Stacy Dochoda Director, Regulatory Strategy

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True-Up of Price to Beat RevenuesPURA 39.262
(e)
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PTB True-Up Outline

• I. Five Steps for Calculating the PTB True-Up
• II. Example
• II. Fleshing out the Details

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PTB True-Up Five Main Steps

• Step 1
• Was 40 of year 2000 consumption served by
  non-affiliated REPs prior to January 1, 2004?
• Step 2
• Compare PTB Price to Market Price.
• Use Electricity Facts Labels
• Residential 1000 kWh and Small Commercial 3500
  kWh
• Exclude nonbypassables
• Average EFL Market Price from non-affiliated REP
  offerings
• weighted average based on customers served

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PTB True-Up Five Main Steps (cont.)

• Step 3
• Calculate preliminary clawback.
• PTB price less EFL market price difference (Step
  2) multiplied by
• usage per customer per month from EFL for
  respective customer group
• 24 months, and
• number of customers served by the AREP in ATDU
  Region at January 1, 2004
• Step 4
• Calculate the maximum clawback.
• (PTB customers at 1/1/04) less (Customers
  outside ATDU Region served by AREP at 1/1/04) X
  150 per customer

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PTB True-Up Residential Example

• Step 1
• 40 consumption level not reached before 1/1/04
• Step 2
• Independent consultant
• collects EFL net market price data (1000
  kWh/month) and customer count
• calculates average EFL net market price (customer
  weighted)

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PTB True-Up Residential Example (cont.)

• Step 2 (cont.)
• ensures average EFL net market price is not less
  than competitive threshold
• competitive threshold retail commodity price
  plus taxes, losses, fees and sales costs 5.1
  c/kWh
• collects AREP Net PTB price (1000 kWh/month) and
  customer counts
• compares Net PTB and Net Market Price
• PTB exceeds Market, therefore need to
  proceed...

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PTB True-Up Residential Example (cont.)

• Step 3
• Preliminary clawback calculation

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PTB True-Up Residential Example (cont.)

• Step 4
• Maximum clawback calculation

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PTB True-Up Residential Example (cont.)

• Step 5
• Amount AREP Credits ATDU
• lesser of Step 3 or Step 4

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PTB True-Up Fleshing out the Details (cont.)

• Independent Third Party
• Required because handling sensitive competitive
  and customer data
• Activities
• obtains certified January 1, 2004 customer counts
  from ERCOT
• PTB Customers
• customers served by AREP outside ATDU Region
• customers served by non-affiliated REPs in ATDU
  region
• collects market price data from EFL disclosures
• calculates difference between price to beat rates
  and market rates (excluding non-bypassables)
• calculates ultimate amount of revenues that AREP
  must credit to ATDU
• Customer Number as of January 1, 2004
• same as date used for 150 per customer cap

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PTB True-Up Fleshing out the Details

• Prices
• Prices at set usage levels
• EFL price disclosures available at three set
  usage levels
• residential kWh/month 500, 1000, 1500
• small commercial kWh/month 1500, 2500, 3500
• Recommend the following usage levels for price
  comparisons and clawback calculations
• residential -- 1000 kWh/month
• small commercial -- 3500 kWh/month
• Need to net nonbypassables from EFL prices

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PTB True-Up Fleshing out the Details

• Prices
• Prices as of January 1, 2004 (use 3 months
  preceeding 1/1/04)
• same as time-frame used for 150 per customer cap
• Market prices and PTB prices must be comparable,
  obtained from public sources, and subject to
  minimum competitive threshold
• market and PTB prices are both retail prices
• price of basic electric service
• comparable terms of service
• price comparisons must be based on comparable EFL
  usage levels
• market prices subject to competitive check