CenterPoint Energy 2014 Annual Report Download - page 66

agreeing that CenterPoint Houston shall be allowed to recover the net of (1) $39.1 million in estimated 2015 program costs; (2) a performance
bonus for 2013 achievements of between $15.8 million and $16.2 million, depending on the outcome of the one remaining contested issue
relating to a bonus calculation; (3) $0.9 million for 2015 evaluation, measurement and verification costs; (4) a credit of $5.1 million for the over-
recovery of 2013 program costs; (5) $0.2 million in rate case expenses from the 2013 EECRF proceeding; and (6) an adjustment of $57,000 to
exclude certain administrative costs. In November 2014, the Texas Utility Commission approved the partial settlement and decided the
remaining contested issue relating to the bonus calculation in CenterPoint Energy’
s favor. The effective date of the rate adjustment will be
March 1, 2015.
Brazos Valley Connection Project.
In July 2013, CenterPoint Houston and other transmission service providers submitted analyses and
transmission proposals to the Electric Reliability Council of Texas (ERCOT) for an additional transmission path into the Houston region. In
April 2014, ERCOT’
s Board of Directors voted to endorse a Houston region transmission project and deemed it critical for reliability. The
project will consist of (i) construction of a new double-
circuit 345 kilovolt (kV) line spanning 130 miles, (ii) upgrades to three substations to
accommodate new connections and additional capacity, and (iii) improvements to approximately 11 miles of an existing 345 kV TH Wharton-
Addicks transmission line to increase its rating. Also in April 2014, ERCOT staff determined that CenterPoint Houston would be the designated
transmission service provider for the portion of the project between our Zenith substation and the Gibbons Creek substation owned by the Texas
Municipal Power Agency, consisting of approximately 60 miles of 345 kV transmission line, upgrades to the Limestone and Zenith substations
and upgrades to 11 miles of the 345 kV TH Wharton-
Addicks transmission line (this portion of the Houston region transmission project is
referred to by CenterPoint Houston as the Brazos Valley Connection). Other transmission service providers were designated by ERCOT for the
portion of the project from Gibbons Creek Substation to the Limestone Substation as well as the upgrades to the Gibbons Creek Substation. As
the owner of the originating and terminating substations of the entire project, CenterPoint Houston appealed that determination to the Texas
Utility Commission in May 2014 and sought the right to construct, own, and maintain the entire project, except for necessary upgrades to the
Gibbons Creek Substation. On October 17, 2014, the Texas Utility Commission filed an order that denied CenterPoint Houston’
s appeal and
upheld the April 2014 ERCOT decision to split the project between CenterPoint Houston and other transmission service providers. ERCOT
estimates that the capital cost of the entire Houston region transmission project will be approximately $600 million, and CenterPoint Houston
estimates that the capital costs for the Brazos Valley Connection will be approximately $300 million. CenterPoint Houston anticipates that the
Brazos Valley Connection project will be completed by mid-2018.
In May 2014, several electric generators appealed the ERCOT Board of Directors’
April 2014 approval of the Houston region transmission
project and the determination that the project was critical for reliability in the Houston region to the Texas Utility Commission. A hearing on the
May 2014 appeal by the electric generators was held in October 2014 and in December 2014, the Texas Utility Commission denied the
generators’
appeal. A motion for rehearing was filed by the electric generators on January 5, 2015, replies to the motion for rehearing were filed
on January 15, 2015, and on January 21, 2015, the Texas Utility Commission voted not to consider the motion for rehearing. CenterPoint
Houston must obtain final approval of the project and the route for the project from the Texas Utility Commission. CenterPoint Houston
anticipates filing its application for approval of the project in the spring of 2015. Once filed, the Texas Utility Commission will have 180 days to
rule on the application.
Transmission Cost of Service
(TCOS). On March 26, 2014, CenterPoint Houston filed an application with the Texas Utility Commission for
an interim update of its TCOS seeking an increase in annual revenue of $13.6 million based on an increase in total rate base of $184.5 million.
CenterPoint Houston received approval from the Texas Utility Commission during the second quarter of 2014, and rates became effective May
12, 2014. A second TCOS filing, as amended, was made on November 21, 2014 seeking an increase in annual revenue of $23.5 million based on
an increase in total rate base of $113.2 million. The case is still pending before the Texas Utility Commission.
Agreement with City of Houston.
On June 13, 2014, CenterPoint Houston entered into an agreement with the City of Houston, Texas
providing that neither CenterPoint Houston nor the city will initiate a base rate case for CenterPoint Houston earlier than December 31, 2016,
subject to a $20 million force majeure provision. During that period, CenterPoint Houston has the right to adjust its rates through (1) the
schedules and riders in its tariff approved by the Texas Utility Commission; (2) adjustments to its distribution rates using the distribution cost
recovery factor rule adopted by the Texas Utility Commission; and (3) adjustments to its transmission rates under Texas Utility Commission
rules. CenterPoint Houston also has the right to propose rates for new services. This agreement is not binding on any other city within
CenterPoint Houston’s service territory or the Texas Utility Commission.
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