Texas PUC Commissioners Affirm Guidance To Change Fixed Price Definition To Explicitly Include Ancillary Services In Price (Fixed Means Fixed)

Commissioners Prepared To Prohibit Index Products In Mass Market, Except For TOU Or Similar Offerings

Commissioners Express Interest In Examining Need For REPs To Proactively Inform Customers Of Next Month's Variable Rate

Several Commissioners Favor Requiring Proactive Acknowledgement Of Risk For Permissible Index Plans

Commissioners Set To Cap POLR Prices, Tentatively Agree On Cap Amount

December 2, 2021

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

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During today's Texas PUC open meeting, Commissioners provided guidance to Staff on several proposed changes to the retail electric customer protection rules.

The PUC did not make a final decision on any rule changes today, but the Commissioners' guidance will inform Staff's drafting of a formal proposal for adoption, which Commissioners will then further consider

Unless otherwise noted, all customer protections in this story relate to residential and small commercial customers only

As previously reported, a proposal for publication would amend the definition of fixed rate product to explicitly provide that the fixed rate shall include ancillary service charges, and that the price cannot vary due to ancillary service charges

Commissioners agreed with this proposed change, with Chairman Peter Lake and Commissioner Will McAdams both reiterating that, "fixed means fixed"

Lake said that, in a fixed rate, the price risk should rest on private financial entities, not customers

Commissioners also agreed that index products should generally be banned for residential and small commercial customers, with a carve-out for time of use or similar innovative products.

HB 16 only banned wholesale index plans that are based on real-time settlement point prices, but Commissioners sought to ban any index plans which would expose customers to similar volatility

Lake said that the index product prohibition should not prevent innovation, nor should it ban time of use or similar rates where the price is based on time, calendar, or a finite or fixed universe that doesn't have a volatility metric

With any permissible index plans, Lake and McAdams favored requiring customers to proactively make an acknowledgement of risk (AOR). Merely disclosing the risks of the index plan through a disclosure that the customer would not explicitly acknowledge is not appropriate, both Commissioners agreed.

Commissioners generally agreed that customers should not be exposed to ancillary service "pass throughs"

That prompted Commissioners to discuss whether variable rate customers need more information, and a greater lead-time, concerning their next month's variable rate, in order for customers to avoid possible volatility from ancillary service cost recovery

Currently, under rule, each residential bill for a variable price product shall include a statement informing the customer how to obtain information about the price that will apply on the next bill. However, a proactive notification to the customer of the next month's variable rate is not required

The Commission may further address notification obligations for the next month's variable rate in a future proceeding.

With regard to POLR rates for residential and small commercial customers, Commissioners tentatively agreed, as a starting point, that a price cap of 20% should be adopted

Specifically, the proposed rule would already change the non-volunteer POLR rate for residential and small commercial customers to be the average of the Real-Time Settlement Point Prices (RTSPPs) for the previous 12-month period ending September 1 of the preceding year multiplied by 120% for residential customers (and 125% for small commercial customers). This compares to the existing rule's use of current RTSPPs, not an annual average.

As an additional safety measure, Commissioners tentatively agreed that this POLR price should not increase by more than 20% in a year, versus the prior year

Project 51830

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