that the only firm transmission customer to whom [TU] proposes to apply a distance-sensitive rate is the one transmission customer for whom distance-sensitive rates will result in an increase rather than a decrease from postage-stamp rates."
While setting the terms and conditions for the transmission service to Tex-La, the FERC deferred a decision on TU's stranded cost claims. TU proposes to assess a stranded cost charge of $27.5 million (equivalent to eight years of transmission demand charges), claiming it negotiated contracts with qualifying facilities in order to serve Tex-La at least through 1998.