Texas Adopts Final Level for Waiver of Demand Ratchet

The Public Utility Commission of Texas adopted with no modifications to the rule's language a Staff proposal for adoption to establish a demand ratchet waiver threshold of 25% (39829).

The Commission did accept several modifications to the preamble suggested by Staff, but otherwise adopted the language of the new rule, to implement House Bill 1064, as proposed earlier and first reported by Matters.

Specifically, the adopted new Substantive Rule 25.244 provides that, "[i]n a proceeding in which base rates are set for nonresidential secondary voltage service customers, the base rates set for nonresidential secondary voltage service customers shall provide that these customers shall be billed on a kilowatt-hour (kWh), kilowatt (kW), or kilovolt-amperes (kVA) basis, and that if a demand ratchet is utilized, the demand ratchet shall not apply to a nonresidential secondary voltage service customer that has an annual load factor less than or equal to 25 percent."

The rule does not require the use of demand ratchets for any customers, and parties in a base-rate proceeding are free to advocate for or against the use of a demand ratchet for customers above the 25% load factor established in the rule.

Language was added to the preamble stating that, in a rate case, the Commission has the authority to set rates based on its assessment of any such arguments for or against a higher demand ratchet waiver threshold pursuant to its general authority to set just and reasonable rates under PURA § 36.003.

Staff has said that data from the TDUs indicate that the 25% threshold will exempt about one-half to two-thirds of the class's customers from the use of demand ratchets.