We knew late last month that Garland's case against the Public Utility Commission would be in Garland's favor. We just didn't know how the final order would read.
 

City of Garland Press Release:

District judge rules in favor of Texas ratepayers

AUSTIN -- In a big win for Texas ratepayers, state District Judge Stephen Yelenosky today has reversed an order of the PUC awarding billions of dollars of transmission projects. The City of Garland had alleged that the Public Utility Commission failed to properly consider the needs of electric customers when it awarded the wind-related projects last year and failed to realistically consider low-cost public power entities like Garland.
 
As a consequence of his ruling, further transmission line development relating to the so-called Competitive Renewable Energy Zone (CREZ) process must be suspended until the PUC properly weighs the costs and benefits to electric customers.
 
The decision comes in a case brought by Garland’s municipally-owned utility, which has consistently advocated for affordable power on behalf of its nearly 200,000 electricity users. Garland submitted a proposal in 2008 to participate in the CREZ construction process, but it was rejected by the PUC in favor of potentially higher-cost plans.
 
Besides requiring the PUC to reconsider Garland’s proposal, Judge Yelenosky’s decision potentially could lead to other CREZ savings—savings that would be enjoyed by all ERCOT ratepayers—because the decision requires the PUC to consider costs and benefits of all the CREZ proposals.
 
The overall cost of the CREZ lines has been put at about $5 billion—or $4 for every ratepayer in ERCOT.
 
"This decision simultaneously encourages customer protection and the development of clean energy—goals that benefit all Texans," said Garland City Attorney Brad Neighbor. "The PUC should not put the interests of big transmission line developers before the interests of Texas ratepayers. We applaud this ruling today."
 
But Neighbor cautioned that if the PUC again excludes municipally-owned utilities in favor of high cost out-of-state and foreign companies, Texas consumers will end up losing again. In the order that was reversed today by the Court, the PUC had awarded hundreds of millions of dollars in CREZ construction projects to foreign and out-of-state companies, including a Spanish consortium.
 
Because it is municipally-owned, the Garland utility operates on a not-for-profit basis, does not pay various taxes as commercial ventures do, and can borrow money at a lower cost. Such advantages allow Garland to build transmission lines at a lower cost than other entities.
 
A staff expert at the Texas Public Utility Commission presented evidence during the agency’s initial CREZ deliberations that Garland, of all the applicants, enjoyed the lowest cost of debt. The expert stated that "assigning these facilities to the companies with the lowest cost of capital is likely to result in the CREZ transmission plan that is of the lowest cost, and, consequently, in the public interest as it provides the most potential benefits to consumers of electricity in Texas."
 
The PUC staff had initially recommended that Garland and another municipally-owned utility receive a substantial portion of the construction projects—valued at approximately $400 million—but unexpectedly reversed itself shortly afterwards. In May 2009 the PUC awarded CREZ development projects to Oncor, Sharyland, a Spanish consortium and other transmission developers—all with presumably higher capital costs than those enjoyed by Garland’s utility.
 
In making this initial decision, the PUC appeared not to have explicitly considered what’s most cost-effective for electric customers. In an earlier letter to parties in the case, Judge Yelenosky noted that the "PUC relied upon factors that are not relevant to providing transmission capacity in a manner most beneficial and cost-effective to electric customers and based its decision on underlying findings that lack substantial evidence."
 
He also noted that there is no substantial evidence that Garland’s proposal would cause a relevant delay in the CREZ process.
 
"But what could delay the process is failure by other parties to immediately comply with the court’s order," said Garland City Attorney Neighbor. "We’re ready to go. Our plans will save consumers money while encouraging the development of clean energy. We have the experience to build, and our not-for-profit status and tax and financing advantages mean we can save money for Texans."
 
The City of Garland, through its municipally-owned utility, already operates more than 130 miles of transmission lines that serve not only its own customers but also other residents in the Dallas area. Garland is one of 13 transmission operators certified to operate in ERCOT.
 

 
Much of this probably comes out ot the blue for most Garland ratepayers because there has been little news coverage. Garland's City Attorney's office has prepared additional information as a primer.
 

Quick Facts about Competitive Renewable Energy Zones and the City of Garland

What is the CREZ process?
CREZ refers to “Competitive Renewable Energy Zones,” which are zones that mark the site for transmission line construction to serve wind developers in West Texas and the Panhandle. The Texas Legislature adopted Senate Bill 20 in 2005 that established the so-called CREZ process whereby the Public Utility Commission would delineate the zones and then assign transmission developers to build the lines. The PUC delineated the zone boundaries in July 2008 and assigned developers in May 2009. Under current estimates, the total cost of CREZ construction could top $5 billion.
 
What has been Garland’s involvement in the process?
The City of Garland was among several transmission service providers to submit proposals to build CREZ lines. Citing its low financing costs and other advantages specific to municipally-owned utilities, PUC staff recommended that Garland construct roughly 80 miles of transmission lines in the Panhandle. However, the PUC staff later reversed that recommendation in favor of a higher-cost utility that is located farther way geographically from the Panhandle. The Texas PUC affirmed those recommendations in May 2009.
 
Garland appealed the decision to state court, claiming that the PUC did not properly consider the welfare of electric customers when it made its decision. In a letter filed Dec. 21, 2009, state District Judge Stephen Yelenosky wrote that the “PUC relied upon factors that are not relevant to providing transmission capacity in a manner most beneficial and cost–effective to electric customers and based its decision on underlying findings that lack substantial evidence,” he wrote.
 
How can Garland do the work for less?
Because it is municipally-owned, the Garland utility operates on a not-for-profit basis, does not pay various taxes common to commercial ventures, and can borrow money at a lower cost. These advantages should likely lead to lower costs for electric customers. In testimony filed on Nov. 14, 2008, a PUC senior financial analyst identified Garland as the applicant with the lowest cost of debt. “Assigning the facilities to the companies with the lowest cost of capital is likely to result in the CREZ transmission plan that is of the lowest cost and, consequently, in the public interest as it provides the most potential benefits to the consumers of electricity in Texas,” he stated.
 
Does Garland have the capacity to participate in the CREZ projects?
Yes. As one of 13 certified transmission operators inside ERCOT, Garland already owns and operates more than 130 miles of lines. The Garland lines serve both its own residents and also those in the Dallas area. By contrast, Sharyland Utilities L.P., which was initially rejected for the CREZ development but then later was awarded more than $300 million in projects, currently owns and operates less than 20 miles of transmission lines.
 
Will Garland’s action undermine the state’s wind plans?
No. Garland’s proposal allows for the construction of transmission lines, but on a more cost-effective basis for electric customers than other proposals. Clean air and affordable electricity benefit all Texans. Garland’s proposal helps achieve both goals. In an earlier letter to parties, state District Judge Stephen Yelenosky stated there is no evidence that Garland’s proposal would cause a relevant delay in the CREZ process.