Application for Annual True-Up of Transition Charges by CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Transition Bond Company, LLC
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CenterPoint Energy Houston Electric, LLC, acting as servicer for CenterPoint Energy Transition Bond Company, LLC, has filed an application with the Public Utility Commission of Texas for an annual adjustment (true-up) of transition charges. This adjustment ensures that sufficient funds are collected to pay principal and interest on transition bonds and other qualified costs. The filing includes recalculations of cost allocations due to changes in customer load, as required by regulatory rules, and will be effective November 1, 2003. The process follows established procedures and regulatory requirements.
EX-10.3 6 h07974exv10w3.txt APPLICATION OF CENTERPOINT ENERGY HOUSTON ELECTRIC EXHIBIT 10.3 PUC DOCKET NO. 28252 APPLICATION OF CENTERPOINT SECTION PUBLIC UTILITY COMMISSION ENERGY HOUSTON ELECTRIC,LLC SECTION ON BEHALF OF CENTERPOINT SECTION OF TEXAS ENERGY TRANSITION BOND SECTION COMPANY, LLC FOR A STANDARD SECTION TRUE-UP OF TRANSITION CHARGES SECTION CONTACT: JAMES N. PURDUE ###-###-#### FAX: (713) 207-9819 EMAIL: ***@*** AUGUST 1, 2003 TABLE OF CONTENTS
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2 APPLICATION OF CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC ON BEHALF OF CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC FOR A STANDARD TRUE-UP OF TRANSITION CHARGES DESCRIPTION OF TRUE-UP BACKGROUND In accordance with the Financing Order adopted in Application of Reliant Energy, Incorporated for Financing Order to Securitize Regulatory Assets and Other Qualified Costs, Docket No. 21665(1) and in conformance with the Issuance Advice Letter of October 18, 2001 CenterPoint Energy Transition Bond Company, LLC(2) securitized certain regulatory assets and other qualified costs on October 24, 2001. CenterPoint Energy Houston Electric, LLC (Company) is the servicer for CenterPoint Energy Transition Bond Company, LLC to bill, collect, receive and adjust Transition Charges imposed pursuant to Schedule TC. Schedule TC sets out the rates and terms and conditions under which Transition Charges will be billed and collected. Schedule TC is contained in CenterPoint Energy Houston Electric, LLC's tariff at Sheet No. 6.7. PURPOSE OF FILING The Company is filing for an Annual Standard True-up of TC Charges in accordance with Schedule TC to be effective November 1, 2003. ANNUAL TRUE-UP Schedule TC, Section 8, Standard True-up For Adjustment of Transition Charges, provides that Transition Charges will be adjusted annually effective November 1st to ensure that the expected collection of Transition Charges is adequate to pay principal and interest on the Transition Bonds when due pursuant to the expected amortization schedule, pay as due all other qualified costs and to fund the overcollateralization account to the required level. Schedule TC Section 8, Part A: True-up Adjustment Procedure For Standard and Interim True-ups provides that Annual Adjustments will be filed 15 days prior to the effective date of the Adjusted Transition Charges unless an adjustment to the Regulatory Asset Allocation Factors ("RAAF") is required under Section 6 (including Intra-Group Allocation Adjustments under Part D of Section 6) in which case the annual adjustment will be filed not later than 90 days prior to the effective date. The Company has determined that an adjustment to the RAAFs is required under Section 6 of Schedule TC and therefore is filing not later than 90 days prior to the November 1, 2003 effective date of the Adjusted Transition Charges. - ------------------- (1) Reliant Energy, Incorporated was converted into CenterPoint Energy Houston Electric, LLC, effective August 31, 2002. (2) CenterPoint Energy Transition Bond Company, LLC was previously Reliant Energy Transition Bond Company, LLC. 3 ADJUSTMENTS TO RAAFs The RAAFs are subject to adjustment using the procedures provided at Section 6 of Schedule TC. Any adjustment required under Section 6 will be made effective on the date of an annual Standard True-up Adjustment. ADJUSTMENT TO RAAFs DUE TO LOAD LOSS QUALIFYING UNDER UTILITIES CODE 39.262(k) Schedule TC, Section 6, Part A provides that the RAAFs shall be adjusted consistent with the Utilities Code 39.262(k) to reflect the loss of loads due to operations of facilities that are "Eligible Generation" as defined in PUC Subst. Rule 25.345 (c) (2) ("Eligible Generation") except that Part A shall not apply to, and the term "Eligible Generation" shall not include, load loss due to installation and operation of small power production facilities with a rated capacity of 10 megawatts or less. Any adjustments required under Section 6 Part A will be calculated under the terms of Schedule TC: Step 1 - The Company will determine the amount of service provided during the twelve months ended April 30, 1999 that has been replaced by Eligible Generation (excluding amounts reflected in a prior adjustment under this Part A) and sum the losses by Transition Charge Class Step 2 - The Company will recalculate the RAAFs for all Transition Charge Classes using the spreadsheet and data used to compute the initial RAAFs but reducing the demand allocation factors for each Transition Charge class to reflect the cumulative losses for that class as calculated under Step 1 (including losses for which RAAF adjustments were made in prior years). No other changes to the spreadsheet or data used to compute the initial RAAFs will be made. Appendix A to Schedule TC contains the spreadsheet and data used to compute the initial RAAFs. Step 3 - An Adjusted Group Allocation Percentage for each TC Group is then calculated as the sum of the Adjusted RAAFs (computed under Step 2) for all Transition Charge Classes within the TC Group. The Company, in its previous Standard True-up filing(3), adjusted the RAAFs to eliminate retail loads served by six facilities that qualified as Eligible Generation under the Commission's rules. The Commission in Docket No. 26402 approved a settlement finding that the Company's proposed adjustments for the customers of the six facilities was appropriate(4). In this filing the Company has continued to treat the retail customers of those six facilities as eligible for reduced transition charges under Utilities Code 39.262(k).The Commission's final order in Docket 26402 also found that one additional facility qualified as Eligible Generation under the Commission's rules and that the retail customer of that facility (Bayer Corporation) was eligible for reduced Transition Charges under Utilities Code 39.262(k)(5). The Company has adjusted the RAAFs to reflect the Commission's determination that Bayer Corporation is eligible for reduced Transition Charges. The Company has recalculated the RAAFs according to the procedures described above. The adjusted RAAFs effective November 1, 2003 are calculated at Appendix A of this filing. - ------------------- (3) Application of CenterPoint Energy Houston Electric. LLC on behalf of CenterPoint Energy Transition Bond Company, LLC For a Standard True-up of Transition Charges, Docket No. 26402. (4) Id. Conclusions Of Law No. 6. (5) Id. Conclusions of Law No. 8A, 8B, and 9. 4 ADJUSTMENT TO RAAFs NOT ATTRIBUTABLE TO ELIGIBLE GENERATION Schedule TC, Section 6, Parts B and C provide that under certain circumstances, generally related to a load loss in a particular TC Class or TC Group that exceeds prescribed thresholds when compared to prior base periods, the RAAFs will be adjusted. The Company has determined that no adjustments are required under Parts B and C. The Company has also determined that no adjustments to the RAAFs are required under Section 6, Part D, which provides for adjustments if the Commission enters an order pursuant to Section 39.253(f) of the Utilities Code. The Utilities Code at Section 39.253(f) provides details for a change to the allocation methodology for stranded cost if stranded cost of investor-owned utilities exceeds $5 billion on a statewide basis. EXPLANATION OF ATTACHED PAGES "ATTACHMENT 5" ALLOCATION OF COSTS TO CUSTOMER CLASSES This page shows the allocation of costs to customer classes and the resulting TC Charges by TC Class for the period beginning November 1, 2003. The format is consistent with that included in the Financing Order. REVENUE REQUIREMENT This page provides the revenue required for the annual period to service the transition bonds including; principal, interest, operating expense, overcollateralization, servicing fees, and bad debt expense as well as an adjustment for over/under recovery from the prior period. FORECAST BILLING DETERMINANTS AND kWh This page provides a forecast of billing determinants and kWh by TC class for the period beginning November 1, 2003. "APPENDIX A" REGULATORY ASSET ALLOCATION FACTORS (RAAFs) These pages are consistent with the template included in the Financing Order. The data has been updated to adjust the RAAFs to reflect the continued eligibility of retail customers served by the six facilities treated as Eligible Generation in the true-up filing in Docket No. 26402 plus the eligibility of Bayer Corporation as ordered by the Commission in that docket. SCHEDULE TC Schedule TC provides the details for billing and collecting TC charges. This filing includes a revised Schedule TC. The revisions to Schedule TC are limited to the following: Additions: Attachment 2, - Provides RAAFs for the period beginning November 1, 2003. Modifications: Section 7: Matrix of Transition Charges - Per unit $ updated for all Transition Charge Classes. Page numbering changed to recognize addition of "Attachment 2" which results in 28th page to Schedule TC. Typographical error on page 23 corrected; "or. After" changed to "or, after". Revision Number: "4th" changed to "5th". Effective: "12/11/02" changed to "11/1/03" 5 YEAR 3 ATTACHMENT 5 ALLOCATION OF COSTS TO CUSTOMER CLASSES
TC Revenue Requirement - Year 3 Forecast Year Ending 10-31-04
* 35 days lag in collection of new rate + 17.5 days effective lag in collection based on one month of prorated bills = 52.5 days lag in revenue collection. 7 TC FORECAST BILLING DETERMINANTS NOVEMBER 2003 - OCTOBER 2004
8 2003-2004 Billing Determinants Section IV - Rate Schedules Appendix A Transition Charges - Schedule TC Page 1 of 2 RELIANT ENERGY HL&P Applicable: Entire Service Area YEAR 3 REGULATORY ASSET ALLOCATION FACTORS (RAAF)
Revision Number: 2nd Effective: 11/01/03 9 Section IV - Rate Schedules Appendix A Transition Charges - Schedule TC Page 2 of 2 RELIANT ENERGY HL&P Applicable: Entire Service Area YEAR 3 REGULATORY ASSET ALLOCATION FACTORS (RAAF)
Revision Number: 2nd Effective: 11/01/03 10 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 1 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 6.1.1.7- SCHEDULE TC- TRANSITION CHARGES SECTION 1: APPLICABILITY This schedule sets out the rates and terms and conditions under which Transition Charges will be billed and collected by CenterPoint Energy Houston Electric, LLC (Company), any successor servicer(s) and any retail electric providers (REP) or collection agents billing or collecting Transition Charges on behalf of CenterPoint Energy Transition Bond Company, LLC (SPE). The Transition Charges were authorized by the Financing Order approved by the Public Utility Commission of Texas (Commission) in Docket No. 21665 on May 31, 2000 (Financing Order). Pursuant to terms of the Financing Order and the requirements of Section 39.301 et seq. of the Texas Utilities Code, all of the Company's rights under the Financing Order, including the right to bill and collect Transition Charges and to adjust Transition Charges pursuant to this Schedule TC, were transferred to the SPE in connection with the issuance of transition bonds. The rights transferred to the SPE are "transition property" of the SPE (as defined in Section 39.304 of the Utilities Code). On the effective date of this Schedule TC, the Company will act as servicer on behalf of the SPE to bill, collect, receive and adjust Transition Charges imposed pursuant to this Schedule TC. However, the SPE may select another party to serve as servicer or the Company may resign as servicer in accordance with terms of the Servicing Agreement and the Financing Order. A successor servicer selected under these conditions will assume the obligations of the Company as servicer under this schedule. As used in this schedule, the term "Servicer" includes any successor servicer. All actions by the Company under this Schedule TC, including collection of Transition Charges, will be undertaken solely in its role as servicer under the Servicing Agreement between the Company and the SPE dated October 24, 2001. This schedule is applicable to: 1. Retail customers located within the Company's certificated service area as it existed on May 1, 1999 who receive electric transmission and/or distribution service either directly from the Company or through a REP served by the Company and to the facilities, premises and loads of such retail customers; 2. Retail customers located within the Company's certificated service area as it existed on May 1, 1999 who are presently receiving transmission and/or distribution service from another utility, electric cooperative or municipally owned utility (T or D Provider), and whose request to change service to the other T or D Provider was made after May 1, 1999; 3. Retail customers located within the Company's certificated service area as it existed on May 1, 1999 and who are served by New On-Site Generation. New On-Site Generation means "New On-Site Generation" as defined in Section 25.345 (c) (1) of the Commission's Substantive Rules. Revision Number: 5th Effective: 11/1/03 11 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 2 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 4. REPs that serve retail customers located within the Company's certificated service area as it existed on May 1, 1999. 