Winter Storm Uri Market Update – March 8, 2021

By March 8, 2021 News

Below is a summary of various regulatory events and filings of importance related to Winter Storm Uri.

Energy Edge Files Petition Seeking Tax Relief for Retail Consumers Exposed to High Market Prices

On Friday March 5th, Energy Edge filed an emergency petition seeking tax relief on February electricity invoices for consumers exposed to the high Day-Ahead and Real-Time energy prices as well as Day-Ahead Ancillary Service prices. Energy Edge is requesting that charges for state sales tax, gross receipts tax (“GRT”) and the Public Utility Commission Assessment fee (“PUCA”) be capped for the month of February.

Each of the above taxes are applied as a percent against the total cost of the electricity and most of the cost of transmission and distribution charges (“T&D”) invoiced to the customer by their Retail Electric Provider (“REP”).  Thus, the larger the invoice for electricity, the more taxes incurred by the consumer.  Below are the rates for each tax that are applied against a customer’s invoice for electricity.

  • State sales tax: 25%
  • GRT: 997% (for customers inside the city limits of a city with a population over 10,000)
  • PUCA: 1667%

Energy Edge has requested the PUC work with the appropriate state entities and implement a cap on the amount of state sales tax, GRT and PUCA that can be assessed to customers who were exposed to market-based prices for the month of February 2021. Energy Edge recommended the cap be set to reflect the amount of taxes a customer would have paid based on the average cost of the real-time market and Day-Ahead A/S for the month of January 2021 or implement another solution that yields a similar result.

Real-Time Energy Prices Will Not Be Re-Priced

On Friday March 5th, the Texas PUC decided it would not re-price any of the energy prices from the week of February 15, effectively rejecting the petition filed by the Texas Energy Association for Marketers (TEAM) which was filed on February 19.

TEAM’s petition was in regard to the PUC’s emergency order issued on February 15th directing ERCOT to count firm load shed volumes in the calculation of real-time prices.  This effectively set real-time prices at the high offer cap of $9,000 / MWh for as long as there was firm load-shedding on the grid.  At 1:05 am on Thursday February 18, ERCOT suspended all load-shedding instructions but kept in place its EEA3 emergency status and continued imposing the administrative adder aimed at keeping real-time prices at $9,000/MWh. TEAM’s petition was for real-time prices to be revised to comply with the PUCT’s instruction that prices should be administratively adjusted to the high offer cap only as long as firm load-shedding was being implemented. The ERCOT Independent Market Monitor (“IMM”) also recommended that the PUC make this change.

Subsequently, on March 8th, Texas Lieutenant Governor Dan Patrick called on the PUC to revisit that decision and implement the re-pricing called for bye TEAM and the IMM.

PUC Still Considering Whether to Re-Price Ancillary Services

On Friday March 5th, the Texas PUC declined to rule on a recommendation by ERCOT’s Independent Market Monitor to reprice all day-ahead ancillary service clearing prices for the period of February 15 through February 20 and capping them at the $9,000 per MWh System-Wide Offer Cap that was in place for real-time energy. During this time, prices for certain day-ahead ancillary services reached $20,000 per MWh. The PUC, while saying it is “reluctant” to re-price ancillary services, said it would give further consideration to this issue.

Transmission and Delivery Companies May Adjust Demand Readings Taken During Winter Storm

The PUC has granted a petition from various ERCOT transmission and delivery companies (“TDUs”) seeking authority to adjust customer metered demand readings taken during Winter Storm Uri if the demand readings are deemed to be erroneous due a phenomenon called cold load pick up. Cold load pickup takes place when a distribution circuit is re-energized following an extended outage and can result in an abnormally high demand reading. Because monthly demand readings are used in the calculation of various customer charges, TDUs wanted to ensure the correct reading is applied to February’s billing. The PUC specifically authorized the TDUs to:

  • Adjust billing demands downward as needed for invoices sent to retail electric providers,
  • Eliminate demand readings for use in future demand ratchet calculations,
  • Ignore or remove demand readings from February when reviewing the rate class a customer takes service under, and
  • Reverse actions already taken related to invoices, ratchets or reclassifications.