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Texas REPs Seek Rehearing Of PUC Decision Denying Designation Of New A/S Cost As Beyond REPs' Control, Say Cited Evidence In PUC's Decision Supports Finding Of Earlier Date Before Which Costs Were Not In REPs' Control
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The Texas Energy Association for Marketers (TEAM) and Alliance for Retail Markets
(ARM) have filed for rehearing of the Texas PUC's recent decision denying the REPs' petition 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, but the PUC found that REPs had sufficient notice and information concerning ECRS implementation to account for ECRS in REPs' fixed rates
See full background on the order here
As part of its order denying the REPs' petition, the PUC took administrative notice of various ERCOT actions concerning the development of ECRS
Most notably, the REPs argue on rehearing that, at a minimum, such ERCOT action supports the REPs' sought declaration, albeit at an earlier date than originally sought by the REPs. As such, the REPs on rehearing petitioned the PUC to allow the one-time rate adjustment for contracts executed before this earlier date, based on the record established in the PUC's order
Specifically, REPs argued that the PUC's denial order finds that, "On December 20, 2022, the quantity of ECRS that ERCOT would procure was
established, based on the ERCOT Board of Directors' approval of the 2023
Ancillary Service Methodology (six months before the initial procurement of
ECRS)."
The REPs argue that this action by ERCOT is the crux of the PUC's denial order, which denied REPs' sought ability to make an adjustment to fixed contracts entered into on or before the later date of June 9, 2023 (the ECRS start date)
The REPs, however, say that the PUC's fixation on ERCOT's December 20, 2022 establishment of the quantity of ECRS supports a finding that, for contracts executed prior to December 20, 2022, ECRS imposes charges beyond the REP's control for a customer's existing contract
Therefore, at a minimum, the REPs on rehearing petitioned the PUC to designate ECRS as an ancillary service
incurring charges beyond a REP’s control for a customer's existing contract (i.e., a
fixed-rate product) that was executed on or before December 20, 2022.
More broadly, the REPs still sought their original relief (allowing the one-time adjustment for contracts up until June 9, 2023) by arguing that, "the
minimum quantity of ECRS to be procured by ERCOT, does not equate to the ability to reasonably
anticipate the costs that would be associated with those charges."
The REPs added that, "It is critically important for customers that REPs understand how the rule language in 16 TAC
§ 25.475(b)(5) [the fixed rate rule] will impact the ability of REPs to adjust existing fixed priced products for
regulatory changes implementing new ancillary services or costs approved by the Commission that
create costs that are beyond the REP’s control after the existing contract was established."
The REPs again emphasized that their sought relief would not authorize retroactive charges, and would not authorize the billing of charges for prior usage (as alleged by an ALJ in a proposed order). Rather, the one-time adjustment would allow the charging of a modified rate on a prospective basis, related to usage going forward
Docket 55959
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January 13, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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