Texas PUC Commissioners Struggle With Recommendations on Alternative Ratemaking

During yesterday's open meeting, Texas PUC Commissioners struggled with what, if any, recommendations should be made concerning alternative ratemaking mechanisms.

As first reported by EnergyChoiceMatters.com, a consultant's report expressed a preference for straight-fixed variable (SFV) rates, while in contrast a draft Staff report proposed to conclude that current ratemaking mechanisms are working well, and that no specific legislative authorization is needed for a particular type or types of alternative ratemaking mechanisms.

Staff's draft also noted that, "The use of inappropriate alternative ratemaking mechanisms could result in uncertain and unintended consequences for the Texas competitive retail market and significantly impact the pricing strategies of retail electric providers."

Click here for more specifics on Staff's draft report

Commissioners noted that TDUs within ERCOT appear less enthusiastic for any changes in ratemaking, and that non-ERCOT utilities appear more eager for changes.

While Commissioners did not discuss in-depth specific rate mechanisms, the Commissioners' limited discussions cited alternative ratemaking mechanisms addressing when and how much a utility may recover (e.g. formula rates) or mechanisms related to a more efficient rate case process and the issue of attorney fees, as opposed to changes in rate design (such as SFV).

While Commissioners did not cite any specific alternative ratemaking mechanism which appeared to be needed (though Commissioners wanted to further review the reports), Commissioners were also hesitant to report to the legislature that the current ratemaking is perfect and no changes are needed.

Commissioners will again consider the issue at the next open meeting.

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