Texas C&I Customers, Cities Back TEAM Request To Correct Wholesale Prices To Remove PUC-Directed Administrative Price Adder As Of Cessation Of Load Shed On Morning Of Feb. 18

February 23, 2021

Email This Story
Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com

Several Texas non-residential customers, which include several cities, (Coalition of Concerned Customers) have filed a letter with the Texas PUC in support of the previously reported request from the Texas Energy Association for Marketers (TEAM) which had asked the PUC to immediately instruct ERCOT to remove, effective back to 1:05 a.m. on February 18, the administrative price adder which had been directed by the PUC to account for load shed, with ERCOT directed to correct prices to reflect such removal

See more details on TEAM's request here

The Coalition of Concerned Customers said that TEAM's request, "will significantly reduce the substantial impact of this extreme event on small businesses in Texas, which already have weathered a storm of operational and other challenges this year because of the pandemic."

As previously reported, TEAM noted that the adder ordered by the PUC had been intended to ensure scarcity prices reflected actual load when load shedding was occurring, but noted ERCOT said that it had completed the restoration of all firm load shed as of 1:05 am on February 18, 2021. Therefore, TEAM said, the adder should have been removed at such time. The adder was removed at approximately 9 a.m. Feb. 19

The Coalition of Concerned Customers said, "Just by enforcing the plain terms of its Order, the Commission can mitigate the economic impact of this devastating storm by hundreds of millions of dollars on small commercial and industrial customers (including intrastate pipelines) that are not just the backbone of the Texas economy, but also served a critical role during the weather event. While we understand that the Commission’s motive in setting prices at this level was to help Texans, ERCOT’s interpretation of the February 16 Order -- by keeping prices at the cap even when ERCOT had ample capacity on the system -- had the unintended consequence of ultimately harming the very interests that the Commission was trying to help."

"The impact of the $9,000/MWh prices will be disproportionately felt by commercial and industrial customers, which often seek to mitigate their energy cost through the use of indexed rate structures. It bears note that even if TEAM’s request were granted, it would still leave $9,000/MWh prices in place for over three days. Frankly, such prices could never have been anticipated by even the most astute student of the ERCOT market rules. There were 90 hours spent near the $9,000 cap in Real Time in February of 2021. For context, in the ten-year history of the nodal market there were only 16 hours spent near the cap in RT before this: 3 hours in 2019 and 13 hours in 2011 (the cap was $3,000 in 2011)," the Coalition said

"The Coalition of Concerned Customers is fully aligned with the Commission’s desire to help Texans. One of the most direct ways in which the Commission could do so is simply to enforce its February 16 Order during the 32 hours in which administrative adders were imposed after the firm load shed instruction was lifted. The removal of these adders consistent with the February 16 Order and when there was no actual supply scarcity would reduce prices by approximately 90% (from approximately $9,000/MWh to approximately $740/MWh) during those hours and reduce the economic impact of this crisis significantly for commercial and industrial customers," the Coalition said

The Coalition offered the following representative examples:

1. An agricultural company with approximately 0.5 MW of load in a month. Its January bill was $5,000 (at an average energy and ancillary rate of ~$20/MWh). That same 0.5 MW of load would receive a bill for more than $470,000 in February. Just focusing on the 32 hours that are the subject of TEAM’s request, normal load service during those hours would cost approximately $125,000 (energy + ancillary services + reliability uplifts). However, if TEAM’s request were granted, the bill for those hours would be reduced to approximately $25,000 (energy + ancillary services + reliability uplifts).

2. A manufacturing facility with approximately 1.7 MWs of load in a month. Its January bill was approximately $19,000. That same 1.7 MW of load in February would cost nearly $1,680,000. Again, just focusing on the 32 hours that are the subject of TEAM’s request, normal load service during those hours would cost approximately $450,000 (energy + ancillary services + reliability uplifts). If TEAM’s request were granted, the bill for those hours would be reduced to approximately $90,000 (energy + ancillary services + reliability uplifts).

3. A large church, with approximately 700 kW of load in a month. Its January bill was approximately $6,000. That same 700 kW of load in February would cost nearly $540,805. Again, just focusing on the 32 hours that are the subject of TEAM’s request, normal load service during those hours would cost approximately $150,000 (energy + ancillary services + reliability uplifts). If TEAM’s request were granted, the bill for those hours would be reduced to approximately $30,000 (energy + ancillary services + reliability uplifts).

