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Control Number: 30037Item Number: 232Addendum StartPage : 0

State Office of Administrative Hearingsr or,, - x 7 A,. Cathleen ParsleyChief Administrative Law JudgeJanuary 21, 2010 --TO:Stephen Journeay, DirectorCommission Advising and Docket ManagementWilliam B. Travis State Office Building1701 N. Congress, 7th FloorAustin, Texas 78701RE:SOAH Docket No. 473-05-2905PUC Docket No. 30037C;:ourkt Pick-upRE: COMPLAINT OFRUSK COUNTYELECTRIC COOPERATIVE, INC.,AGAINST T X U E L E C T R I C D EL I VE R Y C O MPA N Y A ND TX U P O WE REnclosed are two copies of the Proposal for Decision (PFD) in the above-referenced case.Please file-stamp and return a copy to the State Office of Administrative Hearings for our records. Bycopy of this letter, the parties to this proceeding are being served with the PFD.Please place this case on an open meeting agenda for the Commissioners' consideration. Thereis no deadline in this case. It is my understanding that you will be notifying me and the parties of theopen meeting date, as well as the deadlines for filing exceptions to the PFD, replies to the exceptions,and requests for oral argument.Sincerely,minive Law JudgeKDS:cmEnclosurexc:All Parties of RecordWilliam P. Clements BuildingPost Office Box 13025 300 West 15th Street, Suite 502Docket (512) 475-3445(512) 475-4993 Austin Texas 78711-3025Fax (512) 475-4994'/ ,)E

SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037COMPLAINT OF RUSK COUNTYELECTRIC COOPERATIVE, INC.,AGAINST TXU ELECTRIC DELIVERYCOMPANY AND TXU POWER§BEFORE THE STATE OFFICE§§§OFADMINISTRATIVE HEARINGSPROPOSAL FOR DECISIONTABLE OF CONTENTSINTRODUCTION . 11.A.B.2Factual B ackground .Summary of Recommendation . 3FACTUAL ISSUES . 3II.A.B.C.D.E.Who Built and Currently Owns the Transmission Lines from MLSES tothe Beckville and Tatum Mining Areas? . 3When were the MLSES, the Beckville and Tatum Mining Areas, and theTransmission Lines Between the MLSES and the Beckville and Tatum4Mining Areas Built and Put Into Service? .41. MLSES .52. Beckville and Tatum Mining Areas .63. The Transmission Lines .How Long are the Transmission Lines Between the MLSES and theBeckville and Tatum Mining Areas? .6Who Takes Service from the Transmission Lines Between the MLSES andthe Beckville and Tatum Mining Areas? . 6Other Factual Issues . . 71. Laches . . 7.82. Compliance with ERCOT Protocols . .III.A.LEGAL ISSUES . . 9Were the Corporate Predecessors in Interest to Oncor, Luminant ETServices, and Luminant Generation Granted Authority to Serve theMLSES and/or the Beckville and Tatum Mining Areas in Docket No. 5or by Operation of PURA75? . 91. Were the Beckville and Tatum mining areas specifically identified inthe original application for a CCN? . . 9

SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037TABLE OF CONTENTSPAGE 22. Were the Beckville and Tatum mining areas identified in Staff ExhibitsNos. 1-7 discussed in ordering paragraph 1 of the Commission's finalorder in Docket No. 5? .103. If the corporate predecessors in interest to Oncor, Luminant ETServices, and Luminant Generation were granted authority to servethe MLSES and/or the Beckville and Tatum mining areas in a CCNissued in Commission Docket No. 5, which corporate predecessorswere granted this right? .104. Were the Beckville and Tatum mining areas grandfathered througheither pocket No. 5 or PURA75? .115. Were the Beckville and Tatum Mining Areas Granted a Certificate inDocket No. 5? .126. Who currently holds the CCN Associated with Services to the Beckvilleand Tatum Mining Areas? .12B.Service to the MLSES and Beckville and Tatum Mining Areas Under theCurrent Versions of PURA and the Commission's Substantive Rules . 121. How the Service is provisioned to MLSES and the Beckville and Tatummining areas: .122. Is Oncor, Luminant Generation, or Luminant ET Services' Provision ofElectricity to the Beckville and Tatum Mining Areas in Accordance withPURA §37.051(a) or (b)? .133. Is Oncor, Luminant Generation, or Luminant ET Services' Provision ofElectricity to the MLSES and/or the Beckville and Tatum mining areasin accordance with PURA § 39.105 ( a) or (b) and LuminantGeneration's Status as a Power Generation Company? . 15IV.CONCLUSION .19V.PROPOSED FINDINGS OF FACT, CONCLUSIONS OF LAW, ANDORDERING PARAGRAPHS . 20A.Findings of Fact . 20B.CONCLUSIONS OF LAW . 24C.Ordering Paragraphs . 25

4SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037COMPLAINT OF RUSK COUNTYELECTRIC COOPERATIVE, INC.,AGAINST TXU ELECTRIC DELIVERYCOMPANY AND TXU POWER§BEFORE THE STATE OFFICE§§§OFADMINISTRATIVE HEARINGSPROPOSAL FOR DECISIONOn August 3, 2004, Rusk County Electric Cooperative (RCEC) filed a complaintagainst the predecessors of Luminant Generation Company LLC (formerly TXU Power),Luminant ET Services Company (formerly TXU ET Services),' and Oncor ElectricDelivery Company LLC (Oncor) (formerly TXU Electric Delivery Company) allegingviolations of the statute governing the Public Utility Commission of Texas (PUC orCommission) and its substantive rules that prohibit the sale or provision of electricservice at retail within the singly-certificated service territory of an electric cooperativethat has not adopted customer choice. RCEC has not yet adopted customer choice, and itasserts that the companies continue to provide or sell electric service to the Martin LakeSteam Electric Station (MLSES) and the Beckville and Tatum Mining areas, both withinRCEC's singly-certified service area.For the reasons set out below, the Administrative Law Judge (ALJ) recommendsthat Luminant and Oncor be allowed to continue providing service to the MLSES, butthat they be ordered to stop providing electric service to the disputed mining areas.1.INTRODUCTIONThe Commission referred this matter to the State Office of AdministrativeHearings (SOAH) on December 9, 2004. The case was abated for an extended periodbecause the parties requested and were granted approval to gather and exchangeThe term "Luminant" is used in this PFD as a collective reference to Luminant Generation CompanyLLC and Luminant ET Services.

5SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037PROPOSAL FOR DECISIONPAGE 2information informally, including an extended process pertaining to documents relatingto the original certification proceeding in 1976.The parties were also attempting toresolve the matter by agreement. That endeavor eventually failed, and the evidentiaryhearing was held on September 14-15, 2009. The record closed on November 23, 2009,when Staff filed proposed findings of fact and conclusions of law.2A.Factual BackgroundIn 1972, Texas Power & Light Company (TP&L), Dallas Power & LightCompany (DP&L), and Texas Electric Service Company (TESCO) began construction ofthe MLSES, a lignite-fueled electric generation station.The plant was constructed inRusk County adjacent to significant lignite resources owned by these three utilities inRusk and Panola Counties (referred to as the Beckville and Tatum mining areas).MLSES remains in operation today and is the largest lignite generation plant in Texas.The mines are likewise the largest lignite mining enterprise in the state.Although the operations of the MLSES and the associated Beckville and Tatummining areas have changed little over the years, the regulatory framework in which theplant operates was fundamentally altered in 1999 with the passage of Senate Bill SB 7and the attendant deregulation of the electric power industry in Texas.As a result, in2002, TXU Electric Company, the successor utility owner of the MLSES, unbundled itsfunctions and operations into wholesale power generation (Luminant Generation),transmission and distribution (Oncor), and retail sales (Luminant ET Services).Luminant Generation now owns and operates the MLSES. Luminant Generation nowalso owns the mines, but Luminant Mining, a separate but related corporation, operatesthem.2 RCEC and Staff filed motions for leave to file proposed findings of fact and conclusions of law onNovember 17, 2009 and November 23, 2009, respectively. Those motions are granted.

7 6PROPOSAL FOR DECISIONSOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037B.PAGE 3Summary of RecommendationThe discussion below follows the parties' agreed briefing outline, which includesthe issues the Commission identified in the Preliminary Order. In short, the parties now1, 1975 andagree that the MLSES was in existence or under construction on Septemberwas identified in the certificate of convenience and necessity ( CCN) application of thepredecessor of Luminant Generation and in the Staff map referenced in the Commission'sfinal order in the original certification proceeding. There is also no dispute that, underthe current, post-SB 7 regulatory framework, Luminant Generation retains the right toself serve its load at the MLSES when the plant is online and to obtain service fromOncor when it is not. Accordingly, the parties now agree that Luminant Generation andOncor are authorized to continue to provide service as they have to MLSES, whichcomprises 95% of the overall load originally at issue in this proceeding. It is theremaining five percent that serves the mines which remains in active dispute.The ALJ concludes that Luminant Generation and Oncor are not legallyauthorized to serve the mining areas. The mining areas did not fit within the parametersof a vertically integrated public utility under the pre-S13 7 regulations and so were notcertificated to Luminant's predecessors in the original certification proceedings in the1970s.Additionally, Luminant Generation and Luminant Mining are separatecorporations, so service by Luminant Generation to Luminant Mining is not self servicewithin the meaning of the regulations.As a power generation company, LuminantGeneration is not otherwise authorized to provide retail level service to LuminantMining.II.A.FACTUAL ISSUESWho Built and Currently Owns the Transmission Lines from MLSES to theBeckville and Tatum Mining Areas?

7SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037PROPOSAL FOR DECISIONPAGE 4The parties agree that TP&L, DP&L, and TESCO built the transmission lines as ajoint venture. Luminant Mining currently owns and operates the lines-3B.When were the MLSES, the Beckville and Tatum Mining Areas, and theTransmission Lines Between the MLSES and the Beckville and TatumMining Areas Built and Put Into Service?The timing of construction activities of the facilities addressed here cannot bedetermined with precision due to the passage of time. Nevertheless, the ALJ finds thatthe MLSES, the Beckville and Tatum mining areas, and the transmission lines betweenthe MLSES and the Beckville and Tatum mining areas were all built or under activeconstruction by September 1, 1975, which was the key date for grandfathering initiallycertificated facilities under the Public Utility Regulatory Act (PURA) and in the originalcertification proceedings.41.MLSESLuminant witness Bradley C. Jones presented uncontroverted evidence thatconstruction of the MLSES began in 1972.5 RCEC now acknowledges the MLSES wasin existence or under construction by September 1, 1975.6 The three units were placed inservice on May 16, 1977, May 23, 1978, and April 1, 1979, respectively.73 Luminant Ex. 1(Jones Direct), Ex. BCJ-6, p. 62. Applications of Dallas Power & Light Company, Deep East Texas Electric Cooperative, Houston,Panola-Harrison ElectricCounty Electric Cooperative, Cherokee County Electric Cooperative,Cooperative, Rusk County Electric Cooperative, Southwestern Electric Power Company, SouthwesternElectric Service Company, Texas Electric Service Company, Texas Power & Light Company, Upshur Rural Electric Cooperative, and Wood County Electric Cooperative for Certificates of Convenience andNecessity for Certain Areas Within Cherokee, Gregg, Harrison, Panola, Rusk and Smith Counties, DocketNo. 5, 1 P.U.C. BULL. 205 (1976), as correct by Final Order Nunc Pro Tunc, 2 P.U.C. BULL. 109 (Sept. 14,1976) and Order Nunc Pro Tunc, 3 P.U.C. BULL. 1749 (August 10, 1978).5 Luminant Ex. 1(Jones Direct), p. 18. Mr. Jones is Vice President of Luminant Energy and LuminantGeneration.6 RCEC Reply Brief, p. 6.7 Luminant Ex. 1(Jones Direct), p. 18.

8SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 300372.PROPOSAL FOR DECISIONPAGE 5Beckville and Tatum Mining AreasThe most direct evidence regarding initiation of construction at the mining areasis contained in the Examiner's Report and Proposal for Decision issued onTexas Railroad Commission inMarch 7, 1977, by a hearings examiner with theconjunction with the Railroad Commission's approval of the original mining application.The Examiner stated:The applicant initiated its Martin Lake operations in 1974. Equipment hasbeen ordered, service facilities established, hauling roads constructed, landcleared and overburden removed.8Stephen J. Kopenitz, Vice President for Luminant Mining, testified that theBeckville and Tatum mining areas began actual operations in 1977 and 1979,respectively-9 Additionally, RCEC witness James W. Daniel acknowledged in a previousproceeding in 1984 that electric service to the Beckville and Tatum mining areas wasgrandfathered because it was "already in operation or under construction prior to thepassage of PURA."10While Mr. Daniel, has now disavowed his earlier testimony from the 1984 docketin light additional, unspecified, information discovered in the present proceeding, theALJ believes that his earlier assessment should stand. It was made much closer in timethan the current proceeding, is supported by the Railroad Commission Examiner'sReport, and is uncontradicted by any other evidence except his unexplained change ofopinion twenty-five years more removed from the events. There is no question, however,that the mining area was much smaller early on than it is now. The initially approvedmining area was approximately 10,500 with a mine pit of about 3,500 acres. The currentmining area is approximately 55,000 acres.' 18 RCEC Ex. 2 (Daniel Direct), Ex. JWD-8 (Oral Deposition Exhibits), p. 2.9 Luminant Ex. 2 (Kopenitz Direct), p. 5.10 Luminant Ex. 1(Jones Direct), p. 16, Ex. BCJ-4 (pp. 20-21)." RCEC Ex. 1(Kithas Direct), p. 12.

9SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 300373.PROPOSAL FOR DECISIONPAGE 6The Transmission LinesMr. Jones testified that construction began on the 138 kilovolt (kV) transmissionline segments from the MLSES to the Beckville mining area and associated substationfacilities shortly after February 20, 1975.12 He based this testimony on the existence of aconstruction contract between Luminant's predecessor and R.S. Goodman Company.This contract was executed on February 20, 1975, and called for work on the varioussegments to commence "no later than" specified dates ranging from March 15, 1975, toMarch 15, 1976, and for work to be completed on specified dates ranging fromSeptember 1, 1975, to October 1, 1976.13 While the deadlines contained in a contract arecertainly not definitive on the question of whether the parties complied with those terms,in the absence of any evidence that the deadlines were not met, the terms of this bindingcommitment are some indication that construction likely began by September 1, 1975.Such a finding is also generally supported, though not compelled, by the time framesaddressed above, regarding construction of the MLSES and the Beckville and Tatummining areas.C.How Long are the Transmission Lines Between the MLSES and the Beckvilleand Tatum Mining Areas?The transmission lines currently extend 15.8 miles from the MLSES to theBeckville and Tatum mining areas. The length of the line has varied over time dependingon the specific location of mining activities within the permitted mining areas. Portablesubstations are moved from time to time to meet the needs of the mining operations.14 Itis unknown how long the line was in 1975.D.Who Takes Service from the Transmission Lines Between the MLSES andthe Beckville and Tatum Mining Areas?12 Luminant Ex. 1(Jones Direct), p. 18.13 Luminant Ex. 1(Jones Direct), p. 18; Ex. BCJ-6.14 Luminant Ex. 2 (Kopenitz Direct), p. 7; RCEC Ex. 28.

10SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037PROPOSAL FOR DECISIONPAGE 7Load-consuming facilities of both Luminant Generation and Luminant Miningreceive electricity transmitted over the 138 kV transmission facilities between theMLSES switchyard and the Beckville and Tatum mining areas. 15E.Other Factual Issues.In addition to issues addressed under other headings, Luminant also identifies twosets of factual issues under this catchall briefing category: its asserted compliance withthe Electric Reliability Council of Texas (ERCOT) protocols and facts pertaining to itsasserted defense of laches.1.LachesLuminant asserts an affirmative defense of "laches," which is an equitabledoctrine that can prevent a party from obtaining requested relief when it delaysunreasonably in pursuing its rights. Luminant asserts that this defense is supported by thefollowing evidence: RCEC was an active participant in Docket No. 5 and Docket No. 570916 at theCommission17 and was, therefore, aware of both the existence of the MLSESand the Beckville and Tatum mines and the nature of the operation. RCEC acknowledged Luminant's right to serve the Beckville and Tatummining loads in Docket No. 5709. "1 5 Luminant Ex. 2 (Kopenitz Direct), p. 7.16 Application of Texas Utilities Electric Company for a Certificate of Convenience and Necessity for aDocket No. 5709, 10Proposed Transmission Line and Associated Substation in Rusk, County, Texas,involved a disputeDocketNo.5709,P.U.C. BULL. 1008 ( 1985). Similar to the present controversy,provision ofofTUEC'scomplainedTUEC,inwhichRCECbetween RCEC and Luminant's predecessor,in Rusk County then owned by TUECelectric service to the Oak Hill mine, which is another mining areaafter hearing before issuance of d operatedCommission order. In accordance with the settlement, RCEC provides electrical service to the Oak Hillmine." Luminant Ex. 1(Jones Direct), pp. 14-16; RCEC Ex. 2 ( Daniel Direct), pp. 22-23, Ex. JWD-2.18 Luminant Ex. 1(Jones Direct), Ex. BCJ-4 (pp. 20-21).

SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037PROPOSAL FOR DECISIONPAGE 8 RCEC filed its complaint in this proceeding on August 3, 2004, nearly 30years after the certification decisions made in Docket No. 5.19 Luminant has made daily, monthly, and yearly business decisions over the last35 years regarding the operation of the MLSES in reliance on certain costsassociated with the extraction and transportation of lignite, includingconsumption of electricity.20The AU finds these to be reasonable concerns from a common sense andbusiness perspective.Nevertheless, as observed by Staff, RCEC is not the onlyparticipant to this proceeding. This docket involves the legality of the electric servicebeing provided by the Respondents. The Commission's authority and responsibility tomake this determination and to enforce the regulatory requirements applicable to theRespondents cannot be waived by RCEC or any other private entity. 21 Accordingly, theissue of laches is legally irrelevant to this proceeding.2.Compliance with ERCOT ProtocolsLuminant asserts that its operations, including provision of electricity to theBeckville and Tatum mining areas, comply with the generation netting provisions of theERCOT Protocols. It offers the following evidence in support of this contention: ERCOT approved the netting of the MLSES' auxiliary load, including theload at the Beckville and Tatum mining areas, against the MLSES' generationoutput.22 The physical connections of the MLSES generation units to Oncor facilities,and the MLSES auxiliary load to Oncor facilities are less than 400 yards apartwithin the MLSES switchyard.2319 Complaint of Rusk County Electric Cooperative, Inc., Against TXU Electric Delivery Company and TXUPower, Docket No. 30037, Rusk County Electric Cooperative, Inc.'s Complaint Against TXU ElectricDelivery Company and TXU Power (Aug. 3, 2004); RCEC Ex. 2 ( Daniel Direct), Ex. JWD-2.20 Luminant Ex. 2 (Kopenitz Direct), pp. 9-10; Luminant Ex. 1(Jones Direct), pp. 16-17.21 Cf. Sorsby v. State, 624 S.W.2d 227, 236 (Tex.Civ.App. - Houston 1981, no writ)("It is well settledunder Texas law that laches do not run against the state.").22 Tr. 261.23 Id. at 259-61, 268-69; Luminant Ex. 1(Jones Direct), pp. 11-12.

12PROPOSAL FOR DECISIONSOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037PAGE 9 No facilities owned by Oncor or that have been placed in Oncor's rate baseare located between the MLSES auxiliary loads and the point at which suchloads are physically connected to the MLSES switchyard.24 No facilities owned by Oncor or that have been placed in Oncor's rate baseare located between the MLSES generation units and the point at which suchunits are physically connected to the MLSES switchyard. 5The ALJ, however, concurs with Staff and RCEC that the ERCOT protocol,which relates to netting of generation output with auxiliary load for ERCOT powersettlement purposes, does not control. Certification rights for the provision of electricservice are set out in PURA and the Commission's rules and must be decided by theCommission.The Legislature has not provided ERCOT authority to establish oradjudicate certification rights.III.A.LEGAL ISSUESWere the Corporate Predecessors in Interest to Oncor, Luminant ETServices, and Luminant Generation Granted Authority to Serve the MLSESand/or the Beckville and Tatum Mining Areas in Docket No. 5 or byOperation of PURA75?As noted in the Introduction to this Proposal for Decision, the parties now agreethat the MLSES generating facility was under construction as of September 1, 1975 andwas properly certificated in the Docket No. 5 proceedings.26 Accordingly, the discussionbelow will focus on the status of the Beckville and Tatum mining areas.1.Were the Beckville and Tatum mining areas specifically identified inthe original application for a CCN?24 Tr., 259-61; Luminant Ex. 1(Jones Direct), pp. 11-12; Luminant Ex. 3 (Sullivan Direct), p. 7; see alsoLuminant Ex. 2 (Kopenitz Direct), pp. 6-7.25 Luminant Ex. 1(Jones Direct), pp. 11-12; Tr., 259-61.26 RCEC Reply Brief, p. 4; Staff Initial Brief, p. 3.

13SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037PROPOSAL FOR DECISIONPAGE 10The Beckville and Tatum mining areas were not identified in the original TP&Lapplication, which makes no mention of Panola County, where the mines are located.27No party has identified a reference to the mining areas in the original application.2. Were the Beckville and Tatum mining areas identified in Staff ExhibitsNos. 1-7 discussed in ordering paragraph 1 of the Commission's finalorder in Docket No. 5?Paragraph 1 of the Commission's Final Order in Docket No. 5 identifies sevenstaff exhibits that reflect certain stipulated service area boundaries agreed upon by thetwelve applicants in that original CCN proceeding.No mining areas or transmissionfacilities are reflected on Exhibit 4, pertaining to Panola County, despite the fact that themap legend contained a symbol for "mines gravel pits and quarries. The only hint of theexistence of the mining areas on the exhibit is the identification of the Texas UtilitiesService Railway in the area of the mines.3. If the corporate predecessors in interest to Oncor, Luminant ET Services,and Luminant Generation were granted authority to serve the MLSESand/or the Beckville and Tatum mining areas in a CCN issued inCommission Docket No. 5, which corporate predecessors were grantedthis right?According to the final order in Docket No. 5, DP&L, TP&L, and TESCO weregranted certificates under PURA75 § 53 for facilities that were "in place or actively underconstruction as of September 1, 1975, within the areas as claimed and as shown onfacilities maps submitted to the Commission by the parties as parts of applications forsuch certificates."28As addressed above, the preponderance of the evidence indicatesZ' RCEC Ex. 4.28 Luminant Ex. 1(Jones Direct), p. 19; see also Petition of Dallas Power & Light Company, TexasElectric Service Company, and Texas Power & Light Company to Amend their Certificates of Convenienceand Necessity to Reflect Changes in Ownership Percentages for Martin Lake, Mill Creek, and Oak Knollthat DP&L, TP&L,Steam Electric Stations, Docket No. 2650, 4 P.U.C. BULL. 2201, 2202 (1979) ted§53certificationand TESCO

14SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037PROPOSAL FOR DECISIONPAGE 11that the MLSES and the Beckville and Tatum mining areas were actively underconstruction as of September 1, 1975.294.Were the Beckville and Tatum mining areas grandfathered througheither pocket No. 5 or PURA75?The preponderance of the evidence indicates that, although they were notidentified in Docket No. 5, construction of the Beckville and Tatum mining areas wasunderway by September 1, 1975. The ALJ, however, concurs with Staff and RCEC thatthe mining areas were beyond the PUC's subject matter jurisdiction then and now.RCEC witness Martha V. Terry testified that PURA75 gave the PUC no authority toregulate mines or mining companies, which were under the exclusive jurisdiction of theRailroad Commission of Texas to permit. The ALJ concurs with this assessment.The mines, which move over time and could be located anywhere, provide fuel tothe utility for the production of energy. In fact, Luminant Generation also owns the OakHill coal mine in RCEC's certificated area.This mine, also operated by LuminantMining, obtains its electric service from RCEC rather than Luminant.30 Likewise, to fillshortfalls in lignite availability, Luminant also purchases coal from the Powder RiverBasin in Wyoming to fuel the MLSES.31 Absent clear precedent or regulatory authority,theALJ does not believe any of these activities would fit within the parameters ofvertically integrated public utility.To the contrary, and as pointed out be Staff, onlygeneration, transmission, and distribution facilitieswere certificated in the originalproceeding.32Accordingly, the mining areas could be grandfathered only to the extent that, asconsuming facilities, they fellwithin the 100 foot corridor rule for certificated29 RCEC Ex. 2 ( Daniel Direct), Ex. JWD-8 ( Oral Deposition Exhibits - Ex. 2 (pp. 1-2)).30 Tr. 129-130.3 ' Tr. 300.'Z P.U.C SUBST. R. 052.02.05.056(B)(3), (4), AND (5) (repealed). A copy of the original Substantive Rulesis attached as Exhibit MVT-3 to the Rebuttal Testimony of Ms. Terry, which was admitted as RCEC Ex.32.

15SOAH DOCKET NO. 473-05-2905PUC DOCKET NO. 30037transmission lines.PROPOSAL FOR DECISIONPAGE 12The record, however, is silent with respect to what consumingfacilities existed within this area as well as the actual location of the line from theMLSES and the mining areas at the time of the final order in Docket No. 5. In any event,Luminant specifically disclaims any right to certification based on the Corridor Rule,which it considers irrelevant to this proceeding.335. Were the Beckville and Tatum Mining Areas Granted a Certificate inDocket No. 5?For the reasons addressed in Subsection 4, immediately above, the Beckville andTatum mining areas were not granted a certificate in Docket No. 5. Specifically, onlygeneration, transmission, and distribution facilities were certificated under theCommission's rules.6. Who currently holds the CCN Associated with Services to the Beckvilleand Tatum Mining Areas?In Docket No. 5, RCEC received a CCN encompassing all the territory in theBeckville and Tatum Mining areas.34 For the reasons addressed above, no other

Electric Service Company, Texas Electric Service Company, Texas Power & Light Company, Upshur - Rural Electric Cooperative, and Wood County Electric Cooperative for Certificates of Convenience and Necessity for Certain Areas Within Cherokee,