Updated With Statements From REPs

Texas PUC Orders Clawback Of Payments For Ancillary Services (AS) Not Provided; Will Further Consider Re-pricing AS To Max Of $9,000 During Winter Event

Says REPs May Resume Billing Customers, Late Fees

Suspends Late Fees From TDUs To REPs For Recent Invoices, Except Securitization Charges

Botkin Says ERCOT ADR Process, Timelines Warrant Consideration

March 3, 2021

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

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Updated, 3/3 5:55 pm ET

Vinnie Campo, General Manager of Bulb US, issued the following statement concerning the PUC's decision

"We’re pleased to see the PUCT take action already to claw back payments for ancillary services that were not provided during the winter weather event. However, we believe more can and should be done. We encourage the PUCT to vote in favor of the IMM’s recommendation to reprice the day-ahead ancillary services at the System Wide Offer Cap.

"It’s not right to ask providers to pay exorbitant ancillary charges to generators knowing that Texas consumers will end up paying much of the cost. And while Bulb won’t pass on costs from the storm to our customers, these charges could have a negative effect on many other Texans across the state, some of whom are already facing soaring energy bills.

"We hope the PUCT considers this when it makes its decision during Friday’s meeting."

--- Statement from Vinnie Campo, General Manager of Bulb US

Likewise, AP Gas & Electric (TX), LLC separately urged the PUC to adopt the IMM's recommendation to, for operating days February 15 through February 20, 2021, reprice all day-ahead ancillary services (AS) clearing prices to cap them at the System-Wide Offer Cap (SWCAP) of $9,000 per MWh

"By quickly signaling your intent to approve the changes recommended by the IMM, you may bring needed financial stability to Municipalities, Co-ops, and REPs across ERCOT ... and ERCOT itself may be able to alleviate the need to short-pay invoices," APG&E said

"APG&E estimates that allowing the ancillary services prices clear at ~$24,000/MWh (~$15,000/MWh above the SWCAP of $9,000/MWh) during Feb 15-19 caused at least $4 Billion of unwarranted charges to be assessed to LSE's for those operating days," APG&E said

"While APG&E projects that we will not suffer losses due to the extreme winter weather, many LSE's (REP's, Muni's, and Co-Ops) did not share our fate. We submit this request in support of our customers and their friends and family members served by LSEs all across the great state of Texas. Your quick action to implement the IMM recommendations will benefit them all," APG&E said

Earlier:

During a meeting this morning, the Public Utility Commission of Texas agreed to implement one of the recommendations from the ERCOT Independent Market Monitor: to claw back payments for ancillary services (AS) that were not provided during the winter weather event

As first reported by EnergyChoiceMatters.com, the IMM had recommended, for operating days February 14 through February 19, 2021, that the PUC invoke the "failure to provide" settlement treatment for all AS that were not provided in real time, which essentially serves as a clawback. See more specifics on this recommendation of the IMM here

Both Commissioners said that the IMM's other recommendation -- which was, for operating days February 15 through February 20, 2021, that the PUC re-price all day-ahead ancillary services (AS) clearing prices to cap them at the System-Wide Offer Cap (SWCAP) of $9,000 per MWh -- warrants further consideration. However, Commissioners said that more time was needed to consider this recommendation, noting that the PUC is meeting again this Friday

Commissioner Arthur C. D'Andrea said that the $20,000 per MWh ancillary service prices were "surprising" and that no one he's talked to expected that AS prices could go above $9,000.

D'Andrea contrasted a re-pricing on ancillary services with a re-pricing of the energy market prices, noting that ancillary services are difficult to hedge. D'Andrea said that he wanted to further consider the PUC's authority on re-pricing

Both Commissioners agreed to ask the state auditor's office to perform a full audit of ERCOT's market clearing process, to determine where the money went.

The PUC ended its prior encouragement to retail electric providers to cease billing residential and small commercial customers until the meter reads had accurate data, as the PUC understands that such data has now been provided. REPs may resume their normal billing and late fee process

Additionally, noting that the PUC had previously encouraged the suspension of billing and late fees for REPs, the Commission ordered that TDUs shall not charge late fees to REPs for billings related to February 22 through today, with the exception of any charges related to securitization bond charges, where applicable.

The PUC also ended its prior suspension of the low system-wide offer cap (LCAP) in the scarcity pricing mechanism, which had been suspended previously due to abnormal fuel prices

D'Andrea said that the Commission needs to have a discussion, prior to this summer, whether the PUC wants to retain the $2,000 per MWh LCAP

Commissioner Shelly Botkin said that the PUC needs to consider issues surrounding disputes at ERCOT and the Alternative Dispute Resolution (ADR) process, and timelines for that process. Botkin said that the issue will probably not be be ripe for being addressed at Friday's meeting.

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