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by Cody Faulk

Long-time electric distribution customers of Sharyland Utilities will enjoy a new year with lower rates—some by as much as 40%—and have new smart meters on their way. All of this is the result of an agreement reached by Sharyland and Oncor in which the two utilities will exchange certain assets with each other, resulting in all of Sharyland Utilities’ existing retail-electric-delivery customers becoming Oncor’s retail-electric-delivery customers with Sharyland Utilities serving only as a transmission-service provider. This transaction was approved by the Public Utility Commission of Texas (“PUC”) on October 13, 2017, and the agreement between the utilities closed shortly after on November 9, 2017.

Sharyland Utilities is currently a transmission-distribution utility serving approximately 54,000 metered and unmetered accounts in a service territory that includes 29 counties and 4 noncontiguous, geographically diverse divisions. Sharyland’s distribution service area includes the cities of McAllen, Mission, Midland, Big Spring, Colorado City, Stanton, Brady, and Celeste.

Sharyland has historically had the highest retail distribution rates in Texas, a point of contention amongst regulators. The proposed transaction will provide significant rate relief to Sharyland Utilities’ current retail-electric-delivery customers in the Stanton, Brady, and Celeste divisions. In addition, the originally-proposed rate increase for Sharyland Utilities’ retail-electric-delivery customers in the McAllen division will be avoided.

All of Sharyland’s 54,000 distribution customers will now be customers of Oncor. Oncor owns and operates facilities used to transmit and distribute electricity in northeast, central, and west Texas, including the Dallas-Fort Worth Metroplex area. Oncor delivers electricity to more than 3.4 million wholesale and retail customers in over 400 cities and over 90 counties in Texas through one of the largest integrated electric systems in the United States and the largest in Texas.

Oncor’s existing customers will not be on the hook for the effectuation of this transaction, as Oncor has committed that none of the fees and expenses—or any of the other transaction costs of the proposed transaction—will be borne by Oncor’s customers. This commitment does not exempt existing Oncor customers from seeing a slight increase in rates as a result of Oncor taking on Sharyland’s retail distribution customers. As part of the regulatory approvals associated with the asset swap, Oncor was granted a base-rate revenue requirement increase of 3.4 percent in PUC Docket No. 46957, which will go into effect post closing.

The transition began on December 11, 2017. Sharyland customers will be transitioned to Oncor in groups on a rolling basis, based upon their monthly scheduled meter reading date occurring between December 11, 2017 and January 9, 2018. The bill based on the meter reading during this timeframe will be the final electric bill calculated with Sharyland rates. All customers were transitioned by January 9, 2018. Approximately 30 days after the customers’ actual transition date, customers will receive their first electric bill calculated with new, lower Oncor rates. The entire process is intended to be seamless for customers and will be handled between Sharyland, Oncor, and other market participants, such as Retail Electric Providers (REPs). The PUC has authorized Oncor to deploy advanced meters over the coming year, and Oncor is in the process of developing its deployment plan.

Cody Faulk is an Associate in the Firm’s Energy and Utility Practice Group, and his practice focuses on a wide range of utility regulatory and ratemaking matters. If you would like any additional information or have questions related to this article or other matters, please contact Cody at 512.322.5817 or cfaulk@ lglawfirm.com.

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