5. Any other entity which, under the terms of the Financing Order or the Utilities Code, may be obligated to pay, bill, collect, or adjust the Transition Charges. 6. Effective January 1, 2002, this schedule will also become applicable to public retail customers located within the Company's certificated service area as it existed on May 1, 1999 who purchase power from the General Land Office as provided for in the Utilities Code, Section 35.102. "Retail customers", as used in 1, 2, and 3 above, includes all "public retail customers" as defined in Utilities Code, Section 35.101 except for those public retail customers included in 6 above. SECTION 2: CHARACTER OF TRANSITION CHARGES Transition Charges are non-bypassable charges. All Transition Charges other than those applicable to New On-Site Generation are computed and paid on the basis of individual end-use retail customer consumption or demand. In accordance with Utilities Code Section 39.252 (b) and Section 25.345 (i) (3) of the Commission's Substantive Rules, the Transition Charges applicable to use of New On-Site Generation that results in a "material reduction" of the customer's use of energy delivered through the Company's transmission and distribution facilities (as defined in Section 25.345 (i) (4) of the Commission's Substantive Rules) are computed and paid based on the output of the on-site generation used to meet the internal electric requirements of the customer. Customers with New On-Site Generation will also be required to pay the Transition Charges applicable to energy actually delivered to the Customer through the Company's facilities. Individual end-use retail customers are responsible for paying Transition Charges billed to them in accordance with the terms of this Schedule TC whether the charges are billed directly by Servicer or are included in the bills submitted to the customer by an REP or another entity. Payment is to be made to the entity that bills the customer in accordance with the terms of the Servicing Agreement and the Financing Order. The billing entity may be the Company, a successor servicer, an REP or an entity designated to collect Transition Charges in place of the REP. Prior to January 1, 2002, the Transition Charges for retail customers served directly by the Company are included in the otherwise applicable Company rates under which the customer takes service and will not increase the total amounts paid by retail customers. Prior to and after January 1, 2002, the Transition Charges to retail customers who are not served directly by the Company (including retail customers who take service from REPs after the beginning of customer choice and participants in a Customer Choice Pilot Project as provided in Utilities Code Section 39.104) but whose facilities, premises, and loads are subject to Transition Charges billed and collected pursuant to this Schedule TC, are separate charges to be paid in addition to Revision Number: 5th Effective: 11/1/03 12 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 3 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 any other applicable charges for services received. After January 1, 2002, although the Transition Charges are separate charges, they may be included within other charges of the billing entity. The REP or entity designated to collect Transition Charges in place of the REP will pay Transition Charges (less an allowance for charge-offs calculated pursuant to this Schedule TC) to Servicer in accordance with the requirements of the Financing Order and this Schedule TC whether or not it has collected the Transition Charges from its customers. To the extent that the REP's actual charge-offs differ from the charge-off allowance, adjustments will be made pursuant to this Schedule TC. The REP will have no right to reimbursement other than as expressly set out in this Schedule TC. Servicer will remit collections to the SPE in accordance with the terms of the Servicing Agreement. SECTION 3: TERM This Schedule TC is effective beginning on the date the transition bonds are issued. Schedule TC will remain in effect as provided in the Financing Order until the Transition Charges collected and remitted to the SPE are sufficient to satisfy all obligations of the SPE to pay principal and interest on the transition bonds (as due over the 12 year term of the transition bonds) and to pay all other qualified costs as provided in the Financing Order. However, in no event will the Transition Charges be billed for service provided after 15 years from issuance of the transition bonds, or sooner if the transition bonds are paid in full at an earlier date. This Schedule TC is irrevocable. SECTION 4: TRANSITION CHARGE CLASSES Transition Charges are calculated and applied by Transition Charge Class. There are 15 Transition Charge Classes, nine of which are Capped Classes. The Transition Charge Classes are defined as follows: RESIDENTIAL CLASS: The Residential Class is made up of (i) every customer that is served under Company rate schedule RS or RTD, and (ii) every customer that was served under Company rate schedule RS or RTD on the day before the customer discontinued taking service from the Company on a base rate tariff in effect on September 1, 1999 pursuant to Utilities Code Section 39.052 (a), (herein referred to as a "frozen rate schedule"), and (iii) each new customer that was not served by the Company under any frozen rate schedule, but is the type of customer which, if it had been served by the Company under frozen rate schedules would have qualified for service under the Company's rate schedules RS or RTD. MGS CLASS: The MGS Class is made up of (i) every customer that is served under Company rate schedule MGS, and (ii) every customer that was served under Company Revision Number: 5th Effective: 11/1/03 13 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 4 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 rate schedule MGS on the day before the customer discontinued taking service from the Company on a frozen rate schedule, and (iii) each new customer that was not served by the Company under any frozen rate schedule, but is the type of customer which, if it had been served by the Company under a frozen rate schedule would have qualified for service under the Company's rate schedule MGS and whose demand is estimated by the Company to be less than 400 kVa. This class includes customers served under Rider GLTC. Customers served under rate schedules EIS, HVP and CSB are included in the MGS class if the customer's contract for service provides that the MGS rate is the basis for pricing. LGS CLASS: The LGS Class is made up of (i) every customer that is served under rate schedule LGS, and (ii) every customer that was served under Company rate schedule LGS on the day before the customer discontinued taking service from the Company on a frozen rate schedule, and (iii) each new customer that was not served by the Company under any frozen rate schedule, but is the type of customer which, if it had been served by the Company under a frozen rate schedule would have qualified for service under the Company's rate schedules LGS and whose demand as estimated by the Company, if served at less than 60,000 volts, is 400 kVa or greater; or if served at 60,000 volts or greater, is at least 400 kVa but less than 2,000 kVa. This class includes customers served under Rider SEI. Customers served under rate schedules EIS, HVP and CSB are included in the LGS class if the customer's contract for service provides that the LGS rate is the basis for pricing. LOS-A CLASS: The LOS-A Class is made up of (i) every customer that is on rate schedule LOS-A, and (ii) every customer that was served under Company rate schedule LOS-A on the day before the customer discontinued taking service from the Company on a frozen rate schedule, and (iii) each new customer that was not served by the Company under any frozen rate schedule, but is the type of customer which, if it had been served by the Company under a frozen rate schedule would have qualified for service under the Company's rate schedule LOS-A and has a demand as estimated by the Company of 2,000 kVa or greater. Customers served under rate schedules EIS and HVP are included in the LOS-A class if the customer's contract for service provides that the LOS-A rate is the basis for pricing. LOS-B CLASS: The LOS-B Class is made up of (i) every customer that is served under rate schedule LOS-B, and (ii) every customer that was served under Company rate schedule LOS-B on the day before the customer discontinued taking service from the Company on a frozen rate schedule. Customers that were not served by the Company under any frozen rate schedule may not be included in this class. NON-METERED LIGHTING CLASS: The Non-Metered Lighting Class is made up of (i) every customer which is currently served under rate schedules SPL, MLS or MTA, and (ii) every customer that was served under Company rate schedules SPL, MLS or MTA on the Revision Number: 5th Effective: 11/1/03 14 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 5 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 day before the customer discontinued taking service from the Company on a frozen rate schedule, and (iii) each new customer which was not served by the Company under any frozen rate schedule, but is taking outdoor lighting services which are provided on an unmetered basis using lighting fixtures controlled by photo-electric devices which would have qualified for service under the Company's frozen rate schedules SPL, MLS and MTA. In addition to the six Transition Charge Classes described above, there will be nine additional Transition Charge Classes, each of which is a capped class ("Capped Classes"). Each of the Capped Classes will be made up solely of customers that actually received service from the Company during the 12-month period ended April 30, 1999 under the Company rate schedule related to the class. The nine Capped Classes, and the related rate schedule, are as follows:
