PUC Rules Electric Companies Can’t Alter Fixed Price Rates

After the PUC voted to raise the market cape earlier this summer (with more cap raises coming in upcoming years), there were a lot of concerns about whether or not Texas electricity companies would alter the rates of their fixed-rate electricity plans because of increased costs on their end. This was a controversial concept since they would essentially be breaking their contracts with their customers. The only REP that actually ended up compromising themselves, however, was Ambit Energy, who added a “Power Cost Recovery Factor’ charge to their customers in October.

Obviously, this created quite an outcry from Ambit customers, but the PURA Substantive Rules had a clause that seemed to allow for REPs to change their rates following an increase in the market cap. Not that this mattered with Ambit customers who felt the company wasn’t operating in good faith and living up to their contractual commitments.

After the negative publicity and a bunch of irate customers voicing their displeasure, Ambit Energy eventually began offering refunds to customers of their “Power Cost Recovery Factor” charges. Now, on the heels of that refund, the PUC has gone ahead and ruled that the additional charges Ambit imposed on their customers were not allowed under the Texas PURA Substantive Rules in the first place. In short, not only can’t Ambit change contracted fixed-rate electricity charges, neither can anyone else moving forward.

This is great news for customers since any precedent other REPs might have used to increase customer rates despite existing contracts has now been shot down. So no existing temptation for other Texas electricity companies to follow suit is nice. Of course, I should also note that because of the price cap increase, the electric companies themselves are now quite possibly taking losses on customers thanks to the changes in energy costs from the distribution end, which is not exactly a positive for a healthy, functioning deregulated electric market.

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