In Implementing New Law On Wholesale Index Products, Texas PUC Strawman To Include Broader Statement Of Risk For Other Index Plans

During today's open meeting, Texas PUC Staff previewed a strawman to implement HB 16, which includes a ban on wholesale indexed plans for small customers, and which also includes new risk disclosure requirements in order to offer such plans to large customers

Staff noted that the strawman will be developed to be broad to generate discussion and feedback

HB 16 defines "wholesale indexed product" as, "a retail electric product in which the price a customer pays for electricity includes a direct pass-through of real-time settlement point prices determined by the independent organization certified under Section 39.151 for the ERCOT power region."

Staff said that the strawman will more broadly address the statement of risk which HB 16 requires for wholesale indexed products

As more fully discussed in our prior story (see story here), HB 16 requires that large customers enrolling into a wholesale indexed product acknowledge that they understand the volatility and fluctuation of wholesale energy

Staff said that the strawman will propose also applying this disclosure requirement to index plans that don't meet the HB 16 definition and which are instead indexed to something other than the ERCOT real-time energy prices (such as indexed to NYMEX, to ancillary service prices, etc.)

Staff also said that the strawman may propose a separate disclosure statement for any pass-through of ancillary services

Staff also said that, while the intent of HB 16 was not clear, Staff believes that the component of certain customer class POLR rates which are indexed to ERCOT real-time prices need to be removed

Staff suggested that the POLR rate for large customers could instead be set as the REP's market-based rate plus a multiplier (e.g. 10%), to allow the REP to hedge while not tying the rate to ERCOT prices