Texas Staff Propose Revisions to Ensure Disgorged Revenues Reach Retail Customers

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

Staff's proposal for adoption largely tracks the proposal for publication, but notably makes explicit that any disgorged revenues shall be used to reduce costs or fees incurred by retail electric customers.

Specifically, under Staff's proposal, disgorged excess revenues shall be remitted to an independent organization, as defined in PURA §39.151 (e.g. ERCOT).

The independent organization shall distribute the excess revenue to affected wholesale electric market participants in proportion to their load during the intervals when the violation occurred, "to be used to reduce costs or fees incurred by retail electric customers."

The independent organization shall include with the distributed monies a communication that explains the docket number in which the Commission ordered the disgorged excess revenues and, "an instruction that the monies shall be used to reduce costs or fees incurred by retail electric customers."

The Commission may require any affected wholesale electric market participants receiving disgorged funds to demonstrate how the funds were used to reduce the costs or fees incurred by retail electric customers.

In the draft preamble, Staff said that the disgorged funds should be distributed to the QSEs by ERCOT, with an instruction detailing the amounts owed to each LSE within the QSE's portfolio.

Citing the concern of some market participants that disgorged revenues might not flow from QSEs to various load serving entities, Staff's preamble provides that, "any failure to comply with the obligations of the statute and rule to reduce fees and costs to customers would be a violation of PURA and commission rules."

The load of any market participants that are no longer active at the time of the distribution of disgorged revenues shall be removed prior to calculating the load proportions of the affected wholesale electric market participants that are still active.

The proposed rule still provides that if the Commission determines other wholesale electric market participants are affected or a different distribution method is appropriate, the Commission may direct Commission Staff to open a subsequent proceeding to address those issues.

Docket: 40073