Each customer in one or more of the nine Capped Classes will be charged the Transition Charges for the applicable class only for service the customer actually receives during the billing period up to the Monthly Cap. The Monthly Cap for each customer will be based on the amount of service the customer received under the related rate schedule during the 12-month period ended April 30, 1999 and calculated as follows: (1) For customers taking stand alone standby service (SBI and/or SES without other service), the Monthly Cap for SBI and SES will be the highest demand under the respective rate, during the 12-month period ended April 30, 1999. If a customer begins service under SES and/or SBI after April 30, 1999, the Monthly Cap for such customer's will be the highest demand under rate SES or SBI, as applicable, during the period from April 30, 1999 to January 1, 2002, if the customer provides the Company adequate documentation that (i) the additional load served on-site load normally served by the customer's on-site generation and (ii) the customer's on-site generation was out of service due to forced outage or maintenance. If the customer does not provide the required documentation, the additional load will be billed using the Transition Charges applicable to the LGS Class for distribution voltage customers or LOS-A Class for transmission voltage customers. Revision Number: 5th Effective: 11/1/03 15 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 6 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 (2) For customers taking SBI and/or SES in combination with other services, the Transition Charge for additional load taken in excess of the Monthly Cap will be the Transition Charge for the LOS-A class restated and applied as a cents per KWh charge if the customer provides the Company adequate documentation that (i) the additional load was lawfully served without use of the Company's transmission and distribution facilities and (ii) the customer's on-site generation was out of service due to forced outage or maintenance. If the customer does not provide the required documentation, the additional load will be billed using the Transition Charges applicable to the LOS-A Class for transmission voltage customers applied on a kW basis. (3) For any SCP customer that also receives service under another non-Capped Class, the SCP rate will have a Monthly Cap based on the amount of service the customer received under the SCP rate schedule during the 12-month period ended April 30, 1999. The Monthly Cap will be the customer's monthly maximum hourly kW under the SCP rate schedule during the peak hours as defined herein, summed for the 12-month period ended April 30, 1999 and divided by the number of months during which the customer actually consumed power under the SCP rate schedule. (4) For all other customers in Capped Classes, the Monthly Cap will be the customer's monthly maximum hourly kW under the related rate schedule during the peak hours as defined herein, summed for the 12-month period ended April 30, 1999 and divided by the number of months during which the customer actually consumed power under the rate schedule. For monthly service in excess of the Monthly Cap(s), the charge associated with customer's Transition Charge Class will apply. If the customer is served at distribution voltage and did not have service associated with one of the six non-capped Transition Charge Classes, the customer will be required to pay the Transition Charges applicable to the LGS Class for all monthly service in excess of its Monthly Cap. If the customer is served at transmission voltage and did not have service associated with one of the six non-capped Transition Charge Classes, the customer will be required to pay the Transition Charges applicable to the LOS-A Class for all monthly service in excess of its Monthly Cap. The categories of service historically provided by the Company may cease to exist after electric business activities are unbundled pursuant to Section 39.051 of the Utilities Code. Similarly, after the advent of customer choice under Section 39.102 of the Utilities Code, retail customers will receive service that may not only have different names, but may have different characteristics than the service historically provided by the Company. The classifications set out in the preceding paragraphs will be applied to determine the Transition Charge applicable to each customer without regard to the descriptions that may be used to describe the services provided to retail customers. SECTION 5: REGULATORY ASSET ALLOCATION FACTORS Revision Number: 5th Effective: 11/1/03 16 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 7 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 The initial Regulatory Asset Allocation Factors ("RAAF") for each Transition Charge Class are set out below. These initial RAAFs will remain in effect throughout the life of the transition bonds unless a modification of the factors is made pursuant to the allocation factor adjustment provisions in Section 6 of this Schedule TC: INITIAL REGULATORY ASSET ALLOCATION FACTORS
SECTION 6: ALLOCATION FACTOR ADJUSTMENTS The RAAFs will be subject to adjustment using the procedures in this Section 6. Any adjustment required under this Section 6 will be made effective on the date of an annual Standard True-up Adjustment. Required adjustments will be made in the following order: first, adjustments will be made under Part A; second, adjustments will be made under Part B; and third, adjustments will be made under Part C. Revision Number: 5th Effective: 11/1/03 17 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 8 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 For purposes of determining whether an allocation adjustment is required under Parts B, and C of this Section 6 and adjusting RAAFs pursuant to those Parts, the Transition Charge Classes will be combined into three groups (TC Groups) as follows: TC GROUPS
PART A: ADJUSTMENTS DUE TO LOAD LOSS QUALIFYING UNDER UTILITIES CODE SECTION 39.262(k) The RAAFs shall be adjusted consistent with the Utilities Code to reflect the loss of loads due to operations of facilities that are "Eligible Generation" as defined in PUC Subst. Rule 25.345 (c) (2) ("Eligible Generation") except that this Part A shall not apply to, and the term "Eligible Generation" shall not include, load loss due to installation and operation of small power production facilities with a rated capacity of 10 megawatts or less. Any adjustments required under this Part A will be calculated as follows: Step 1 - The Company will determine the amount of service provided during the twelve months ended April 30, 1999 that has been replaced by Eligible Generation (excluding amounts reflected in a prior adjustment under this Part A) and sum the losses by Transition Charge Class. Step 2 - The Company will recalculate the RAAFs for all Transition Charge Classes using the spreadsheet and data used to compute the initial RAAFs but reducing the demand allocation factors for each Transition Charge class to reflect the cumulative losses for that class as calculated under Step 1 (including losses for which RAAF adjustments were made in prior years). No other changes to the spreadsheet or data used to compute the initial RAAFs will be made. Appendix A to this Schedule TC contains the spreadsheet and data used to compute the initial RAAFs. Step 3 - An Adjusted Group Allocation Percentage for each TC Group shall then be calculated as the sum of the Adjusted RAAFs (computed under Step 2) for all Transition Charge Classes within the TC Group. Revision Number: 5th Effective: 11/1/03 18 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 9 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 PART B: INTER-GROUP ADJUSTMENTS DUE TO CUMULATIVE LOAD LOSS NOT ATTRIBUTABLE TO ELIGIBLE GENERATION In connection with each annual Standard True-up Adjustment, the Company will compare the projected billing determinants being used to set Transition Charges for each Transition Charge Class during the ensuing year to the billing determinants in effect on January 1, 2002 (adjusted to exclude any billing determinants attributable to Eligible Generation if any adjustment was made under Part A after January 1, 2002) (such billing determinants as adjusted are hereafter referred to as the "January 1, 2002 Base Billing Determinants"). The RAAFs of all Transition Charge Classes in all TC Groups will be adjone or more TC Groups experience load loss (calculated excluding load loss attributable to Eligible Generation for which adjustments have been made under Part A but including load loss attributable to small power production facilities of 10 megawatts or less) aggregating 50% or more on a cumulative basis when measured against the January 1, 2002 Base Billing Determinants. The adjustments under this Part B will be made using the following procedures: Step 1: For each TC Group, if CTCOL(G) / Then, no RAAF adjustment will occur and PBR(G) > or = 0.50 any adjustment made in previous years under Part B shall be reversed For each TC Group, if CTCOL(G) / Then, a RAAF adjustment will be PBR(G) < 0.50 calculated pursuant to steps 2 through 5. where: ctcol(g) = cumulative test collections for group g = (sigma)cc(c)* fbu(c) for all classes (c) in group (g) fbu(c) = forecasted billing determinants for class c cc(c)= cumulative test charge for class c = {raaf(c)*pbr(t)}/ bbd(c) raaf(c)= the raafs then in effect, or if an adjustment has been made under part a, the adjusted raafs from part a pbr(t)= total periodic billing requirement for upcoming period bbd(c)=base billing determinants (as measured on january 1, 2002) for class c pbr(g)= periodic billing requirement for group = (sigma)raaf(c)* pbr(t) for all classes in g revision number: 5th effective: 11/1/03 19 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 10 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 Step 2: For each TC Group in Step 1 where CTCOL(G) / PBR(G) < 0.50, a reduction amount (red(g)) will be calculated for group g where red(g)= 0.5 (pbr(g) - ctcol(g)) step 3: for all tc groups, a reallocation amount for that group (ra(g)) shall be calculated where: ra(g) = gap(g) * {(sigma)red(g)} for all groups where: gap(g) = group allocation percentage = (sigma)raaf(c) for all classes in the group step 4: for all tc groups a group allocation percentage adjustment (gapa(g)) shall be calculated where: gapa(g)= (ra(g)-red(g)) / pbr(t) where: (sigma)gapa(g) = 0 for all g step 5: for all tc classes, the raaf adjustment for class c (raafa(c)) will be calculated for use in calculating adjustments to the transition charges under section 8, part a where raafa(c)= gapa(g) * (raaf(c)/gap(g)) revision number: 5th effective: 11/1/03 20 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 11 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 PART C: INTER-GROUP ADJUSTMENTS DUE TO YEAR-OVER-YEAR LOAD LOSS NOT ATTRIBUTABLE TO ELIGIBLE GENERATION In connection with each annual Standard True-up Adjustment, the Company will compare the projected billing determinants being used to set Transition Charges for each Transition Charge Class during the ensuing year to the forecasted billing determinants used to develop the then currently effective Transition Charges for the class minus the Eligible Generation load loss for the class determined in Step 1 of Part A after the billing determinant for the currently effective Transition Charges was determined (such adjusted amount is hereinafter referred to as the "Prior Year Billing Determinant"). The RAAFs of all Transition Charge Classes in all TC Groups will be adjusted if (i) one or more TC Groups experience load loss (calculated excluding load loss attributable to Eligible Generation for which adjustments have been made under Part A but including load loss attributable to small power production facilities of 10 megawatts or less) of 10% or greater on a year-over-year basis when compared to the Prior Year Billing Determinants or (ii) any TC Group for which an adjustment was made under this Part C in one or more prior years experiences load growth resulting in projected billing determinants for the current year at a level which, if they had existed in one or more of such prior year(s) would have resulted in no adjustment to RAAFs in such prior year(s). No reduction in RAAFs will be made under this Part C for any TC Group for which a reduction amount was computed under Step 5 of Part B. The adjustments under this Part C will be made using the following procedures: Step 1: For each TC Group not adjusted under Part B, If YTCOL(G) / PBR(G) > or = 0.90 Then, no RAAF adjustment will occur. If YTCOL(G) / PBR(G) > 1.00 Then, no RAAF adjustment will occur and any prior year adjustments made under C will be reversed pursuant to step 6. If YTCOL(G) / PBR(G) < 0.90 then, a raaf adjustment will be calculated pursuant to steps 2 through 5. revision number: 5th effective: 11/1/03 21 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 12 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 Where: YTCOL(G) = year-to-year test collections for group G = (SIGMA)YC(c)* FBU(c) for all classes (c) in Group (G) FBU(c) = forecasted billing determinants for class c YC(c)= year-to-year test charge for class c = {RAAF(c)*PBR(T)}/ FBU(c)(-1) RAAF(c)= the RAAFs then in effect, or if an adjustment has been made under Part A, the adjusted RAAFs from Part A PBR(T)= total periodic billing requirement for upcoming period FBU(c)(-1)=prior year's forecasted billing determinants for class c PBR(G)= periodic billing requirement for group = (SIGMA)RAAF(c)* PBR(T) for all classes in the group Step 2: For each TC Group in Step 1 where YTCOL(G) / PBR(G) < 0.90, a year to year reduction amount (yred(g)) shall be calculated where yred(g)= 0.9 (pbr(g) - ytcol(g)) step 3: for all tc groups, a year to year reallocation amount (yra(g)) shall be calculated where: yra(g)= gap(g) * {(sigma)yred(g)} for all groups where: gap(g) = group allocation percentage = (sigma)raaf(c) for all classes in the group step 4: for all tc groups a year to year group allocation percentage adjustment (ygapa(g)) shall be calculated where: ygapa(g)= (yra(g)-yred(g)) / pbr(t) where (sigma)gapa(g) = 0 for all g revision number: 5th effective: 11/1/03 22 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 