Texas PUC To Remove Fuel Index From ERCOT Low Offer Cap, Will Wait On Potential Further Changes

During an open meeting today, Texas PUC Chairman Arthur C. D'Andrea directed Staff to propose for publication a rule change under which the "50 times FIP [fuel index price]" provision in the scarcity pricing rule would be eliminated

Currently, the low system-wide offer cap (LCAP) is the greater of: (i) $2,000 per MWh and $2,000 per MW per hour; or (ii) 50 times the natural gas price index value determined by ERCOT, expressed in dollars per MWh and dollars per MW per hour.

While the term fuel index price is not used in the scarcity pricing rule (it is used in ERCOT protocols), based on discussion at the open meeting, the proposed change appears to be elimination of the second LCAP provision -- 50 times the natural gas price index value determined by ERCOT, expressed in dollars per MWh and dollars per MW per hour

D'Andrea said that, right now, his inclination is to replace this provision with a make-whole provision, but that could be changed in the formal rulemaking process based on stakeholder comment.

A proposal for publication with this revision will be drafted and returned at a future PUC meeting for a vote, which would represent the initiation of the formal rulemaking process to incorporate the change.

D'Andrea said that other potential changes to the rule may be needed, but said that any additional changes should await on how conversations on market design, at the legislature and at ERCOT, develop before proposing further changes

Project No. 51871