In Broad Energy Bill, Texas Committee Drops Language That Would Have Banned All Variable Rates, Narrows To Wholesale Index Products (But Includes Small C&I)

The Texas Senate Committee on Jurisprudence today reported favorably to the full Senate a committee substitute for SB 3, a broad-ranging energy bill that would have, as originally filed, banned all variable retail electric rates

SB 3 is notable, because unlike other bills proposed to regulate various retail electric provider products, SB 3 addresses a number of other proposed measures in response to the winter weather event (including weatherization), and thus is more likely to be acted upon than some stand-alone bills affecting REP products.

As originally filed, SB 3 provided that, "The commission [PUC] by rule shall require a retail electric provider to offer service under a fixed-price contract. A retail electric provider may not offer a contract for service at a variable rate."

This prohibition on variable rates was not limited to residential service as originally filed

Language for the committee substitute was not immediately available.

However, the bill's author, Sen. Charles Schwertner, described changes under the committee substitute during a committee meeting

Schwertner said that the committee substitute would abolish wholesale index electricity products for residential as well as small C&I customers.

While Schwertner did not specifically state that this provision replaced in its entirety the original, broader variable rate prohibition, it would appear that the committee substitute is narrowing the prohibition to be limited to wholesale index products, based on discussion and testimony during the committee meeting.

Other changes under the committee substitute include:

• Limiting ERCOT pricing under higher offer cap to 12 hours per year

• Establishing a separate system-wide cap during system emergencies

• Establishing a cap on ancillary services prices equal to 150% of the system-wide market cap

• Requiring ERCOT to procure ancillary services to account for intermittent generation

As filed, the original bill provided that REPs and TDUs shall work to provide certain information to customers, as follows (no changes to this provision were highlighted in discussing the substitute):

An electric utility providing transmission service for a retail electric provider, as defined by Section 31.002, shall collaborate with the retail electric provider to ensure that information about the following matters is regularly provided to the retail electric provider's retail customers together with bills sent to the customers:

(1) the electric utility's procedures for implementing rolling blackouts;

(2) the types of customers who may be considered critical customers or critical load according to commission rules adopted under Section 38.075;

(3) the procedure for a customer to apply to be considered a critical customer or critical load according to commission rules adopted under Section 38.075; and

(4) reducing electricity use at times when rolling blackouts may be implemented.

As filed, the original bill would direct the PUC to, by rule, require TDUs to:

(1) maintain lists of customers willing to voluntarily participate in load shedding; and

(2) coordinate with municipalities, businesses, and customers that consume large amounts of electricity to encourage voluntary load shedding

As filed, the original bill would provide that the PUC, by rule, shall require each provider of generation service to implement measures to prepare the provider's generation assets to provide adequate electric generation service during a winter weather emergency according to reliability standards adopted by the commission.