13 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 Step 5: For all TC classes, a year to year RAAF adjustment (YRAAFA(c)) shall be calculated for use in calculating adjustments to the Transition Charges under Section 8, Part A where: YRAAFA(c)= YGAPA(G)*(RAAF(c)/GAP(G)) Step 6: if{(SIGMA)(YC(c)*FBU(c))}/{(SIGMA)(YC(c)*FBU(c)(t-1))} > or = .90 (for all classes in group G) then the adjustment made in year t shall be discontinued. if{(SIGMA)(YC(c)*FBU(c))}/{(SIGMA)(YC(c)*FBU(c)(t-1))} < .90 (for all classes in group g) then the adjustment made in year t carries forward. where fbu(c)(t-1) is the forecasted billing determinants from the year prior to the year an adjustment was made adjusted to reflect any adjustments made under part a between year t-1 and the current year. revision number: 5th effective: 11/1/03 23 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 14 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 PART D: ADJUSTMENTS TO BASE CLASS ALLOCATIONS The methodology used to allocate qualified costs and determine Transition Charges shall not be changed except in the limited circumstance described in this paragraph. If, but only if, the Commission enters an order pursuant to Section 39.253 (f) of the Utilities Code ("Stranded Cost Allocation Order") that (A) requires the Company to allocate stranded costs in a manner which complies with that section and is different from the methodology used for allocation and collection of Transition Charges under the Financing Order in Docket No. 21665, and (B) also determines that it is necessary to adjust the initial RAAFs to comply with the requirements of Section 39.253 (f), the Company will recalculate the initial RAAFs to comply with the requirements of such order and will also recalculate all adjustments which have been made pursuant to Parts A, B, C, and D of this Section in order to recalculate the Adjusted RAAFs after giving effect to the revised starting point. Within 45 days after the Stranded Cost Allocation Order becomes final and is not subject to appeal, Servicer, on behalf of the SPE, will file recomputed Transition Charges reflecting the effect of changing the initial RAAFs. Any changes in Transition Charge resulting from a change in the initial RAAFs under this paragraph shall be made prospectively from the date recomputed Transition Charges become effective which effective date shall be 30 days after the recomputed Transition Charges are filed at the Commission. Transition Charges for services rendered prior to such effective date will not be changed. Future changes to the RAAFs underlying the recomputed Transition Charges, if necessary under Parts A - D of this Section 6 will be computed pursuant to this Section 6. SECTION 7: TRANSITION CHARGES The Transition Charges to be applied beginning on the effective date of this Schedule TC are set out below. Transition Charges to be applied in subsequent periods (Adjusted Transition Charges) will be determined in the manner described in Section 8. TRANSITION CHARGES
Revision Number: 5th Effective: 11/1/03 24 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 15 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021
The Transition Charges shall be applied on a kW basis for all service provided at Transmission voltage and for all service provided to Capped Classes and to any LGS customer that also receives SES-Distribution service. The kW to be used in calculating the bill for those customers obligated to pay on a kW basis will be the highest kW measured over a one hour period occurring on weekdays (Monday through Friday) during the sixteen hours beginning with and including the hour that ends at seven (a.m.) (07:00) and extending until the hour that ends at ten p.m. (22:00), local time (central standard or central daylight saving time, as appropriate). The Transition Charges shall be applied on a kVa basis for all service provided at distribution voltage (other than service at distribution voltage to Capped Classes or to LGS customers that also receive SES-Distribution service) and whose kVa is greater than 10 kVa in the billing month. The kVa will be the highest kVa measured over a 15 minute period during the month if the metering equipment has indicators for measuring and recording only the highest demand during the billing period, otherwise if the metering equipment measures and records continuously for all 15 minute periods the kVa will be the average of the 4 highest 15 minute periods measured during the billing period. If the demand meters used to meter service to a customer measure service is on a kW basis instead of a kVa basis or measure in intervals different than 15 minutes e.g. 5, 10, 30 minutes, the transition charge to the customer will be based on the kW with the interval measurement period closest to a 15 minute period. Revision Number: 5th Effective: 11/1/03 25 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 16 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 Transition Charges will be applied on a kWh basis for those customers with watt-hour meters and those customers with demand meters whose measured demand is 10 kVa or less. Each retail customer shall be obligated to pay Transition Charges for its applicable class. The Transition Charge shall be applied to all service received by the customer during the applicable billing period. If a customer was taking service in more than one rate class through one point of service on April 30,1999, or on the day before the customer discontinued taking service from the Company on a frozen rate schedule, its Transition Charges shall be determined as follows: 1. For customers taking service under two or more rates through a single meter, the following order will be used to determine Transition Charges for the customer: (a) If the customer takes service in one or more Capped Classes (other than SCP) through a single meter, the service shall be allocated first to Capped Classes in ascending order of unit Transition Charges beginning with the Capped Class with the lowest unit Transition Charge. All service to the customer, up to the lesser of (i) the highest hourly on-peak kW for total premises load (Total kW) or the Monthly Cap for the class, shall be deemed to be service under the Capped Class with the lowest unit Transition Charge. If the Total kW is greater than the Monthly Cap for the class with lowest unit Transition Charge, the difference up to the Monthly Cap for the Capped Class with the next lowest unit Transition Charge will be deemed to be service under the Capped Class with the next lowest unit Transition Charge. The remainder will then similarly be allocated to each other Capped Class under which the customer is served until the Total kW has been allocated or all applicable Monthly Caps have been reached. (b) If the total amount allocated to Capped Classes under (a) is less than the Total kW, the remainder, up to the Monthly Cap for SCP shall be deemed to be service provided under SCP. (c) Any amount remaining after the allocations in (a) and (b) will be deemed to be service provided under the Transition Charge Class (other than Capped Classes and SCP) that is applicable to the customer. If the customer is not otherwise taking service under any Transition Charge Class (other than Capped Classes and SCP) the amount remaining after the allocations in (a) and (b) shall be deemed to be service under LOS-A, if the customer is served at transmission voltage, or under LGS, if the customer is served at distribution voltage. Revision Number: 5th Effective: 11/1/03 26 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 17 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 In addition, each customer which has New On-Site Generation shall pay an amount each month computed by multiplying the output of the on-site generation used to serve the internal electric requirements of the customer (either kW or kVa, as determined by the Transition Charge class for which the customer would qualify if it were being served by the Company or an REP) by the Transition Charge in effect for services provided to customers in that class during the month. This amount shall be in addition to any Transition Charges applicable to energy or demand actually delivered to the customer through the Company's or another T&D Provider's facilities. SECTION 8: STANDARD TRUE-UP FOR ADJUSTMENT OF TRANSITION CHARGES Transition Charges will be adjusted annually effective on November 1st to ensure that the expected collection of Transition Charges is adequate to pay principal and interest on the Transition Bonds when due pursuant to the expected amortization schedule, pay as due all other qualified costs and to fund the overcollateralization account to the required level. In addition, in limited circumstances the Transition Charges may be adjusted at other times but not more frequently than once each quarter (Interim Adjustments). The Interim Adjustments will be made if, after application of collections in accordance with the terms of the Transition Bond indenture, the actual principal balance of bonds outstanding at the next bond payment date will be more than 5% higher than the expected principal balance as set out on the expected amortization schedule. All annual and interim adjustments will be designed to cause (i) the outstanding principal balance of the Transition Bonds to be equal to the scheduled balance on the expected amortization schedule; (ii) the amount in the overcollateralization subaccount to be equal to the required overcollateralization level; (iii) the amount in the capital subaccount to be equal to the required capital plus any investment earnings on amounts in the capital subaccount to the extent that the investment earnings have not been released to the SPE and (iv) the reserve subaccount to be zero by the payment date immediately preceding the next adjustment or by the final payment date, if the next payment date is the final payment date. PART A: TRUE-UP ADJUSTMENT PROCEDURE FOR STANDARD AND INTERIM TRUE-UPS Servicer will calculate the Adjusted Transition Charges using the methodology described below and will file the Adjusted Transition Charges with the Commission. Annual adjustments will be filed 15 days prior to the effective date of the Adjusted Transition Charges unless an adjustment to the RAAFs is required under Section 6 (including Intra-Group Allocation Adjustments under Part D of Section 6) in which case the annual adjustment will be filed not later than 90 days prior to the effective date. Interim Adjustments will be filed not less than 15 days prior to the effective date of the Adjusted Transition Charges. The Adjusted Transition Charge for the upcoming period for each class (TCc) shall be computed as follows: Revision Number: 5th Effective: 11/1/03 27 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 18 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 For the residential class, TC(c)= PBR(T)*(RAAF(c)+RAAFA(c)+YRAAFA(c)(t))/FBU(c) For classes in the Commercial and Industrial TC Groups: TC(c)= TC(c)(-1) {(SIGMA)[PBR(T) * (RAAF(c)+RAAFA(c)+YRAAFA(c)(t))] / (SIGMA)(TC(c)(-1)*FBU(c))} For all classes in the applicable group. Where TC(C)(-1) = the transition charge for that class from the previous period PBR(T)= Periodic Billing Requirement for the ensuing period (the 12 months beginning on the effective date of the adjusted transition charges in the case of annual true-ups and the period until the next scheduled annual true-up in the case of interim adjustments). The Periodic Billing Requirement will be the amounts required to pay principal and interest on the Transition Bonds when due pursuant to the expected amortization schedule, pay as due all other qualified costs to fund the overcollateralization account to the required level and to recover any net system under-collections or credit any net system over-collections so that (i) the outstanding principal balance of the Transition Bonds will be equal to the scheduled balance on the expected amortization schedule; (ii) the amount in the overcollateralization subaccount will be equal to the required overcollateralization level; (iii) the amount in the capital subaccount will be equal to the required capital plus any investment earnings on amounts in the capital subaccount to the extent that the investment earnings have not been released to the SPE and (iv) the reserve subaccount will be zero by the payment date immediately preceding the next adjustment or by the final payment date, if the next payment date is the final payment date. RAAF(c) = the RAAFs then in effect, or if an adjustment has been made under Section 6, Part A, the adjusted RAAFs from Section 6, Part A. RAAFA(c)= the adjustment (if any) from Section 6, Part B, Step 5 YRAAFA(c)(t)= the adjustment from Section 6, Part C, Step 5 for every year t in which an adjustment was made unless that adjustment was discontinued under Section 6, Part C, Step 6. FBU(c)= the forecasted billing determinants for the upcoming period Revision Number: 5th Effective: 11/1/03 28 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 19 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 SECTION 9: BILLING AND COLLECTION TERMS AND CONDITIONS Transition Charges will be billed and collected as set forth in this Schedule TC. The terms and conditions for each party are set forth below. PART A: BILLING AND COLLECTION PRIOR TO CUSTOMER CHOICE A. Billing by Servicer to end-use customers: 1. Payment terms for each Transition Charge Class will be identical to those which are contained in the Company's rate schedules in effect on November 1, 1999 and applicable to customers in that class. 