Texas Bill Would Cap Retail, Wholesale Electric Rates During Emergencies, Expand Disconnection Protections

March 12, 2021

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

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SB 1690 has been filed in the Texas Senate which would, through amendments to PURA Chapter 36, cap retail and wholesale electric rates during declared emergencies, and also expand disconnection protections

Chapter 36 generally deals with regulated utilities and utility rates (including TDU rates paid by REPs in competitive areas). However, the bill itself uses broad language concerning "retail electric service" -- which retail electric providers provide under PURA -- and the bill also includes declarations such as, "Notwithstanding any other provision in law..."

In placing a cap on electric rates during an emergency as further discussed below, the bill uses the term, "A provider of retail or wholesale electric service."

Moreover, a statement of legislative findings in the bill references the extreme weather events of February 2021. While non-ERCOT utilities experienced load shed and other impacts, the most serious impacts -- including market pricing impacts -- were in ERCOT, and we see the bill as being prompted by the experiences in ERCOT. Accordingly, while the bill's drafting may not include amendments to PURA Chapter 39 (restructuring), we view the bill as governing retail electric providers, in their capacity as providers of retail electric service, and/or utilities serving REPs.

A statement of legislative findings states, "It is the intent of the legislature to prevent the collapse of the electric grid caused by extreme weather events and the exploitation of energy consumers during a statewide emergency and in the normal course of business as ratepayers."

As noted, the bill would cap wholesale electric rates during a declared emergency. Ostensibly, the Texas legislature lacks authority to cap wholesale prices in an area outside of ERCOT, due to FERC jurisdiction, and therefore, SB 1690, and its various consumer protections, should be read as intending to apply to the ERCOT region, regardless of their text and proposed placement in PURA. The bill also uses, seemingly interchangeably, terms such as "utility", "utility company," "electric or natural gas company," and "electric and gas service providers."

Currently, the term utility company is used only once in the existing PURA, and the term "electric company" (in its plural form) is used only once as well. Again, we feel this reflects the early nature of the bill's drafting, and readers should not focus on precise terms in evaluating whether this bill's provisions are intended to apply to retail electric providers

Even if the provisions of SB 1690 do not apply to REPs themselves, TDUs remain subject to the jurisdiction of Chapter 36, and would need to comply with the new disconnection protections proposed for Chapter 36 under SB 1690

SB 1690 was authored by Sen. Roland Gutierrez, representing District 19, which is understood to be nearly entirely (if not entirely) within ERCOT.

With those caveats noted, SB 1690 would, "notwithstanding any other provision in law," provide that, "an individual customer for retail or wholesale electric service may not be charged a rate in excess of $500 per megawatt hour for electric service provided during an emergency declared by the governor or the federal government in the geographic area affected by the disaster."

SB 1690 would provide that, "A provider of retail or wholesale electric service that charges a rate in violation of this section during a declared emergency by the governor or federal government is assessed civil penalty equal to the difference between the charged rate during an emergency and the rate charged before the declared emergency."

SB 1690 would also, "notwithstanding any other provision in law," establish various "ratepayer rights," and would provide that, "and [sic] individual customer for retail or wholesale electric service" shall have various rights as described below

Among other things, SB 1690 provides that an "individual customer for retail ... electric service," shall, "be given accurate and understandable information concerning the price and terms of service." (again, this is not language we would usually associate with a tariffed service from a regulated utility).

SB 1690 provides that an "individual customer for retail ... electric service" shall have the following disconnection protections:

• shall have the right to avoid discontinuation of service for nonpayment on any Saturday or Sunday or any holiday observed by the utility, unless the utility is open to accept payment and restore service on those days;

• shall have the right to avoid discontinuation of service for a period of sixty (60) days for nonpayment when the utility receives written notice from a medical doctor licensed to practice in the State of Texas, or any adjoining state, certifying that discontinuance of service would create a life threatening situation for the customer or other permanent resident of the customer's household;

• shall have the right to be given a written notice from the utility company of pending discontinuation of service at least five (5) days prior to disconnection of service. This notice shall include a date on or after which discontinuance may occur;

• shall have the right to negotiate with any electric or natural gas company a delayed payment plan to avoid discontinuation of service for a delinquent account in accordance with the utility's terms and conditions;

• shall have the right to avoid discontinuation of service or refusal of service because a former occupant, not of the same household, failed to pay prior bill;

• shall have the right to avoid disconnection of their electric or gas service during extreme temperatures exceeding 100 degrees Fahrenheit or below 32 degrees Fahrenheit;

• shall have the right to avoid discontinuation of service of electric or natural gas service for nonpayment, if the ratepayer has been approved for Low Income Home Energy Assistance Program (LIHEAP) benefits in an amount equal to the delinquent balance, payable within thirty (30) days, and the notice of the approval has been given to the utility provider;

• shall have the right to avoid discontinuation of service for failure to pay a portion of any bill that is in dispute, provided that a deposit is made by the ratepayer for amounts in dispute

• shall have the right to avoid discontinuation of electric or natural gas service for nonpayment of bills if, as of 8:00 a.m. on the scheduled disconnection day, a freeze warning has been issued by the National Weather Service for the county of the scheduled disconnection;

• shall have the right to avoid discontinuation of electric service for nonpayment of bills if, as of 8:00 a.m. on the scheduled disconnection day, an Excessive Heat Warning has been issued by the National Weather Service for the county of the scheduled disconnection;

SB 1690 would also provide that an "individual customer for retail ... electric service" shall, "have the right to negotiate monthly installments for initial service deposits in excess of One Hundred Dollars ($100.00) provided that the entire amount of the deposit is paid within 60 days."

SB 1690 would also provide that an "individual customer for retail ... electric service" shall, "have access through the Commission to an independent administrative process that provides a simple, quick, and effective means of resolving complaints about service and bills from all electric and gas service providers over which the Commission has appropriate jurisdiction."

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