Texas PUC: Retail Provider Cannot Change Fixed Rate due to Higher ERCOT Price Caps

A retail electric provider cannot change its fixed rate provided to a small customer due changes in the level of the high price cap in ERCOT, the Public Utility Commission of Texas has determined.

Specifically, as first reported by the Star-Telegram, Ambit Energy is making refunds to fixed rate customers who had previously had a "Power Cost Recovery Factor" applied to their bills, after the PUCT determined that the charge was not allowed under the Substantive Rules. Ambit had imposed the charge in light of higher hedging costs resulting from the increase in the high system-wide offer cap in ERCOT to $4,500/MWh on August 1.

Terry Hadley, spokesperson for the PUCT, told Matters that the Commission's conclusion was reached based on an interpretation of the relevant substantive rules, rather than any factors specific to Ambit (such as whether Ambit actually incurred higher costs from hedging).

Specifically, language on Ambit's notice to customers of the refunds notes that the PUCT has concluded that the higher price cap does not "impose" a fee on REPs, nor does it "mandate" any specific costs, and therefore a change in the fixed rate was not permissible.

Though no formal finding from the Commission has yet been voted on in a contested proceeding, the conclusion is that the higher price cap does not trigger the "change in law" provision in Subst. R. §25.475, which allows retail electric providers to change rates in fixed-rate products for retail customers due to, "changes resulting from federal, state or local laws that impose new or modified fees or costs on a REP that are beyond the REP's control."

This interpretation is to apply to all REPs serving small volume customers, and not just Ambit's specific circumstances.