Texas PUC To Consider Whether To Ban All Index Products, And All Products With Ancillary Service Pass-Throughs, For Residential And Small Commercial Customers

As part of a rulemaking to implement recent legislation, the Texas PUC will consider whether to prohibit all index products, and any product with a pass-through of ancillary services, for residential and small commercial customers

At today's meeting, the PUC voted to issue for comment a proposal for publication which would, among other things, require a new signed Acknowledgement of Risk for any residential and small commercial customer product which has a separate assessment of ancillary service charges, and any residential and small commercial indexed product

See our prior story on the proposed rule changes under the proposal for publication

The PUC did not revise any proposed language under the proposed rule as drafted by Staff, but did seek stakeholder comment on going beyond the draft language in terms of product limits

Specifically, the PUC will, in issuing the proposed rule for comment, request stakeholder comment on whether, for residential and small commercial customers, the PUC should ban all indexed retail electric products and products that allow for the pass-through of ancillary services

Commissioner Lori Cobos had requested such consideration, expressing concern that, even with a signed Acknowledgement of Risk, small customers may not be familiar with the risks associated with such products, and are not in the position to understand the impact of their indexed product until getting their bill. Cobos cited mass market indexed products tied to the NYMEX gas price as an example of a product with which small customers may not be familiar with the impact until receiving their bill.

Cobos also noted that most small customers will not be familiar with the term ancillary services

"I'm just concerned that those indexed products may be something that's just not beneficial, period, to residential and small commercial customers," Cobos said

Additionally, at the request of Cobos, the PUC will also consider whether to impose a further cap, or safety threshold, on the maximum POLR rate for non-volunteer POLRs (LSPs), and will seek stakeholder comment on such question

As previously reported, the proposal for publication would establish LSP POLR rates by using the following revised energy charge:

• For residential customers, the LSP energy charge would be, "the average of the actual Real-Time Settlement Point Prices (RTSPPs) for the customer’s load zone for the previous 12-month period ending September 1 of the preceding year multiplied by the number of kWhs the customer used during that billing period and further multiplied by 120%."

• For small and medium non-residential customers, the LSP energy charge would be, "the average of the actual RTSPPs for the customer’s load zone for the previous 12-month period ending September 1 of the preceding year, multiplied by the number of kWhs the customer used during that billing period and further multiplied by 125%."

Cobos said that the continued use of any RTSPPs, even when averaged over 12 months, makes her "a little nervous" and could still produce significant swings in prices

Cobos suggested some form of percentage limit, versus the prior year, in setting the LSP rate for the POLR classes listed above, though Cobos did not offer a specific threshold or language, other than asking if the LSP pricing, "should include a safety threshold to prevent the energy charge from increasing by more than a certain percentage on a year-to-year basis?"

Cobos acknowledged that the issue requires a balance in protecting customers while ensuring REPs are not financially impacted in serving POLR customers

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