Texas Staff File Draft Proposal for Disgorgement Rules

Staff of the Public Utility Commission of Texas have filed a draft proposal for publication to implement HB 2133, concerning the disgorgement of excess revenues resulting from a violation of PURA or administrative rule or protocol (40073).

Staff's draft would amend PUC Substantive Rule 25.503 and PUC Procedural Rule 22.246.

Staff's draft would provide that an enforcement action for a violation of PURA §39.157 (relating to market power, etc.) must include a recommendation for disgorgement of excess revenues, but that disgorgement is discretionary for other wholesale electric market violations of PURA, Commission rules, or ERCOT protocols.

Excess Revenue would be defined as revenue in excess of the revenue that would have occurred absent a violation of PURA § 39.157 or Substantive Rule 25.503.

The parties to a proceeding relating to administrative penalties or disgorgement of excess revenue would be limited to the person alleged to have committed the violation and Commission Staff, including the independent market monitor.

Any disgorged excess revenues would be remitted to an independent organization, as defined in PURA §39.151 (e.g. ERCOT), and the independent organization would distribute the excess revenue to Affected Wholesale Electric Market Participants in proportion to their load during the intervals when the violation occurred. However, if the Commission determines other wholesale electric market participants are affected or a different distribution method is appropriate, the Commission may direct Staff to open a subsequent proceeding to address those issues.

Affected Wholesale Electric Market Participants would be defined as an entity, including a retail electric provider (REP), municipally owned utility (MOU), and electric cooperative, that sells energy to retail customers and served load during the period of the violation, excluding any affiliate of the person from which excess revenue is disgorged.