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ERCOT Fee Hike ‘Sure to Trickle Down,” Says TCAP

October 21, 2015 By Cheryl Kaften

The Electric Reliability Council of Texas (ERCOT), which manages the transmission grid throughout about 85 percent of the Lone Star State, received a system administration fee hike on October 8 of nearly 20 percent from the Public Utility Commission of Texas (PUCT).

The increase – the largest approved by the commission (Project No. 38533) in at least six years – brings the fee up from 46.5 cents per megawatt hour (MWh) to 55.6 cents/MWh. It will be applied to wholesale power purchases; however, according to the Texas Coalition for Affordable Power (TCAP), ratepayers still will feel the pain.

Indeed, “The nine-cent fee hike … is sure to trickle down anyway – and could increase [customer] energy costs by 10 cents or more each month.” R.A. Dyer, a policy wonk at TCAP, commented.

Dyer explained that, like a sales tax, the fee is attached to energy consumption. “So just as state revenues increase when more goods are sold statewide, so too do ERCOT revenues go up when energy consumption rises. The fee itself also has increased over the years — from 33 cents/MWh in 2003, then later to 41.7 cents, and most recently to 46.5 cents.”

The new fee structure would lead to about $193.9 million in revenues during 2016 and $197.5 million in 2017, according to ERCOT’s budget documents. That equates to a more than 50 percent increase in fee-generated revenues in fewer than ten years.

ERCOT requested an effective date of January 1, 2016, for the fee increase.

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