Texas ALJ Suggests That Retail Providers May Need To Mail Notice Of Petition For New A/S Pass-Through Authority To All Customers

January 8, 2024

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Reporting by Paul Ring • ring@energychoicematters.com

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The Chief ALJ of the Texas PUC has suggested that retail electric providers seeking an order from the PUC designating the new ERCOT Contingency Reserve Service (ECRS) as an, "ancillary service product as incurring charges beyond the REP’s control for a customer’s existing contract", may need to mail notice of the petition to all potentially affected customers.

The sought designation of ECRS by the PUCT as an, "ancillary service product as incurring charges beyond the REP’s control for a customer’s existing contract", would allow REPs to apply a one-time price adjustment to a fixed rate contract that was executed before the implementation of this new ancillary service

The petition has been filed by the Texas Energy Association for Marketers (TEAM) and the Alliance for Retail Markets (ARM). See background on the petition here

The ALJ noted, "As the ALJ understands it at this time, if the petition of TEAM and ARM is granted, the result will be that, under 16 Texas Administrative Code (TAC) § 25.475(b)(5), any REP providing electric service to certain customers under a 'fixed rate product' with a term of at least three months will be allowed to pass along to those customers the cost of ECRS even if it results in exceeding the price stated in the fixed rate product. TEAM and ARM state that, since implementation, ECRS has had the highest cost of any ancillary service, at more than $600,000,000. Thus, the ALJ presumes that, if the petition is granted, the cost impact to fixed rate product customers will be meaningful."

"TEAM and ARM concede that if the petition is granted, all REPs who are serving residential or small commercial customers under a fixed rate product with a contract term that began before June 9, 2023, will be permitted to adjust the price of the fixed rate product to reflect the cost of ECRS. In other words, the persons potentially impacted by the petition are: (1) all REPs that are providing service to residential or small commercial customers under a fixed rate product with a contract term that began before June 9, 2023; and (2) all the customers of those products," the ALJ said

Texas PUC Staff had proposed that REPs provide public notice of their petition to potentially affected customers via a published notice in the state register

However, the ALJ is currently of the opinion that such notice would not be sufficient

"The ALJ concludes that one-time publication of notice in the Texas Register is insufficient to provide adequate notice to customers receiving service under a fixed rate product that their costs may increase," the ALJ said

"At this time, the ALJ is of the opinion that the relief sought in the petition is analogous to a rate increase for fixed rate customers and, therefore, each REP that is a member of TEAM or ARM should be required to give notice by publication and mail as required by 16 TAC § 22.51(a)(1) and (2)," the ALJ said

"However, the ALJ would benefit from input from the parties on this issue. By January 22, 2024, the parties must respond whether they agree with the type of notice proposed by the ALJ and, if not, why not," the ALJ said

16 TAC § 22.51 states, "In proceedings under PURA, Chapter 36, Subchapters C and E; Chapter 51, §51.009; or Chapter 53, Subchapters C and E involving the commission’s original jurisdiction over a utility’s proposed increase in rates, the applicant must give notice in the following manner..."

Such utility rate change notice requirements include, but are not limited to:

• "The applicant must publish notice of its statement of intent to change rates in a conspicuous form and place at least once a week for four consecutive weeks prior to the effective date of the proposed rate change, in a newspaper having general circulation in each county containing territory affected by the proposed rate change."

• "The applicant must mail notice of its statement of intent to change rates to all of the applicant’s affected customers. This notice may be mailed separately or may be mailed with customer billings."

The ALJ also addressed the provision of notice of the petition to other REPs. PUC Staff had suggested issuance of an ERCOT market notice to LSEs and QSEs, but the ALJ questioned the authority of the ALJ to direct such action, since ERCOT is not a party to the proceeding, in contrast to other proceedings where ERCOT market notices have been used

The ALJ also said that, "it is unclear to the ALJ whether a market notice to all LSEs and QSEs captures all REPs who are serving residential or small commercial customers under a fixed rate product with a contract term that began before June 9, 2023."

The ALJ invited comment on the issue raised concerning use of an ERCOT market notice, and also noted, "Among other options, the parties are free to negotiate directly with ERCOT to attempt to obtain its voluntary agreement to provide the market notice."

Docket 55959 s."

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