Texas Staff Makes Further Recommendation On How To Calculate Total Capacity For M&A Transactions
July 19,2018
Staff of the Texas PUC have made a further recommendation of how to process generation M&A applications given recent Commissioner discussion concerning the calculation of capacity and the stated intent to open a new rulemaking
Looking ahead to future applications submitted under PURA § 39.158, Staff said in a memo in Docket 48162 that it appreciates the Commission's decision that a rulemaking be opened to revise 16 TAC § 25.91 and § 25.401 to clarify the methodology to be used to determine both the numerator and the denominator of the share-of-installed-generation calculation.
Staff said that, for all currently pending applications and new applications submitted prior to an adopted rule revision, Staff recommends calculating the percentage share of installed generation capacity owned and controlled after the completion of a transaction proposed under PURA § 39.158 two ways:
1. Using the full nameplate capacity of non-dispatchable renewable generating units to determine both the "installed generation capacity owned and controlled by [a] power generation company in, or capable of delivering electricity to, a power region" (numerator) and the total installed generation capacity located in, or capable of delivering electricity to, a power region (denominator); and
2. Using the discounted7 nameplate capacity of non-dispatchable renewable generating units to determine both the numerator and the denominator as a proxy for the actual capacity.
Staff said that it acknowledges that the second calculation does not address the Commission's concerns that relying on the discounted nameplate capacity for non-dispatchable renewable generating units to calculate the numerator, absent data in the record of the actual capacity value for the unit during the most recent peak season, is not in compliance with 16 TAC § 25.91(f). However, Staff said that it cannot calculate the denominator using this approach at this time, "because the generating capacity reports filed under Project No. 23730 have not been completed in strict compliance with Commission rules."
Accordingly, Staff does not have access to the actual capacity values during the most recent peak season for every non-dispatchable renewable generating unit within ERCOT, which is what it would need to calculate a denominator that is consistent with the numerator required by 16 TAC § 25.91(0.
Staff recommends evaluating applications using both of the calculations described above.
This suggested method provides continuity until market participants provide more accurate data or the rule is amended, Staff said