Texas PUC Overturns ALJ on Price Corrections
Commissioners Deny ERCOT Market Participants’ Complaints
Texas regulators denied complaints by ERCOT market participants and rejected an administrative law judge’s decision on the ISO’s price-correction practices.

Texas regulators last week denied complaints by two ERCOT market participants and rejected an administrative law judge’s preliminary decision related to the ISO’s price-correction practices (50871).

DC Energy Texas and Monterey TX, both qualified scheduling entities in ERCOT, alleged last year that the ISO improperly charged them for point-to-point obligations in the day-ahead market at prices exceeding their not-to-exceed bid prices. The ALJ in October ruled ERCOT violated its Protocols when it issued resettlement statements and found that DC Energy and Monterey were entitled to a remedy.

Texas’ Public Utility Commission disagreed. After hearing arguments from both sides during its open meeting on Thursday, it granted ERCOT’s motion for a summary decision.

Monterey’s legal counsel, Valerie Green, argued that maximum prices are the only way market participants can limit their liability in auctions and that they are a fundamental component of the bid. She said DC Energy had committed to pay less than $261/MWh but wound up ultimately being charged more than $44,000/MWh for the same contract path.

ERCOT Senior Corporate Counsel Erika Kane responded that the grid operator followed its Protocols in making the price corrections and that all market participants are aware of the process.

“Just because ERCOT has done it this one way, that doesn’t mean it’s necessarily correct in the Protocols,” Green countered.

The ISO has been forced to make a number of price corrections in recent years because of software or human errors. Most recently, the Board of Directors in October approved price corrections for 25 operating days during 2020. (See “Board Approves 2 Sets of Price Corrections,” ERCOT Board of Directors Briefs: Oct. 13, 2020.)

“I think DAM price corrections is a very apt phrase here,” Commissioner Arthur D’Andrea said.

Texas PUC
Texas PUC Chair DeAnn Walker | Texas PUC

PUC Chair DeAnn Walker noted ERCOT had attempted to revise its process for price corrections with a nodal protocol revision request but failed to successfully complete the stakeholder process.

“We may have to address it here because the industry can’t do it out there,” she said. “I really have a problem with this being uplifted to ratepayers who had nothing to do with this. … Every ratepayer in ERCOT is going to have to pay for this mistake, and I don’t think that’s the right answer.”

D’Andrea and Commissioner Shelly Botkin agreed with Walker, with D’Andrea saying the case “raises questions [that] need to be answered at the commission.”

“Efforts to resolve this issue at ERCOT have stalled out,” Botkin said. “It may be time for us to make some policy decisions about how to do these things. Nobody likes price corrections.”

No Approval for Entergy, ETEC Swap

The commissioners decided not to sign off for the time being on a request by Entergy Texas and East Texas Electric Cooperative (ETEC) for approval of two mutually dependent transactions until they can gather more information from the parties (50790).

The utilities want to transfer ETEC’s ownership of the Hardin County Peaking Facility to Entergy in exchange for a minority interest in the latter’s new Montgomery County Power Station that equates to 75 MW of capacity. Montgomery County, a 993-MW natural-gas facility, was energized on Jan. 1.

Texas PUC
Entergy’s Montgomery County Power Station | Entergy Texas

If approved, Entergy would pay a little over $36 million for the 11-year-old Hardin facility, which consists of two 75-MW combustion turbines. ETEC would nearly double that by paying $71.1 million for its minority share in Entergy’s unit.

“We have a company giving up ownership in a very efficient, new project to get a less efficient, older project,” Walker said. “I can see what’s in East Texas’ best interest, but I’m not sure how it’s [beneficial] to Entergy.”

The commissioners also expressed their unease with what they said were “side deals” between some of the parties involved. The joint applicants, PUC staff, the Office of Public Utility Counsel and Texas Industrial Energy Consumers filed an unopposed settlement agreement last year.

“This looks more like a straightforward transfer of money,” D’Andrea said. “It’s hard to know. Ultimately, money is flowing from Entergy to ETEC. Entergy has a rebuttal that says, ‘No, this is mutually beneficial exchange.’

“We have to make a public interest finding, and I’m not sure I’m ready to do that,” he said.

The PUC did approve on an interim basis Entergy’s request to update the power plant’s generation cost-recovery rider to reflect the sale of its partial interest. The commissioners agreed to abate the proceeding until either the transaction closes or the utility tells the commissioner it won’t close (51381).

The commission signed off on two other orders involving Entergy. It approved Entergy’s request to establish regulatory accounting treatment for a mark-to-market tax accounting method (51095) and to establish the tax effects of the method’s regulatory accounting treatment (50540) in its existing purchase power agreements.

In other actions, the PUC:

  • Approved East Texas Electric Cooperative’s request to change its wholesale transmission service rates, setting its recoverable annual cost-of-service revenue requirement at $244,902 (50295).
  • Allowed Texas-New Mexico Power Co. to upgrade its advanced meter technology for 170,000 meters after its service provider announced it would no longer support the third-generation network (51387).
  • Granted good-cause waivers of rate-filing requirements to Cross Texas Transmission (51534) and Electric Transmission Texas (51583).

Close COVID-19 Call for D’Andrea

Texas PUC
Chair DeAnn Walker was the only commissioner in the room for the PUC’s meeting on Thursday. | Texas PUC

Walker was the only commissioner present in the hearing room for the open meeting, though both D’Andrea and Botkin called in from self-isolation.

D’Andrea quarantined himself “out of an abundance of caution” after being told a family member had symptoms similar to those of COVID-19.

The family member has since tested negative for COVID-19.

Energy MarketPublic Utility Commission of Texas (PUCT)TexasTransmission

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