2. Servicer shall have the same right to terminate service for non-payment of Transition Charges as the Company has to terminate service for non-payment of charges under the Company's rate schedules. Any termination shall comply with applicable Commission rules. B. Billings by Servicer to T or D Providers: 1. When former retail customers of the Company in multiply certificated service areas are taking service from other T or D Providers, and the customer did not request to switch to the other T or D Provider prior to May 1, 1999, the Transition Charges will be billed to and collected from the other T or D Provider. 2. The T or D Provider shall pay all Transition Charges not later than 16 days after the bill is mailed by Servicer. The T or D Provider shall make such payment regardless of whether it collects such charges from the end-use retail customer. C. Billings by Servicer to New On-Site Generation: 1. Customers subject to Transition Charges for New On-Site Generation shall pay such charges in full not later than sixteen days after the date the bill is mailed to the customer. 2. Transition Charges applicable to New On-Site Generation are in addition to applicable Transition Charges under A above. 3. If the entity with New On-Site Generation receives transmission or distribution service from the Company or another T or D Provider, Servicer shall have the same right to terminate service or to require the other provider to terminate service for non-payment of Transition Charges as the Company has to terminate Revision Number: 5th Effective: 11/1/03 29 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 20 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 service for non-payment of charges under the Company's rate schedules. Any termination shall comply with applicable Commission rules. PART B: BILLING AND COLLECTION SUBSEQUENT TO CUSTOMER CHOICE. A. Billings by Servicer to other T or D Providers: 1. Transition Charges applicable to former retail customers of the Company in multiply certificated service areas who are now taking service from other T or D Providers will be billed to and collected from the other T or D Provider, which, in turn will be responsible for collecting the Transition Charges from the retail customers. 2. The T or D Provider shall pay all Transition Charges not later than 35 days after bill is mailed by Servicer. The T or D Provider shall make such payment regardless of whether it collects such charges from the end-use retail customer. B. Billings by Servicer to New On-Site Generation: - 1. Customers subject to Transition Charges for New On-Site Generation shall pay such charges in full not later than sixteen days after the date the bill is mailed to the customer. 2. Transition Charges applicable to New On-Site Generation are in addition to applicable transition charges under A above or C below. 3. If the entity with New On-Site Generation receives transmission or distribution service from the Company or another T or D Provider, Servicer shall have the same right to terminate service or require the other provider to terminate service for non-payment of Transition Charges as the Company has to terminate service for non-payment of charges under the Company's rate schedules. Any termination shall comply with applicable Commission rules. C. Billings by the REP or its replacement to end-use customers: 1. REPs will bill and collect, or cause to be billed and collected, all Transition Charges applicable to consumption by retail customers served by the REP. 2. If the Servicer is providing the metering, metering data will be provided to the REP at the same time as the billing. If the Servicer is not providing the metering, the entity providing metering services will be responsible for complying with Commission rules and ensuring that the Servicer and the REP will receive timely and accurate metering data in order for the Servicer to meet its obligations under Revision Number: 5th Effective: 11/1/03 30 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 21 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 the Servicing Agreement and the Financing Order with respect to billing and true-ups. 3. Each REP must (1) have a long-term, unsecured credit rating of not less than "BBB-" and "Baa3" (or the equivalent) from Standard & Poor's and Moody's Investors Service, respectively, or (2) provide (A) a deposit of two months' maximum expected Transition Charge collections in the form of cash, (B) an affiliate guarantee, surety bond, or letter of credit providing for payment of such amount of Transition Charge collections in the event that the REP defaults in its payment obligations, or (C) a combination of any of the foregoing. A REP that does not have or maintain the requisite long-term, unsecured credit rating may select which alternate form of deposit, credit support, or combination thereof it will utilize, in its sole discretion. The Indenture Trustee shall be the beneficiary of any affiliate guarantee, surety bond or letter of credit. The provider of any affiliate guarantee, surety bond, or letter of credit must have and maintain a long-term, unsecured credit ratings of not less than "BBB-" and "Baa3" (or the equivalent) from Standard & Poor's and Moody's Investors Service, respectively. 4. If the long-term, unsecured credit rating from either Standard & Poor's or Moody's Investors Service of a REP that did not previously provide the alternate form of deposit, credit support, or combination thereof or of any provider of an affiliate guarantee, surety bond, or letter of credit is suspended, withdrawn, or downgraded below "BBB-" or "Baa3" (or the equivalent), the REP must provide the alternate form of deposit, credit support, or combination thereof, or new forms thereof, in each case from providers with the requisite ratings, within 10 business days following such suspension, withdrawal, or downgrade. A REP failing to make such provision must comply with the provisions set forth in paragraph 3 of Section D, Billings by Servicer to the REP or its replacement (when applicable). 5. The computation of the size of a required deposit shall be agreed upon by the Servicer and the REP, and reviewed during no more frequently than quarterly to ensure that the deposit accurately reflects two months' maximum collections. Within 10 business days following such review, (1) the REP shall remit to the Indenture Trustee the amount of any shortfall in such required deposit or (2) the Servicer shall instruct the Indenture Trustee to remit to the REP any amount in excess of such required deposit. A REP failing to so remit any such shortfall must comply with the provisions set forth in Paragraph 3 of the Section D, Billings by Servicer to the REP or its replacement (when applicable). REP cash deposits shall be held by the Indenture Trustee, maintained in a segregated account, and invested in short-term high quality investments, as permitted by the rating agencies rating the Transition Bonds. Investment earnings on REP cash deposits shall be considered part of such cash deposits so long as they remain on deposit with the Indenture Trustee. At the instruction of the Servicer, cash deposits will Revision Number: 5th Effective: 11/1/03 31 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 22 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 be remitted with investment earnings to the REP at the end of the term of the Transition Bonds unless otherwise utilized for the payment of the REP's obligations for Transition Bond payments. Once the deposit is no longer required, the Servicer shall promptly (but not later than 30 calendar days) instruct the Indenture Trustee to remit the amounts in the segregated accounts to the REP. 6. In the event that a REP or the Provider of Last Resort (POLR) is billing customers for Transition Charges, the REP shall have the right to transfer the customers to the POLR (or to another certified REP) or to direct the servicer to terminate transmission and distribution service to the end-use customer for non-payment by the end-use customer pursuant to applicable Commission rules. D. Billings by the Servicer to the REP or its replacement (when applicable): 1. Servicer will bill and collect from REPs all Transition Charges applicable to consumption by retail customers served by the REP, including applicable former customers and New On-Site Generation. 2. Payments of Transition Charges are due 35 calendar days following each billing by the Servicer to the REP, without regard to whether or when the REP receives payment from the end-use retail customers. The Servicer shall accept payment by electronic funds transfer, wire transfer, and/or check. Payment will be considered received the date the electronic funds transfer or wire transfer is received by the Servicer, or the date the check clears. A 5% penalty is to be charged on amounts received after 35 calendar days; however, a 10 calendar-day grace period will be allowed before the REP is considered to be in default. A REP in default must comply with the provisions set forth in paragraph 3 of this Section D. The 5% penalty will be a one-time assessment measured against the current amount overdue from the REP to Servicer. The "current amount" consists of the total unpaid Transition Charges existing on the 36th calendar day after billing by the Servicer. Any and all such penalty payments will be made to the Indenture Trustee to be applied against Transition Charge obligations. A REP shall not be obligated to pay the overdue Transition Charges of another REP. If a REP agrees to assume the responsibility for the payment of overdue Transition Charges as a condition of receiving the customers of another REP that has decided to terminate service to those customers for any reason, the new REP shall not be assessed the 5% penalty upon such Transition Charges; however, the prior REP shall not be relieved of the previously-assessed penalties. Revision Number: 5th Effective: 11/1/03 32 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 23 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 3. After the 10 calendar-day grace period (the 45th calendar day after the billing date), the Servicer shall have the option to seek recourse against any cash deposit, affiliate guarantee, surety bond, letter of credit, or combination thereof provided by the REP, and avail itself of such legal remedies as may be appropriate to collect any remaining unpaid Transition Charges and associated penalties due Servicer after the application of the REP's deposit or alternate form of credit support. In addition, a REP that is in default with respect to the requirements set forth in paragraphs 4 and 5 of Section C and paragraph 2 of this Section D shall select and implement one of the following options: (a) Allow the POLR or a qualified REP of the customer's choosing to immediately assume the responsibility for the billing and collection of Transition Charges. (b) Immediately implement other mutually suitable and agreeable arrangements with Servicer. It is expressly understood that the Servicer's ability to agree to any other arrangements will be limited by the terms of the servicing agreement and requirements of rating agencies that have rated the bonds necessary to avoid suspension, withdrawal or downgrade of the ratings on the Transition Bonds. (c) Arrange that all amounts owed by retail customers for services rendered be timely billed and immediately paid directly into a lock-box controlled by Servicer with such amounts to be applied first to pay Transition Charges before the remaining amounts are released to the REP. All costs associated with this mechanism will be borne solely by the REP. If a REP that is in default does not immediately select and implement one of the options specified in (a), (b) or (c) or, after so selecting one of the foregoing options, fails to adequately meet its responsibilities thereunder, then the Servicer shall immediately implement option (a). Upon re-establishment of compliance with the requirements set forth in paragraphs 4 and 5 of Section C and paragraph 2 of this Section D and the payment of all past-due amounts and associated penalties, the REP will no longer be required to comply with this paragraph 3. 