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Texas PUC Staff Draft Won't Compel Retail Providers To Offer Responsive Device Program, Would Not Mandate Level Of Customer Compensation
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Texas retail electric providers would not be compelled to offer a residential responsive device program, nor would the PUC mandate specific compensation to customers under any such REP responsive device programs, under a draft proposal for adoption from Staff of the Texas PUC to implement legislation authorizing the TDUs to devote part of their demand response budgets (under their energy efficiency funding) to fund REP-offered responsive device programs
Staff's draft proposal for adoption would implement SB 1699, which requires the establishment of a goal for an average total residential load reduction in the ERCOT market
The rule would also authorize REPs to secure funding, from the ratepayer-funded TDU energy efficiency programs, to develop and offer a responsive device program (as defined further below) that provides an incentive to residential customers for load reductions
See background on the law here
Under the draft proposal for adoption, a responsive device program must allow demand response participation by residential customers, "where reasonably available," including during the summer and winter seasons, but, as noted further below, REPs would not be mandated to offer a residential responsive device program or demand response program
As previously reported, Octopus Energy as well as certain energy efficiency advocates had proposed that, in implementing SB 1699, the PUC should require that REPs serving residential customers must offer a demand response program to residential customers
Octopus had said that such a mandate would give effect to language in SB 1699 (codified as PURA 39.919(b)(1)) which requires that PUC rules implementing the demand reduction goal, "must provide for the adoption of a program that ... provides demand response participation to residential customers where reasonably available."
However, PUC Staff's draft proposal for adoption would deny any sought mandate that REPs, under the rule, must offer a responsive device program, or any other demand response program
In a proposed preamble for the rule, Staff would find that the statute provides REPs with "flexibility" in offering a responsive device program, and that there is no language in PURA §39.919 that mandates the offering of such a program by a REP
Staff cited PURA §39.001 which prohibits the PUC from adopting rules that regulate competitive electric services, prices, or competitors, except as authorized by PURA.
"[N]either the statute nor the rule requires REPs to develop responsive device programs," Staff said
Adopting the same reasoning, Staff's proposal would decline to mandate that REPs offer responsive device programs to certain customers (i.e. low-income, under-served, etc.)
Staff clarified that the rule does not bar the offering of a responsive device program to critical care customers, but, in a draft preamble, Staff said that a REP, "must establish adequate safeguards" to ensure that the program does not, per rule language, "adversely impact the needs of a critical care residential customer or chronic condition residential customer[.]"
Furthermore, Staff would reject calls from certain parties to mandate any specific manner or level of compensation to be provided to residential customers by REPs under any responsive device program
SB 1699 does not mandate the provision of any specific level of customer incentives for responsive device programs, Staff said
Consistent with PURA, Staff's draft proposal for adoption favors competitive rather than regulatory solutions, Staff said
However, Staff would, in a modification from the proposal for publication, impose limits on the length of service under any specific enrollment of a customer onto a responsive device program offered by a REP
Specifically, Staff proposes an expiration date for service under any responsive device program enrollment as follows:
• If the responsive device program is bundled with a retail electric contract, the responsive device program enrollment expires with the term of the retail contract
• If the responsive device program is offered on a stand-alone basis separate from the supply contract, then the responsive device program enrollment expires on the earlier of: (1) 12 months from the date of enrollment, or (2) the cessation of electric supply service from the REP to the customer
Staff said that such limits "ensure each customer is given ample opportunity to evaluate the benefits of responsive device programs[.]"
Staff's draft broadly denies, as outside the scope of the rulemaking, various requests to create, address, or expand residential demand response programs other than SB 1699's responsive device program
In doing so, Staff noted that the responsive device program rule does not require a REP to, in customer-facing communications, refer to a responsive device program offered to customers as a "responsive device program". The rule also does not prohibit REPs from offering other demand response programs, or from incorporating non-device-based demand response elements into a REP's responsive device program
Staff stressed, however, that only programs meeting the responsive device program criteria under the rule will be counted for determining whether the average total residential load reduction goal has been met
Additionally, Staff modified the definition of a responsive device program such that such a program no longer must offer an incentive for residential customers to reduce demand specifically, "during an ERCOT peak demand period", as the program may be designed to offer an incentive at any time. While the incentive under a REP's program is no longer limited to paying incentives only for reductions during an ERCOT peak demand period, only reductions during an ERCOT peak demand period will be used to calculate whether the average total residential load reduction goal has been attained.
