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Texas Staff Suggest Modifying Capital Requirements for REP Certification Due to Higher Price Cap, Seek Guidance on Other Retail Market Impacts Staff of the Public Utility Commission of Texas have sought guidance on moving forward with several projects to address retail market impacts from the higher system wide offer cap (SWOC), including potentially increasing the capital required of retail electric providers for certification.
Staff noted that last fall, the Commissioners discussed the need to review the REP certification rules to ensure that any additional risks associated with the increase of the SWOC are accounted for in the standards the Commission sets for those retail providers wishing to enter the market (see prior story for discussion). Though Commissioners last fall agreed to revisit the REP certification rules, the Commission has yet to formally commence a proceeding on REP capital requirements. Earlier this week, a docket (41615) was assigned for a review of the certification rules, but it was not explicit as to content (and as previously reported may also include a review of standards for managerial competence to ensure bad actors are not re-certified)
Staff sought further guidance from the Commission on the issue of REP capital requirements, and said that if the Commission wishes to proceed, Staff would open a project and seek comment whether additional risks associated with the increase of the SWOC should be accounted for, and if so how, in the REP certification rules.
Additionally, Staff noted that Commissioner Kenneth Anderson previously filed a memo stating that ERCOT can achieve significant improvements in its credit exposure, and the collateral requirements imposed on market participants, by working to shorten the real-time market settlement timeline from its current 9 days for invoice issuance down to five or even three days.
Staff said that at the Commission's direction, Staff would coordinate with ERCOT (especially its Credit Working Group and ERCOT Staff) to: a) mitigate unnecessary collateral requirements; and b) reduce credit exposure to ERCOT and its participants, which could include reducing the settlement times for the real time market.
Finally, Staff sought guidance on reviewing the possible mitigation of higher retail prices for customers who transition to a Provider of Last Resort (POLR) during a peak load event.
Staff noted that taking on a new customer at the moment of a peak load event may expose the POLR to unexpectedly higher capital requirements. The customer would potentially be charged higher retail rates, that the customer would not have anticipated.
Staff said that this raises the following questions:
a) Should the POLR's capital requirements during such a mass transition be addressed, and if so how; and
b) Should the customer's rates under such circumstances be addressed and if so, how?
At the Commission's direction, Staff would open a project and seek comment on whether, and if so, how, a POLR's capital requirements and the customer's retail rates could or should be mitigated when a mass transition occurs at a peak load event.
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June 27, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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