4. The initial POLR appointed by the Commission, or any Commission-appointed successor to the POLR, must meet the minimum credit rating or deposit/credit support requirements described in paragraph 3 of Section C ("Billings by the REP or its Replacement to end-use customers")in addition to any other standards that may be adopted by the Commission. If the POLR defaults or is not eligible to provide such services, responsibility for billing and collection of Transition Charges will immediately be transferred to and assumed by the Servicer until a new POLR can be named by the Commission or the customer requests the Revision Number: 5th Effective: 11/1/03 33 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 24 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 services of a certified REP. Retail customers may never be re-billed by the successor REP, the POLR, or the Servicer for any amount of Transition Charges they have paid their REP (although future Transition Charges shall reflect REP and other system-wide charge-offs). Additionally, if the amount of the penalty detailed in paragraph 2 of this Section D is the sole remaining past-due amount after the 45th calendar day, the REP shall not be required to comply with clauses (a), (b) or (c) of paragraph 3 of this Section D, unless the penalty is not paid within an additional 30 calendar days. 5. In the event that the Servicer is billing customers for Transition Charges, the Servicer shall have the right to terminate transmission and distribution service to the end-use customer for non-payment by the end use customer pursuant to applicable Commission rules. 6. The REP will be allowed to hold back an allowance for charge-offs in its payments to the Servicer. Such charge-off rate will be recalculated each year in connection with the annual true-up procedure. In the initial year, REPs will be allowed to remit payments based on the same system-wide charge-off percentage then being used by the Servicer to remit payments to the indenture trustee for the holders of Transition Bonds. On an annual basis in connection with the true-up adjustment process, the REP and the Servicer will be responsible for reconciling the amounts held back with amounts actually written off as uncollectable in accordance with the terms agreed to by the REP and the Servicer, provided that: (a) The REP's right to reconciliation for write-offs will be limited to customers whose service has been permanently terminated and whose entire accounts (i.e., all amounts due the REP for its own account as well as the portion representing Transition Charges) have been written off. (b) The REP's recourse will be limited to a credit against future Transition Charge payments unless the REP and the Servicer agree to alternative arrangements, but in no event will the REP have recourse to the Indenture Trustee, the SPE or the SPE's funds for such payments. (c) The REP shall provide information on a timely basis to the Servicer so that the Servicer can include the REP's default experience and any subsequent credits into its calculation of the adjusted Transition Charge rates for the next transition charge billing period and the REP's rights to credits will not take effect until after such adjusted Transition Charge rates have been implemented. 7. In the event that a REP disputes any amount of billed Transition Charges, the REP shall pay the disputed amount under protest according to the timelines detailed in paragraph 2 of this Section D. The REP and the Servicer shall first Revision Number: 5th Effective: 11/1/03 34 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 25 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 attempt to informally resolve the dispute, but if they fail to do so within 30 calendar days, either party may file a complaint with the Commission. If the REP is successful in the dispute process (informal or formal), the REP shall be entitled to interest on the disputed amount paid to the Servicer at the Commission-approved interest rate. Disputes about the date of receipt of Transition Charge payments (and penalties arising thereof) or the size of a required REP deposit will be handled in a like manner. It is expressly intended that any interest paid by the Servicer on disputed amounts shall not be recovered through Transition Charges if it is determined that the Servicer's claim to the funds is clearly unfounded. No interest shall be paid by the Servicer if it is determined that the Servicer has received inaccurate metering data from another entity providing competitive metering services pursuant to Utilities Code Section 39.107. 8. If the Servicer is providing the metering, metering data will be provided to the REP at the same time as the billing. If the Servicer is not providing the metering, the entity providing metering services will be responsible for complying with Commission rules and ensuring that the Servicer and the REP will receive timely and accurate metering data in order for the Servicer to meet its obligations under the Servicing Agreement and the Financing Order with respect to billing and true-ups. OTHER TERMS AND CONDITIONS If the customer or REP pays only a portion of its bill, a pro-rata portion of Transition Charge revenues shall be deemed to be collected. The Company will allocate any shortfall first, ratably based on the amount owed for Transition Charges and the amount owed for other fees and charges, other than late charges, owed to the Company or any successor, and second, all late charges shall be allocated to the Company or any successor. If the Company does not regularly include the notice described below in the bills sent by it to REPs or directly to retail customers, then at least once each year the Company shall cause to be prepared and delivered to REPs and such customers a notice stating, in effect, that the amount billed includes Transition Charges which were authorized by the Financing Order dated May 31, 2000 and have been transferred to and are being collected on behalf of CenterPoint Energy Transition Bond Company, LLC and are not owned by the Company. In the customer's initial bill from the REP and at least once each year thereafter, each REP that bills Transition Charges shall cause to be prepared and delivered to its customers a notice stating, in effect, that the amount billed includes Transition Charges which were authorized by the Financing Order dated May 31, 2000 and have been transferred to and are being collected on behalf of CenterPoint Energy Transition Bond Company, LLC and are not owned by the REP or the Company, and that under certain circumstances described in Schedule TC Servicer may be permitted to collect the Transition Charges directly from the retail customer. Such notice shall be included either as an insert to or in the text of the bills delivered to such REPS or customers, as applicable, or shall be Revision Number: 5th Effective: 11/1/03 35 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 26 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 delivered to customers by electronic means or such other means as Servicer or the REP may from time to time use to communicate with their respective customers. Revision Number: 5th Effective: 11/1/03 36 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 27 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 ATTACHMENT 1 REGULATORY ASSET ALLOCATION FACTORS
TC GROUPS
Revision Number: 5th Effective: 11/1/03 37 6.1.1 Delivery System Charges Sheet No. 6.7 Schedule TC- Transition Charges Page 28 of 28 CenterPoint Energy Houston Electric, LLC Applicable: Entire Service Area CPE 8021 ATTACHMENT 2 REGULATORY ASSET ALLOCATION FACTORS
TC GROUPS
Revision Number: 5th Effective: 11/1/03 38 NOTICE CONCERNING PROPOSED CHANGES TO TRANSITION CHARGES EFFECTIVE NOVEMBER 1, 2003 FOR CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC CenterPoint Energy Houston Electric, LLC (CenterPoint Energy) filed on August 1, 2003 with the Public Utility Commission of Texas a proposed change to Transition Charges to be effective November 1, 2003. CenterPoint Energy is required to true-up Transition Charges annually on November 1st in compliance with the Financing Order adopted in Application of Reliant Energy, Incorporated for Financing Order to Securitize Regulatory Assets and Other Qualified Costs, Docket No. 21665. Schedule TC sets out the rates and terms and conditions under which Transition Charges will be billed and collected. Schedule TC is contained in CenterPoint Energy's Tariff for Retail Delivery Service at Sheet No. 6.7. Persons wishing more information about this filing may contact Mr. James N. Purdue at CenterPoint Energy, 1111 Louisiana, Houston, Texas 77002 or call ###-###-####. Persons who wish to intervene in or comment upon these proceedings should notify the Public Utility Commission of Texas (Commission) as soon as possible, as an intervention deadline will be imposed. A request to intervene or for further information should be mailed to the Public Utility Commission of Texas, P.O. Box 13326, Austin, Texas 78711-3326. Further information may also be obtained by calling the Public Utility Commission at ###-###-#### or ###-###-####. Hearing- and speech-impaired individuals with text telephones (TTY) may contact the commission at ###-###-####. 39 NOTICE OF OWNERSHIP OF TRANSITION CHARGES Invoices for delivery service sent by CenterPoint Energy Houston Electric, LLC (CNP) to Retail Electric Providers (REPs) include transition charges. Pursuant to the Financing Order in Docket No. 21665 and the Schedule TC- Transition Charge tariff, CNP must provide REPs written notification concerning the ownership of transition charges at least once each year. Therefore, CenterPoint Energy Houston Electric, LLC is providing you the following notification: OWNERSHIP NOTIFICATION THE AMOUNT BILLED THE RETAIL ELECTRIC PROVIDER INCLUDES TRANSITION CHARGES WHICH WERE AUTHORIZED BY THE FINANCING ORDER IN DOCKET NO. 21665 DATED MAY 31, 2000. THE TRANSITION CHARGES HAVE BEEN TRANSFERRED TO AND ARE BEING COLLECTED ON BEHALF OF CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC (FORMERLY RELIANT ENERGY TRANSITION BOND COMPANY, LLC) AND ARE NOT OWNED BY CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC. The tariff also requires each Retail Electric Provider that bills Transition Charges to provide a similar notice to its retail customers in the customer's initial bill and at least once each year thereafter. The text of the notice requirements included in Schedule TC- Transition Charges is reproduced below: If the Company does not regularly include the notice described below in the bills sent by it to REPs or directly to retail customers, then at least once each year the Company shall cause to be prepared and delivered to REPs and such customers a notice stating, in effect, that the amount billed includes Transition Charges which were authorized by the Financing Order dated May 31, 2000 and have been transferred to and are being collected on behalf of CenterPoint Energy Transition Bond Company, LLC and are not owned by the Company. In the customer's initial bill from the REP and at least once each year thereafter, each REP that bills Transition Charges shall cause to be prepared and delivered to its customers a notice stating, in effect, that the amount billed includes Transition Charges which were authorized by the Financing Order dated May 31, 2000 and have been transferred to and are being collected on behalf of CenterPoint Energy Transition Bond Company, LLC and are not owned by the REP or the Company, and that under certain circumstances described in Schedule TC Servicer may be permitted to collect the Transition Charges directly from the retail customer. Such notice shall be included either as an insert to or in the text of the bills delivered to such REPS or customers, as applicable, or shall be delivered to customers by electronic means or such other means as Servicer or the REP may from time to time use to communicate with their respective customers. 40 Workpaper - Divisor - Attachment 5 YEAR 3 TC CHARGE DIVISOR CALCULATION
41 Transition Bonds WP - Principal & Interest - Yr 3 Calculation of Principal and Interest Required Funding From 11-01-03 To 10-31-04
(1) Based on the number of days from 11-1-03 to 3-15-04 as a percent of the number of days from 9-16-03 to 3-15-04. (2) Based on the number of days from 9-16-04 to 10-31-04 as a percent of the number of days from 9-16-04 to 3-15-05.
