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Texas ALJ’s Proposed Order Denies REP’s Coalition Declaration Request That Sought Allowance For One-Time Adjustment For Some Existing Fixed Rate Contracts To Designate ECRS As Ancillary Service
The Administrative Law Judges (ALJ) proposed order finds that, “[t]he REP Coalition failed to prove that the need for consumer protection is outweighed by the need to protect REPs from risk of reduced profitability due to ECRS costs.”
Per the Texas PUC Administrative Law Judges, (ALJ’s) proposed order, retail electric providers (REPs) would not be permitted to make a one-time adjustment to certain existing fixed rate contracts to reflect the costs of ERCOT Contingency Reserve Service (ECRS). The proposed order from the Texas PUC’s ALJs denies the REP Coalition petition to designate ECRS as an ancillary service product under which REPs incur charges, “beyond the REP’s control for a customer’s existing contract.”
As background, the original ECRS NPRR was proposed in February 2019.
Under the PUC’s fixed rate rule, ancillary services are defined as being included in the fixed rate. 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 considering the new A/S product, only for those contracts entered prior to the new A/S product.
The REP coalition had sought a finding from the PUC to allow for a one-time adjustment to an eligible customer’s fixed rate going forward, though the rule is generally silent as to how the fixed rate may “vary” from the previously disclosed rate.
However, the ALJ’s proposed order declines to designate ECRS as an ancillary service product. The proposed order finds that REPs were better positioned to address future ECRS costs, at the time of customer contracting, than residential and small commercial customers.
“In some instances, these costs may be difficult for REPs to accurately predict,” the proposed order concludes, “Nevertheless, there is no question that REPs have a significantly greater ability to do so than their residential and small commercial customers.”
The ALJ’s proposed order also cites a discussion from a December 2021 open meeting discussion citing then-PUC Chairman Lake’s statement who said, “when we do get ECRS, how can we ensure that those costs, those new ancillary services are not passed on to consumers?”
The ALJ proposed order states, “[t]hese factors should have prompted REPs, prior to June 2023 [the ECRS start date], to price fixed rate products to take into account the possible costs of ECRS.”
The REP Coalition also made the argument that key parameters for ECRS were not finalized until April 2023. However, the ALJ’s proposed order says that the rule’s relevant provision allowing a fixed rate to “vary” from the previously disclosed rate is intended for “extraordinary or unexpected costs” from a new A/S; and says that REPs’ pleas are undercut by the timing of such request for the A/S designation.
In accordance with the discussion and analysis above, the Commission issues the following orders. 1. The Commission declines to declare ECRS as an ancillary service product incurring charges beyond a REP’s control for a customer with a contract that was executed on or before June 9,2023. 2. The Commission denies all other motions and any other requests for general or specific relief, if not expressly granted.
The parties must file corrections or exceptions to the Proposed Declaratory Order by September 18, 2024.
Proposed Declaratory Order With Memo (09/04/2024)
55959 (12/08/2023)
Joint Petition Of Texas Energy Association For Marketers And Alliance For Retail Markets For Designation Under 16 TAC § 25.475(B)(5)
