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Staff of the Texas PUC issued a series of questions to commence a review of 4CP transmission cost allocation, as provided under SB 6

Among other things, SB6 requires that the PUC evaluate whether the current four coincident peak methodology used to calculate wholesale transmission rates ensures that all loads appropriately contribute to the recovery of an electric cooperative’s, electric utility’s, or municipally owned utility’s costs to provide access to the transmission system

SB 6 also requires that the PUC evaluate whether alternative methods to calculate wholesale transmission rates would more appropriately assign the cost of providing access to, and wholesale service from, the transmission system, such as consideration of multiple seasonal peak demands, demand during different lengthy daily intervals, or peak energy intervals

Among other things, Staff asked for comments concerning the impact of the current 4CP on the retail market

Section 6(a)(3) of SB 6 requires the PUC to evaluate the portion of the costs related to access to, and wholesale service from, the transmission system that should be nonbypassable, consistent with Section 35.004(c-1).

Staff asked, “Does the language regarding ‘nonbypassable’ costs in section 6(a)(3) of SB 6 refer to costs other than the interconnection costs described by new PURA § 35.004 (c-1)”?

If so, among other things, Staff asked, “How is ‘nonbypassable’ to be properly interpreted?”

Staff’s full questions issued for comment are:

1. What are the pros and cons of the existing four coincident peak (4CP) retail cost allocation and rate design? In your response, please address impacts to the following:

a. the wholesale market;

b. the retail market;

c. ratepayers generally; and

d. specific customer classes (e.g., residential, small commercial).

2. How have congestion and wholesale market prices been impacted by the 4CP retail cost allocation and rate design?

3. How has 4CP price response affected residential and small commercial customers? Is this quantifiable? If so, how?

4. What potential harms to ratepayers might occur if the demand-response signal provided by the status-quo 4CP pricing is diluted?

5. Do the risks of cost-shifting associated with 4CP price response exceed the benefits of cost avoidance or other savings that are associated with 4CP price responses during the months of June, July, August, and September? Please provide all relevant data and analyses.

6. What are the primary drivers of transmission cost incurrence?

a. Are the costs for transmission network upgrades primarily driven by customer load at the time of the transmission system peak load? If not, what share of transmission network upgrades is primarily driven by peak load?

b. What portion of non-interconnection transmission costs are primarily driven by customer non-coincident peak demand, or other measures of demand?

c. Quantify the absolute and relative magnitudes associated with the various categories of primary transmission cost drivers, including the amounts of transmission costs incurred by category in recent years.

d. How stable is the relative relationship between the primary transmission cost drivers over time?

7. What alternative methods to 4CP should the commission consider? In your response, please distinguish between 4CP for wholesale cost recovery and 4CP for retail cost recovery.

8. At what times is the transmission system most congested, excluding discretionary outages (i.e. planned outages)?

9. Section 6(a)(3) of SB 6 requires the commission to evaluate the portion of the costs related to access to and wholesale service from the transmission system that should be nonbypassable, consistent with Section 35.004(c-1). Does the language regarding ‘nonbypassable’ costs in section 6(a)(3) of SB 6 refer to costs other than the interconnection costs described by new PURA § 35.004 (c-1) ? If so:

a. What non-interconnection costs are referred to?

b. How is ‘nonbypassable’ to be properly interpreted?

10. What data can transmission and distribution service providers (TDSPs) (or other stakeholders) provide to aid the commission in evaluating the appropriateness of the existing transmission cost recovery methods and alternative transmission cost recovery methods?

11. How have other areas of the country (i.e., other Regional Transmission Operators and Independent System Operators) addressed wholesale transmission cost recovery? Are there lessons to be learned from these other areas?