42 WP - Bad Debt % - Yr 3
43 WP - Servicing Fee & Operating Expenses Series 2001-1 Transition Bonds - Support and Servicing Costs 25-Jul-03
- ------------------ (1) Fitch ($10,000) and Standard & Poor's ($5,000) (2) Fitch ($10,000), Standard & Poor's ($5,000) and Moody's ($10,000) 44 CenterPoint Energy Transition Bond Company, LLC WP - Prior Year Over/(Under) $748,897,000 Transition Bonds, Series 2001-1 Recovery - Yr 3
45 WP - Principal & Interest - 9-15-03 to 10-31-03 Transition Bonds - Calc of Principal & Interest Required Funding Prior to 11-01-03 for 3-15-04 payment
(1) Based on the number of days from 9-16-03 to 10-31-03 as a percent of the number of days from 9-16-03 to 3-15-04.
46 WP - Estimated July-Oct Remittances - Yr 3 1 - last rate change % = 92.6%
47 CenterPoint Energy WP - July 2003 Remittances - Yr 3 Transition Bond, Remittances July 1 - 31, 2003
48 SUMMARY BILLING DETERMINANTS FORECAST 2003-2004 (NOV '03-OCT '04)
wp-DETERMINANTS Worksheet 49
wp-T.C. DIVISORS 50 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC STANDARD TRUE-UP FOR ADJUSTMENT OF TRANSITION CHARGES SCHEDULE TC, SECTION 6, PART B: CUMULATIVE LOAD LOSS TEST EFFECTIVE: NOVEMBER 1, 2003
51 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC STANDARD TRUE-UP FOR ADJUSTMENT OF TRANSITION CHARGES SECTION 6, PART C: YEAR-OVER-YEAR LOAD LOSS TEST EFFECTIVE: NOVEMBER 1, 2003
52 Docket No. 26402 TC Allocation Factors (RAAFs)
TC Group Allocation Factors
wp-Alloc Factors 53 FOR LOAD LOSS CALCULATIONS
wp-Load Loss Bill Det 54 CenterPoint Energy Houston Electric, LLC TC TRUE-UP Forecast of Electric Usage In support of CenterPoint Energy Houston Electric, LLC's annual filing to update its Transition Charges, forecasts of electric usage (kWh, kVA and kW billing determinants as applicable) were prepared for the various TC classes. These classes reflect the "bundled" rate classes which were in effect prior to implementation of retail choice in 2002. The Transition Charge classes are defined by Section 4 of the "Schedule TC-Transition Charges" in CenterPoint Energy's "Tariff for Retail Delivery Service". In many cases, the customer make-up of the Transition Charge classes differ from the rate classes applicable to energy delivery under "unbundled" rates today. The forecast is for the period from November 2003 through October 2004. DEMOGRAPHIC AND ECONOMIC ASSUMPTIONS Various sources of historical and forecasted data were reviewed to help establish appropriate assumptions for the forecast. The majority of the historical and forecasted values of CMSA population, inflation rate and real income are from the Perryman Group. The US macroeconomic outlook is from the EIA. Other sources reviewed included Economy.Com for Houston PMSA and macroeconomic outlooks, DATABook Houston (May 2003) by the Institute for Regional Forecasting at the University of Houston, materials from the Greater Houston Partnership and Federal Reserve Bank of Dallas PREPARATION OF THE FORECAST Forecasts were prepared for Transition Charge classes as follows: A. Distribution Voltage Classes Residential The forecast of residential kWh sales is the product of (A) the number of residential customers projected for each month and (B) use per residential customer projected for each month assuming normal weather. The forecasted number of residential customers is population driven and assumes 3.18 persons per new household. kWh usage is based upon a least squares regression model. The model has terms (independent variables) for (1) the average numbers of days billed, (2) heating degree hours (two terms described below), (3) cooling degree hours (two terms described below), (4) real income per residential customer, (5) an interaction term for cooling degree hours and average real electric price (where the average real electric price is an exponential average of the prior month's average electric price and the prior month's average electric price in the previous year), (6) a dummy variable for the month of January and (7) another dummy variable to "true up" the model to the last 12 months of historical usage. The residential model uses a "linear spline model" approach to estimate the kWh response of customers to heating and cooling degree hours. The spline model approach is 55 used in recognition that the kWh response to heating and cooling degree hours is not entirely linear. There are two heating terms in the model. The first term (HEAT1=HDH base 65 - HDH base 55) in the model estimates the response (slope) of residential kWh per customer as temperatures drop from 65 degrees down to 55 degrees. The second term (HEAT2=HDH base 55) starts at 55 degrees and is used to estimate the slope as temperatures get colder than 55 degrees. Similarly, there are two cooling terms. The first cooling term (COOL1=CDH base65 - CDH base 72) estimates the slope for temperatures ranging from 65 degrees up to 72 degrees. The second term (COOL2 = CDH base 72) starts at 72 degrees and is used to estimate the slope for temperatures above 72 degrees. To approximate the lagging and dampening effects of insulation, an exponentially weighted average of temperature is used to calculate billing month heating degree hours and cooling degree hours which in turn are used to calculate the HEAT1, HEAT2, COOL1 and COOL2 terms described above. The exponentially weighted average of temperature is calculated with the current hour's actual temperature receiving a 0.25 weight and the previous hour's exponentially weighted average temperature receiving a 0.75 weight. MGS & LGS For the distribution portion only of the MGS & LGS classes (alternatively referred to as MGSD and LGSD), a model of kWh per customer is estimated for the combined MGSD/LGSD classes. A combined class approach is used because of rate migration which has historically occurred between the two classes. Migration was most pronounced in 1996 after the kVA minimum in the LGS rate was lowered from 600 kVA to 400 kVA. The model has terms (independent variables) for (1) the average numbers of days billed, (2) heating degree hours, (3) cooling degree hours, (4) a dummy variable for the month of January to reflect closure of many office buildings and retail stores on Christmas day and New Years day, (5) a variable used to account for seasonal changes in metered lighting loads, (6) a dummy variable for the 1st quarter of 2002 to offset noise in the data due to billing problems associated with the implementation of retail choice in January of 2002 and (7) another dummy variable to "true up" the model to the last 12 months of historical usage. To reflect each of the billing systems used to bill MGSD customers (CIS and BES) and LGSD customers (BES only), the combined MGSD/LGSD forecast uses a weighted average of CIS and BES read schedules (51% and 49%, respectively) to calculate the average numbers of days billed and the heating and cooling degree hour terms. Multiplying the forecasted kWh per customer by the projected number of MGSD/LGSD customers provides an estimate of the combined MGS/LGS MWH sales. The heating and cooling degree hour terms are the same as those described for the residential model, except for the CIS and BES weight factors mentioned above. The a priori expectation for the slopes, however, is much different for the combined MGSD/LGSD class than for the residential class. Based upon historical hourly load data, kWh usage by the MGSD class is relatively flat between 55 and 65 degrees and the LGSD class does not hit a minimum load until temperatures drop to approximately 55 degrees. This indicates that air conditioning usage for the LGSD class starts at approximately 55 degrees. Consequently, the combined MGSD/LGSD model is expected to show little response to temperatures between 65 degrees and 55 degrees. To determine individual forecasts of MWH sales for the MGSD and LGSD classes, the next step was to prepare a forecast of MWH for the LGSD class in isolation. The LGSD 56 model is similar to the model for the combined MGSD/LGSD classes described above, but only uses data from November 1996 to May 2003. MWH sales for the LGSD class is calculated as the product of the forecasted use per customer and the projected number of LGSD customers. Next, MWH sales are forecasted for the MGSD class by calculating the difference between the MWH forecast for the combined MGSD/LGSD classes and the MWH forecast for the LGSD class. Historical ratios are then used to estimate billing determinants including demand for the MGSD class with loads above 10 kVA, demand for the LGSD class and billing kWh for the MGSD class with loads below 10 kVA . The data is supplemented with customer information on any capped rates. Lighting Estimates of kWh usage for the MLS and SPL classes are based upon recent trends in commercial (MLS and SPL) and municipal lighting (SPL), respectively. B. Transmission Voltage Classes MGS & LGS The transmission portion of the MGS and LGS rates (also referred to as MGS-T and LGS-T) represent a small portion of the transmission class and are estimated in aggregate using a recent trend. This class aggregate is then supplemented with customer information on any capped rates and historical ratios pertaining to class usage. Large Industrial Customers Individual kW and usage estimates are prepared for many large industrial customers. These estimates reflect recent billing history, anticipated economic conditions in customer's particular industries and whenever possible specific information about customer's plans for the future. This data is supplemented with customer information on capped rates and historical ratios pertaining to class usage history. 57 MWH SALES RESIDENTIAL
58 FORECAST SUMMARY
59 CUSTOMERS RESIDENTIAL
SEASONAL FACTOR CALCULATION
60 KWH PER CUSTOMER RESIDENTIAL
61 SALES REVENUE RESIDENTIAL ( $ 000 )
62 PRICE-TO-BEAT WORKSHEET
63
64 AVERAGE PRICE PER KWH RESIDENTIAL (Nominal $/Kwh)
Note: Starting in 2002, prices are estimated average Price-To-Beat Rates (see Price To Beat worksheet for details) 65 AVERAGE PRICE PER KWH RESIDENTIAL (1983 $/Kwh)
Note: Starting in 2002, prices are estimated average Price-To-Beat Rates (see Price To Beat worksheet for details) 66 HOUSTON CMSA POPULATION (Thousands)
Source: Bureau of Census: Population Estimates PPL-36 Native Frequency: ANNUAL (July 1); 1991 to 2000 data reflect 2000 Census Growth in 2003 & 2004 per Perryman Short-Term Outlook (2002-2007) 67 HOUSTON CMSA Non-agricultural Employment (000)
HOUSTON CMSA 12 Month Change in Non-Agricultural Employment (000)
68 HOUSTON CMSA REAL INCOME ($ billions)