"In sum, even if TEAM’s request is granted, the bills from the 32 hours impacted by the request would still be equal to five times the entire bill from January. That is, even if TEAM’s request is granted, in less than a day and a half, the agricultural company, manufacturer, and church would be paying five times the entire amount they spent on the entire month of January’s service. If TEAM’s request is denied and the Commission chooses not to enforce its February 16 Order, the cost for less than a day and a half of service will be approximately 24 times higher than the bill for the entire month of January," the Coalition said

"The Coalition of Concerned Customers agrees with TEAM that the rationale and the directive of the February 16 Order were clear and focused on $9,000/MWh prices during times of firm load shed. While the Coalition of Concerned Customers believes that the Commission should reconsider its decision to impose $9,000/MWh prices, the Commission, at a minimum, should grant TEAM’s request and direct ERCOT to remove the administrative price adders from prices after 1:05 am on Thursday, February 18, when ERCOT 'completed the restoration of all firm load shed.' The Commission has the authority and ability to protect the commercial and industrial customers that are the backbone of Texas’ economy. It should act promptly to enforce its February 16 Order and to remedy this unjust result," the Coalition said

"While the Commission’s decision may have been well-intentioned, there are other means that would be less devasting [sic] to customers to provide assurance to generators that they will be made whole for the costs that they incurred while operating during the extreme weather event. In the interest of the public welfare that is grappling with the consequences of the February 16 Order, the Commission should use its emergency powers to rescind it. Moreover, support for these Comments should not be read as agreement that granting TEAM’s request would be a complete and adequate remedy for the unprecedented and long-lasting prices imposed by the February 16 Order, nor a waiver of any rights related thereto," the Coalition said

"The Coalition of Concerned Customers notes that, as TEAM suggested, should there be any claims that generation resources brought online after the load shed instructions were lifted cannot recover costs with removal of the administrative price adder, the Commission should clarify that any generator that is unable to recover its verifiable fuel costs that it reasonably incurred to produce power through the applicable ERCOT Nodal Protocols will be permitted to file with the PUC for recovery of those costs," the Coalition said

The Coalition noted that granting TEAM's request would significantly alleviate the impact on customers with no impact on the State’s treasury

The Coalition of Concerned Customers is an ad hoc group of commercial and industrial customers that includes the following companies: BPR OP, LP; City of Baytown; City of Rosenberg; Creative Specialty Foods Inc.; Crownmark Imports (Crown Mark, Inc); United Minerals and Properties, Inc. dba Cimbar Performance Minerals Inc.; City of Round Rock; Chisos Logistics; Kyocera Document Solutions America, Inc.; Arandas Bakery (Arandas Franchises representing 25 locations); Harbor Freight Tools USA, Inc.; Lincoln Rackhouse; Best Press Inc.; Leslies Poolmart, Inc.; NET Power, LLC; Stratas Foods LLC; Alamo Crossing, LLC; B & B Theatres Operating Co., Inc.; IKO Southwest Inc.; KRM 505 Sam Houston LLC; KRM 525 Sam Houston LLC; McCoy Corporation; NW Crossings Management LLC; Overwraps Packaging, Inc.; Rojan, Inc.; SanMar Corporation; Suffolk Business Solutions; VRE Properties LLC; Webster Surgical Specialty Hospital, LTD; Bixby Enterprises; Explorer Pipeline Company; G&H Diversified Manufacturing; RS 4606 FM 1960 LLC; Blue Line Distribution; Redoak Drive LLC; Cryoport Systems; Data Foundry; and Huhtamaki, Inc

Docket 51617

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Energy Operations & Reporting Associate
• NEW! -- Commercial Sales Support Representative -- Retail Supplier
• NEW! -- Channel Partner/Channel Sales Manager -- Houston
• NEW! -- Wholesale Originator -- Retail Supplier -- Houston
• NEW! -- Trading Analyst -- Retail Supplier
• NEW! -- Renewables Trader -- Retail Supplier
• NEW! -- Channel Partner Sales Manager -- Retail Supplier
• NEW! -- Experienced Retail Energy Account Manager
• NEW! -- Sales Channel Manager -- Retail Supplier
• NEW! -- Retail Energy Account Executive -- Texas
• Supply and Pricing Analyst -- Retail Supplier -- DFW
• IT Billing Project Manager
• IT Billing Business Analyst