Texas REPs Seek Finding By PUC That Fixed Retail Prices May Be Modified Due To New Firm Fuel Supply Service Charged To ERCOT LSEs -- EnergyChoiceMatters.com

Texas REPs Seek Finding By PUC That Fixed Retail Prices May Be Modified Due To New Firm Fuel Supply Service Charged To ERCOT LSEs

March 22, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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In comments regarding a proposed Firm Fuel Supply Service (FFSS) in ERCOT, the Texas Energy Association for Marketers (TEAM) requested that the PUC issue a finding that an existing retail fixed price contract may be modified due to new FFSS costs imposed on REPs

TEAM requested that the PUC issue such a finding under 16 TAC § 25.475(b)(5), which provides that, for a fixed rate contract (mass market), the price may not vary from the disclosed amount to reflect changes in ancillary service charges unless the Commission expressly designates a specific type of ancillary service product as incurring charges beyond the REP’s control for a customer’s existing contract.

"TEAM ... recommends that the Commission designate the FFSS as a service that imposes a cost beyond a retail electric provider’s (REP) control at the time NPRR 1120 is adopted," TEAM said

"Without an express finding on this issue, REPs will not be permitted to adjust the price of a fixed rate product in an existing customer contract to account for the new costs associated with the FFSS. The FFSS has been characterized as an ancillary service, and the payment due for total FFSS capacity and fuel replacement will be allocated to Qualified Scheduling Entities representing Loads based on an hourly load ratio share. Because the FFSS creates a brand new charge for a product not previously provided by generators operating in the Electric Reliability Council of Texas (ERCOT) power region, this cost will not have been built into the price for a customer on a term contract for a fixed rate product that was executed prior to implementation of the FFSS and the accompanying capacity charge," TEAM said

"Allowing a one-time price adjustment mid contract term will ensure that customers are paying for the actual amount of new costs a REP incurs due to the FFSS. If REPs are precluded from adjusting the price on existing contracts, then the pricing of fixed rate products offered leading up to the date the FFSS charges would likely need to be set to cover the potential amount of increased costs due to this new ancillary service. Consequently, REPs would be forced to estimate the amount necessary to cover these additional costs, which would potentially expose customers to the risk of paying for costs at levels higher than those actually imposed by the FFSS. Consequently, a one-time price adjustment is the more economically efficient option for customers," TEAM said

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