# Perryman forecast adjusted lower to reflect lower employment. 69 HOUSTON CPI All Items / 1983 = 100
Assumed Escalation Rate: 2.5% (Source: Perryman Short-Term Outlook (2002 - 2007), Texas Consumer Price Index 70 AVERAGE CYCLE LENGTHS CIS READ SCHEDULES (Average Days for 21 Cycles per Month)
Note: 2004 Cycles are assumed to be the same as 2003 71 HOBBY AIRPORT 2003 CIS BILLING MONTHS / EXPONENTIALLY SMOOTHED TEMPERATURES
72 Hobby Airport HEATING DEGREE HOURS CIS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 73 Hobby Airport HEATING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 55 to 65 / Exponentially Smoothed Temperatures
NOTE: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 74 Hobby Airport HEATING DEGREE HOURS CIS Billing Months / Base 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 75 Hobby Airport COOLING DEGREE HOURS CIS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 76 Hobby Airport COOLING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 65 to 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 77 Hobby Airport COOLING DEGREE HOURS CIS Billing Months / Base 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 78 Regression Model Residential
Dependent Variable: KWH per Customer Koyck Lag: 0.65
79 FITTED VALUES RESIDENTIAL
80 RESIDUALS RESIDENTIAL
DEPENDENT VARIABLE: KWH per Customer R Square 0.993
81 MWH SALES MGS & LGS
82 MGS & LGS FORECAST SUMMARY
83 CUSTOMERS MGS & LGS CHANGE
CUSTOMERS MGS
[CHART OF JOBS & MGS CUSTOMERS] CUSTOMERS LGS
84 MWH SALES FOR MGS & LGS FORECAST STARTING JUNE 2003 [CHART OF MWH SALES FOR MGS & LGS] 85 MWH SALES MGS & LGS
86 SALES REVENUE MGS & LGS ($ 000)
87 PRICE-TO-BEAT WORKSHEET
88
89 AVERAGE PRICE PER KWH MGS & LGS (Nominal $/kwh)
Note: Starting in 2002, prices are estimated average Price-To-Beat Rates (see Price To Beat worksheet for details) 90 AVERAGE PRICE PER KWH MGS & LGS (1983 $/kwh)
Note: Starting in 2002, prices are estimated average Price-To-Beat Rates (see Price To Beat worksheet for details) 91 Houston CMSA Population (thousands)
Source: Bureau of Census: Population Estimates Native Frequency: ANNUAL Growth PPL-36 (July 1); 1991 to 2000 data reflect 2000 Census in 2003 & 2004 per Perryman Short-Term Outlook (2002-2007) 92 HOUSTON CMSA Non-agricultural Employment ( 000)
HOUSTON CMSA 12 Month Change in Non-agricultural Employment ( 000)
93 HOUSTON CMSA Real Income ($ billions)
# Perryman forecast adjusted lower to reflect lower employment. 94 HOUSTON CPI All Items / 1983 = 100
Assumed Escalation Rate 2.5% (Source: Perryman Short-Term Outlook (2002 - 2007), Texas Consumer Price Index 95 Average Cycle Lengths Weighted Read Schedules (Average Days for 21 Cycles per Month)
Note: 2004 cycles are assumed to be the same as 2003 Average Cycle Lengths CIS Read Schedules (Average Days for 21 Cycles per Month)
Note: 2004 cycles are assumed to be the same as 2003 Average Cycle Lengths ICBS/BES Read Schedules (Average Days for 21 Cycles per Month)
Note: 2004 cycles are assumed to be the same as 2003 96 Hobby Airport Heating Degree Hours 2003 CIS Billing Months / Exponentially Smoothed Temperatures
97 Hobby Airport HEATING DEGREE HOURS Billing Months / Base 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. Hobby Airport HEATING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 40 to 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 98 Hobby Airport HEATING DEGREE HOURS CIS Billing Months / Base 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. Hobby Airport HEATING DEGREE HOURS ICBS/BES Billing Months / Base 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 99 Hobby Airport HEATING DEGREE HOURS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. Hobby Airport HEATING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 55 to 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 100 Hobby Airport HEATING DEGREE HOURS CIS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. Hobby Airport HEATING DEGREE HOURS ICBS/BES Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 101 Hobby Airport COOLING DEGREE HOURS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. Hobby Airport COOLING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 65 to 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 102 Hobby Airport COOLING DEGREE HOURS CIS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. Hobby Airport COOLING DEGREE HOURS ICBS/BES Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 103 Hobby Airport COOLING DEGREE HOURS Billing Months / Base 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. Hobby Airport COOLING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 72 to 80 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 104 Hobby Airport COOLING DEGREE HOURS CIS Billing Months / Base 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. Hobby Airport COOLING DEGREE HOURS ICBS/BES Billing Months / Base 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 105 REGRESSION MODEL MGS & LGS
106 FITTED VALUES MGS & LGS
107 RESIDUALS MGS & LGS
DEPENDENT VARIABLE: COM_KPC R Square 0.9806
108 MWH SALES LGS
109 LGS FORECAST SUMMARY
110 CUSTOMERS LGS
CUSTOMERS MGS
CUSTOMERS LGS
[JOBS & MGS CUSTOMERS CHART] Previous Recession
1.26 0.0189133 111 KWH PER CUSTOMER LGS
112 SALES REVENUE LGS ( $ 000 )
113 PRICE-TO-BEAT WORKSHEET
114
115 AVERAGE PRICE PER KWH LGS (Nominal $/kwh)
Note: Starting in 2002, prices are estimated average Price-To-Beat Rates (see Price To Beat worksheet for details) 116 AVERAGE PRICE PER KWH LGS (1983 $/kwh)
Note: Starting in 2002, prices are estimated average Price-To-Beat Rates (see Price To Beat worksheet for details) 117 Houston CMSA POPULATION (thousands)
Source: Bureau of Census: Population Estimates PPL-36 (July 1); 1991 to 2000 data reflect 2000 Census Native Frequency: ANNUAL Growth in 2003 & 2004 per Perryman Short-Term Outlook (2002-2007) 118 HOUSTON CMSA Non-agricultural Employment ( 000)
HOUSTON CMSA 12 Month Change in Non-agricultural Employment (000)
119 Houston CMSA Real Income ($ billions)
# Perryman forecasr adjusted lower to reflect lower employment. 120 HOUSTON CPI All Items / 1983 = 100
Assumed Escalation Rate: 2.5% ( Source: Perryman Short-Term Outlook (2002 - 2007), Texas Consumer Price Index 121 Average Cycle Lengths CIS Read Schedules (Average Days for 21 Cycles per Month)
Note: 2004 cycles are assumed to be the same as 2003 Average Cycle Lengths CIS Read Schedules (Average Days for 21 Cycles per Month)
Note: 2004 cycles are assumed to be the same as 2003 Average Cycle Lengths ICBS/BES Read Schedules (Average Days for 21 Cycles per Month)
Note: 2004 cycles are assumed to be the same as 2003 122 Hobby Airport HEATING DEGREE HOURS 2003 ICBS Billing Months / Exponentially Smoothed Temperatures
123 Hobby Airport HEATING DEGREE HOURS Billing Months / Base 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. Hobby Airport HEATING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 40 to 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 124 Hobby Airport HEATING DEGREE HOURS CIS Billing Months / Base 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. Hobby Airport HEATING DEGREE HOURS ICBS/BES Billing Months / Base 55 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 125 Hobby Airport HEATING DEGREE HOURS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. Hobby Airport HEATING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 55 to 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 126 Hobby Airport HEATING DEGREE HOURS CIS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. Hobby Airport HEATING DEGREE HOURS ICBS/BES Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate HDH. 127 Hobby Airport COOLING DEGREE HOURS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. Hobby Airport COOLING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 65 to 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 128 Hobby Airport COOLING DEGREE HOURS CIS Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. Hobby Airport COOLING DEGREE HOURS ICBS/BES Billing Months / Base 65 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 129 Hobby Airport COOLING DEGREE HOURS Billing Months / Base 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. Hobby Airport COOLING DEGREE HOURS BY COMPONENT CIS Billing Months / Temperature Range 72 to 80 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 130 Hobby Airport COOLING DEGREE HOURS CIS Billing Months / Base 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. Hobby Airport COOLING DEGREE HOURS ICBS/BES Billing Months / Base 72 / Exponentially Smoothed Temperatures
Note: An exponentially weighted average temperature, with the current hour receiving a 1/4 weight, was used to calculate CDH. 131 Regression Model LGS
132 FITTED VALUES LGS
133 RESIDUALS LGS
134 TC WORKSHEET FOR MISCELLANEOUS RATES
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177 LGS-D WITH CAPS
178 MGS-T
179
180
181
182 self-gen adj only YEAR 3 WP - Mwh-gen for A&E4CP - Appendix A, P. 1 change from D21665 F. O
183 self-gen adj only YEAR 3 Workpaper - 4CP - Appendix A, P. 1 change from D21665 F. O CALCULATION SELF-GEN ADJUSTED 4CP FOR YEAR END APRIL 30, 1999
YEAR 3 Workpaper - 4CP 4CP SELF-GENERATION ADJUSTMENTS
184 YEAR 3 WP - Self-gen Adj - 4CP
185 no change thru col (10) YEAR 3 WP - Gen Capa Rev - Appendix A, P. 1 from D21665 F.O p. 1 of 2 DEVELOPMENT OF GENERATION CAPACITY REVENUE ALLOCATION FACTORS
186 no change thru col (10) YEAR 3 WP - Gen Capa Rev - Appendix A, P. 1 from D21665 F.O p. 1 of 2 DEVELOPMENT OF GENERATION CAPACITY REVENUE ALLOCATION FACTORS
Note: For Col. (10), SCP, EIS-T, SES-T, IS-30, IS-10, ISI, ISS-T, SBI = LOS-A; EIS-D, SES-D, ISS-D = LGS-D. 187
188 YEAR 3 WP - Self-gen Adj - Base+PCRF & Mwh-gen for A&E4CP BASE + PCRF REVENUE AND MWH SALES SELF-GEN ADJUSTMENTS
189 does not change WP - Rev Imputation - self-gen adj - from D21665 F.O. Base+PCRF Source: Dec 1998 EMR
190 does not change - WP - Mwh-gen Allocator - Appendix A, P. 2 same as D21665 F.O. YEAR END 4-30-99 MWH WEATHER AND ISS ADJUSTMENTS
191 does not change - WP - Losses Multiplier - Mwh-gen Allocator & same as D21665 F.O. Self-gen Adj - 4CP & Loss Multiplier Calculation Mwh-gen for A&E4CP
192 WP - Schedule TC, Year 3 TC Group Allocators YEAR 3
193 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing filing was hand delivered, electronically mailed, or sent by overnight delivery or United States first class mail to all parties in Docket No. 21665 and Docket No. 26402 and to all Retail Electric Providers listed on the Public Utility Commission's web site this 1st day of August 2003. /s/ [ILLEGIBLE] --------------------------- 194
