Texas PUC Commissioner Flags Authorizing Retail Providers To Pass-Through New Firm Fuel A/S Cost As Commission Debates New Service -- EnergyChoiceMatters.com

Texas PUC Commissioner Flags Authorizing Retail Providers To Pass-Through New Firm Fuel A/S Cost As Commission Debates New Service

April 21, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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During a discussion of a potential new Firm Fuel Supply Service (FFSS) product in ERCOT (paid by REPs and LSEs) at today's Public Utility Commission of Texas open meeting, PUC Commissioner Will McAdams asked the PUC to consider designating the new firm fuel supply cost as a charge beyond the retail electric provider's control for a customer’s existing contract, which would authorize REPs to pass-through such costs to fixed-rate contract customers

While the ultimate impact of the new firm fuel ancillary service depends on what methodology is adopted in terms of sizing and cost, McAdams said that there will be impact to consumers, and impact to the retail market

"I would suggest ... that we consider asking ERCOT, as they deliberate, when they report back the potential financial impact to the system, before we execute, that we consider a plan to authorize the pass-through of a firm fuel program cost under 16 TAC 25.475(b)(5), which is an authorized pass-through amount occurring from an out-of-market action that this Commission authorizes. We specifically allowed that in [the fixed price rule] for the very scenario of the firm fuel program because we knew that was coming, we knew we were going to have to build this in for resiliency purposes," McAdams said

"I just want to keep that on our radar," McAdams said

Chairman Peter Lake appreciated the point being raised and said that it is important to consider that, "the shock value to our retailers, especially independent retailers, is significant."

"I don't know the right answer right now," Lake said, but Lake noted that, ultimately, the new product would be a "competitive" ancillary service, though one with unique characteristics. Lake did say it is worth considering staggering how the charge is treated

McAdams said that, absent authorization for a pass-through, customers would be hit with the costs all at once at renewal

Given the nature of the proposed firm fuel product, McAdams also said that the ability for most REPs to self-hedge against the firm fuel product is not present.

"Obviously we are dealing with a known pool of resources that have a dominant market participant, that's one, that does have a retail component to it," McAdams noted

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