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Texas PUC Does Not Adopt Several ALJ Findings About REPs' Ability To Manage A/S Costs (Versus Customers' Ability), As PUC Denies REPs' Sought Declaration To Allow One-Time Adjustment To Subset Of Fixed Rate Contracts To Account For New Ancillary Service
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The Texas PUC, in a 2-0 vote, denied a petition from retail electric providers that sought to allow REPs to make a one-time adjustment to certain existing fixed rate contracts to reflect the costs of ERCOT Contingency Reserve Service (ECRS), as REPs sought to designate ECRS as an ancillary service product under which REPs incur charges, "beyond the REP's control for a customer's existing contract."
Under the PUC's fixed rate rule, ancillary services are defined as being included in the fixed rate. As such, fixed contracts may not be adjusted due to ECRS, including fixed contracts executed prior to the start of ECRS
However, REPs may seek from the PUC a determination that a new A/S product imposes costs that are beyond the REP's control, with such determination then allowing the price charged by a REP to "vary" from the previously disclosed fixed rate in light of the new A/S product, only for those contracts entered into prior to the new A/S product.
REPs sought such a determination for ECRS
See more background here
The PUC generally found that REPs, due to the timeline for the creation and adoption ECRS at ERCOT, had adequate notice concerning the new applicability of ECRS, and thus the new ECRS did not impose on REPs costs that were beyond the REPs' control
The final order states, "Consistent with ERCOT's presentation to the Wholesale Market Working Group in August 2022 (nearly a year before ERCOT's first procurement of ECRS), ERCOT's aggregate procurement of ancillary services in 2023 increased and the total amount of ECRS procured in 2023 was 2,531 MW (which was within the estimated range of 1,093 MW and 3,039 MW that ERCOT provided to the Wholesale Market Working Group in 2022). Additionally, ERCOT's procurement of Non-Spin decreased by approximately 900 MW (which was within the estimated range of 746 MW and 1,521 MW that ERCOT provided to the PDCWG on September 14, 2022)."
As such, the PUC denied the REPs' petition, and REPs' fixed contracts executed prior to the start of ECRS may not be adjusted to reflect ECRS costs
The final order, in denying the REPs' petition, generally only cites the timeline for development and approval of ECRS, and does not adopt certain findings and dicta from an ALJ's proposed order, nor does the final decision more broadly address the question of whether REPs or customers are better suited to manage unknown A/S costs
The final order does not include the ALJ's conclusion that, "there is no question that REPs have a significantly greater ability to [accurately predict A/S costs] than their residential and small commercial customers."
The final order also does not opine, as the proposed order did, that the rule's relevant provision allowing a fixed rate to "vary" from the previously disclosed rate is only intended for "extraordinary or unexpected costs" from a new A/S
The final order also does not adopt an ALJ's view that any request for designation of a new A/S as imposing costs beyond the REP’s control, for a customer’s existing contract, should occur before the new A/S is implemented (here, the REP's petition was filed a few months after the ECRS start date)
Commissioner Lori Cobos and Commissioner Kathleen Jackson voted to deny the REPs' petition in the 2-0 vote. Commissioner Courtney Hjaltman and Chairman Thomas Gleeson were recused from the vote. Commissioner Jimmy Glotfelty was not present at the meeting
Docket 55959
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December 19, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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