Texas groups call on PUC to hold ERCOT financially accountable

Complaining of financial secrecy, Texas consumer groups have asked state regulators for a complete review of expenditures by the Electric Reliability Council of Texas, the grid operator in charge of running the deregulated electricity market. The groups called for increased accountability by ERCOT and for a set of standards the Public Utility Commission can use to review the grid operator's expenses in the future.


By Ann de Rouffignac
OGJ Online

HOUSTON, Aug. 29 -- Complaining of financial secrecy, Texas consumer groups have asked state regulators for a complete review of expenditures by the Electric Reliability Council of Texas, the grid operator in charge of running the deregulated electricity market.

Watchdog groups, including Texas Ratepayer's Organization to Save Energy, Consumers Union Southwest Regional Office, and Texas Legal Services Center, filed the formal request with state regulators Aug. 16. The groups called for increased accountability by ERCOT and for a set of standards PUC can use to review the grid operator's expenses in the future.

The Texas Public Utility Commission didn't respond to the consumer group's request at last week's meeting. A spokesman said there was no decision "at this time or response" to the consumer representatives' petition.

"We have no idea what they [ERCOT] are spending," said Carol Biedrzycki, executive director of Texas Ratepayers' Organization to Save Energy in Austin. "It's captive ratepayer money. You can't get away from paying it."

Nearly all Texas consumers must pay 2.2 mils/kw-hr for ERCOT's upkeep. The charges are included in the transmission and distribution rates that will remain regulated and are subject to regulatory review.

The consumer coalition asked the commission to:

-- Review past expenditures, including the costs incurred for development of the customer registration system, delays in the pilot project, and operational failures associated with the single control area.

-- Set up policies under which ERCOT can incur debt that ratepayers must repay.

-- Establish a process for returning funds to ratepayers overcharged for independent system operator services.

-- Monitor expenditures on an ongoing basis.

-- Order an annual financial and managerial audit of ERCOT.

-- Open financial records consistent with public information requirements of state agencies.

-- Create policies that govern selection, use, and payment of outside consultants.

-- Limit ERCOT's fee requests to once a year except under extraordinary conditions.

The consumer advocates complained the commission doesn't appear to have any recourse, if ERCOT's expenses exceed what is considered just and reasonable. "There is no ability for the commission to disallow recovery from ratepayers," according to the filing. "There are no shareholders at ERCOT to cover imprudent expenditures."

The coalition called for a full review of ERCOT's costs to date and plans for future expenditures, noting such an examination is "in the public interest." Without prior oversight by the commission, ERCOT has no incentive to minimize what will be charged ratepayers, it said.

ERCOT should submit its revenue requirement for full review and approval, rather than submitting its expenses after the fact, the coalition said. The grid operator, which is still formulating its budget for the Phase 2 system changes, should give the PUC a forecasted revenue requirement for these expenses before committing to them, the consumer groups said.

"We need to know how much more money they will need," said Biedrzycki. "How much is it going to cost to put this system together?"

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