Texas Adopts Rule Setting Form of Energy Efficiency Cost Recovery Factor Applicable to REPs

The Public Utility Commission of Texas adopted, without substantive changes to the provisions affecting retail electric providers, a proposal for adoption as filed by Staff for a revised energy efficiency rule, which includes a requirement that the Energy Efficiency Cost Recovery Factor (EECRF) applicable to REPs shall be a volumetric charge for residential customers.

The prior rule allowed the PUCT to use either a flat or volumetric charge when establishing the EECRF.

Under the newly adopted rule, for residential customers and for commercial rate classes whose base rates do not provide for demand charges, the EECRF rates shall be designed to provide only for energy charges.

For commercial rate classes whose base rates provide for demand charges, the EECRF rates shall provide for energy charges or demand charges but not both. Any EECRF demand charge shall not be billed using a demand ratchet mechanism.

The new rule also further reinforces the required advance notice to be provided to REPs prior to updated EECRF charges.

Under the PUCT's order, for a utility in an area in which customer choice is offered, the effective date of a new or adjusted EECRF shall be March 1. The presiding officer shall set a procedural schedule that will enable the utility to file an EECRF compliance tariff consistent with the final order within 10 days of the date of the final order. The procedural schedule shall also provide that the compliance filing date will be at least 45 days before the effective date of March 1. Notably, "In no event shall the effective date of any new or adjusted EECRF occur less than 45 days after the utility files a compliance tariff consistent with a final order approving the new or adjusted EECRF."

Furthermore, while the procedural schedule may be extended for good cause, "in no event shall the effective date of any new or adjusted EECRF occur less than 45 days after the utility files a compliance tariff consistent with a final order approving the new or adjusted EECRF, and in no event shall the utility serve notice of the approved rates and the effective date of the approved rates to retail electric providers that are authorized by the registration agent to provide service in the utility’s service area more than one working day after the utility files the compliance tariff"

The final rule also establishes new EECRF cost caps as follows:

The total EECRF costs, excluding EM&V costs and municipal EECRF proceeding expenses, shall not exceed the amounts prescribed below unless a good cause exception is granted:

(A) For residential customers for program year 2012, $0.001 per kWh; and

(B) For residential customers for program year 2013, $0.0012 per kWh;

(C) For commercial customers for program year 2012, rates designed to recover revenues equal to $0.0005 per kWh times the aggregate of all eligible commercial customers' kWh consumption; and

(D) For commercial customers for program year 2013, rates designed to recover revenues equal to $0.00075 per kWh times the aggregate of all eligible commercial customers' kWh consumption.

(E) For the 2014 program year and thereafter, the residential and commercial cost caps shall be calculated to be the prior period’s cost caps increased by a rate equal to the most recently available calendar year’s percentage change in the South urban consumer price index (CPI), as determined by the Federal Bureau of Labor Statistics.

Project No. 39674