Texas Retail Providers Say PUC Staff's Proposal On Transmission-Voltage Customer Uplift Financing Opt-Out Impermissibly Changes Process To Opt-In

August 2, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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Several Texas retail electric providers have filed comments with the Texas PUC stating that a proposal from PUC Staff to implement an opt-out process for transmission-voltage customers from the winter event uplift financing program impermissibly changes the process to an opt-in process

See details in our prior story here concerning the Staff proposal to implement the statutory fining program related to Reliability Deployment Price Adder ("RDPA") charges and Ancillary Service costs above the Commission's system-wide offer cap for the period beginning 12:01 a.m., February 12, 2021, and ending 11:59 p.m., February 20, 2021 (known as "uplift" in the proceeding)

As previously reported, among the entities eligible to opt-out of such financing program (and associated proceeds and cost recovery) are transmission-voltage customers served by a REP.

As first reported by EnergyChoiceMatters.com, Staff proposed that, "To ensure that each transmission-voltage customer is informed of the right to opt out, each REP must notify these customers in writing," Staff recommended

Staff further proposed that, "If a customer does not respond with a statement affirmatively opting out, then the REP must assume that the customer has elected to opt out [sic]."

Just Energy, Gexa, APG&E, and Southern Federal Power ("Joint Intervenors") said that, "By requiring transmission-voltage customers to affirmatively opt in to stay on the path to receiving the benefits of HB4492, the last step transforms Staff's proposal into an opt in process that does not comply with PURA § 39.653(d)'s express direction for a one-time opt out process."

Joint Intervenors said, "PURA § 39.653(d) set the default at being able to receive proceeds from the uplift financing and paying the accompanying uplift charges. PURA § 39.653(d) makes clear that the mandate is that 'transmission-voltage customers that opt out under this subsection shall not receive any proceeds from the uplift financing.' PURA § 39.653(d) does not say that transmission customers shall not receive any proceeds from the uplift financing unless they take affirmative steps to opt in."

"It seems that the opt in methodology suggested does not comply with PURA § 39.653(d) and risks depriving transmission-voltage customers of the securitization benefits ... To impose a unique requirement on transmission-voltage customers that they alone must take affirmative action to opt in to HB4492's benefits, as Staff's proposal would require, presents an opposite and far greater concern: transmission-voltage customers will, through disparate treatment, inadvertently miss the opportunity to opt in," Joint Intervenors said

In separately filed comments, NRG Energy likewise said that, "Staff's recommended procedure is not consistent with the language of PURA § 39.653(d); rather, Staff proposes that transmission-voltage customers be required to "opt-in" contrary to the statutory language."

In separately filed comments, Calpine likewise said that, "Calpine recommends that all eligible entities be treated in the same manner, such that opt-out eligible transmission-voltage customers must affirmatively state their intent to opt out of Uplift Charges ... as the plain language of the statute contemplates an active opt-out process rather than a default opt-in process, particularly because it conditions such opt-out on the payment in full by the relevant entity of all invoices owed during the period of the emergency."

To satisfy notice to eligible transmission-voltage customers, Calpine recommends that ERCOT provide a form notice for REPs to use in this endeavor.

Calpine recommends that REPs will then be responsible for sending the form notice to their transmission-voltage customers.

"The notice could also advise customers that opting out will result in the customer not receiving finance proceeds, as described in PURA § 39.653(d)," Calpine said

In separately filed comments, NRG and TXU Energy both addressed the requirement that, in order for a transmission-voltage customer to opt-out, the customer must pay all relevant invoices

NRG noted that, "Another important requirement of PURA § 39.653(d) is that a transmission-voltage customer that opts out of uplift charges must pay in full all invoices owed for usage during the period of the emergency. Any opt-out procedure adopted by the Commission must require a transmission-voltage customer to meet both of these requirements before allowing it to avoid uplift charges and reduce its REP' s access to securitized funds."

"If transmission level customers are opted out on a default basis, and not required to demonstrate that they have paid all relevant invoices, that would be contrary to the clear statutory requirements and potentially allow for some transmission level customers to avoid paying invoices and uplift charges," NRG said

TXU said that, "With respect to transmission-level customer opt-outs, additional determinations must be made to implement the statute, such as what constitutes 'paying in full all invoices owed for usage during the period of emergency' and whether the statute requires that such customers must have been contractually exposed to the uplift costs in order to opt-out. Also, would such customers that were contractually exposed to the uplift costs be disadvantaged by a default opt-out assumption? The Commission's decision on other issues, such as netting, could directly impact a transmission-level customer's opt-out calculus. These policy and procedural questions could directly impact notice and documentation requirements for REPs. Consequently, to allow for a robust evaluation of the inter-related allocation issue and transmission-level opt-out issues, TXU LSEs recommend that the Commission determine in this proceeding, simultaneously with deciding the allocation issue, the process and requirements that will govern such opt-out decisions."

Project 52322

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