Among other things, Staff declined to adopt any calls from REPs or other parties for creation of ERCOT-funded residential demand response programs, or new ERCOT market products, tailored to REPs
Staff's draft specifically declines to address any sought changes to the ADER pilot project as beyond the scope of the SB 1699 rulemaking.
Aside from the rejected mandate sought by certain parties that a REP must offer a responsive device program, the provision of the rule which drew most attention from REPs was the proposed reporting requirements
Staff's proposal for adoption would decline to substantively change any of the reporting requirements from the proposal for publication
As such, Staff's proposal for adoption would mandate that REPs offering a qualifying program shall report, "the date of each demand response event, including each demand response event start time and stop time and the ESI IDs deployed for each event."
Octopus had said that this provision is needlessly "intrusive" into a REP's competitively sensitive operations while imposing a new compliance burden on REPs
Base Texas REP had suggested that the ESI ID requirement in the above-quoted proposed rule section should be replaced with a "total customers enrolled" reporting requirement
In declining these changes sought by REPs, Staff said that REPs are already tracking the information required to be reported under the rule.
Staff affirmed that, per existing rule, all information that a REP reports to ERCOT required under the rule, "will be confidential and treated as protected information under the ERCOT Protocols."
Staff has added language to the rule stating, "The requirements of this section [of the rule] neither authorize nor require a REP to publicly disclose proprietary customer information."
In comments on the draft rule, Octopus had said that the PUC should advise the legislature to re-think the current ban on residential retail electric rates that are indexed to the wholesale market, adopted after Winter Storm Uri
Staff's draft proposal for adoption would decline to modify the rule to recommend a reconsideration of residential wholesale indexed rates, stating that the PUC's 2025 report to the legislature is outside the scope of the SB 1699 rulemaking
Staff's draft proposal for adoption would strike a proposed provision that would have broadly limited customers to participation in a, "single demand response program within the ERCOT region."
Instead, Staff more narrowly prohibits a residential customer who is participating in an ERCOT/TDU emergency or similar program, which provides that the customer must be capable of responding pursuant to the applicable ERCOT/TDU program, from participating in another demand response program
Specifically, under Staff's draft, a responsive device program must not allow participation of a residential customer that is enrolled in, "an emergency program such as the Emergency Response Service under §25.507 of this title, relating to Electric Reliability Council of Texas (ERCOT) Emergency Response Service (ERS), or a TDU load management program under §§25.181-183 of this title."
Staff's draft clarifies the amount of the TDUs' energy efficiency budgets which may be applied to fund REP responsive device programs
Specifically, a TDU may use 10% of its demand response budget, which is part of its overall energy efficiency budget, for funding of the REP responsive device programs -- not 10% of the TDU's total energy efficiency budget
Staff's draft proposal for adoption would set the average total residential load reduction goal at 0.25 (i.e., a 20 percent [sic] reduction in load by participating residential customers).
The goal is calculated as a ratio by dividing the load reduced by all responsive device programs during an ERCOT peak demand period by the total amount of demand of all residential customers participating in a responsive device program during that ERCOT peak demand period
The draft rule would allow the PUC to modify the target average total residential load reduction goal in the future without needing to open a rulemaking to do so
The draft rule would provide that a responsive device program is a program that offers an incentive to residential customers with "smart responsive appliances or devices" to reduce load
Under the draft, the term smart responsive appliance or device is defined as an appliance or device that allows its electricity usage (or the usage of connected devices) to be adjusted remotely
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December 5, 2024
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Reporting by Paul Ring • ring@energychoicematters.com
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