Navigating New PUC Rules: Understanding §25.8 for Utilities and §25.504 for Generators

Keeping up with regulations in the energy world can be daunting but understanding them is crucial for compliance and operational efficiency. The Public Utility Commission of Texas (PUC) has rolled out two crucial rules – §25.8 and §25.504 – that utilities and power generators need to know about. These new regulations set the stage for how violations are classified and penalized, and they introduce measures to ensure fair play in Texas’s electricity market. Stay tuned as we break down what these rules mean for your business and how to stay compliant.?

Breakdown of §25.8 (Utilities):?

Executive Summary: §25.8 is specifically designed for utility companies, establishing a classification system for violations and detailing the penalties associated with each type. This rule ensures that utilities maintain compliance with the Public Utility Regulatory Act (PURA) and related regulations.?

Class C Violations:?

• Minor Infractions: Missing report deadlines, with fines up to $1,000/day (§25.8(b)(1)(A)).?

• Customer Complaints: Failing to investigate and report on customer complaints in a timely manner (§25.8(b)(1)(B)(ii)).?

• Registration Updates: Not updating registration or certification information on time (§25.8(b)(1)(B)(iii)).?

Class B Violations:?

• General Misconduct: Any violations not specifically listed as Class C, A, or Special, with fines up to $5,000/day (§25.8(b)(2)(A)).?

Class A Violations:?

• Serious Infractions: Engaging in fraudulent business practices or improperly disconnecting electric service, with fines up to $25,000/day (§25.8(b)(3)(A)).?

• Economic Harm: Violations causing over $5,000 in economic harm or benefit (§25.8(b)(3)(B)(x)).?

• Health and Safety Hazards: Other significant risks to health or safety (§25.8(b)(3)(B)(ix)).?

Special Violations:?

• Major Disruptions: Violations related to wholesale market oversight, with fines up to $1,000,000/day (§25.8(b)(4)(B)).?

Breakdown of §25.504 (Generators):?

Executive Summary: §25.504 targets power generation companies, aiming to prevent unfair control over electricity prices and ensure healthy competition. The rule imposes severe fines for market manipulation and offers a compliance pathway through Voluntary Mitigation Plans (VMPs).?

• Severe Fines for Market Manipulation: Entities found controlling prices or excluding competition through unfair market strategies will face severe fines (§25.504(d)).?

• Voluntary Mitigation Plans (VMPs): Entities can submit VMPs to demonstrate compliance and avoid penalties (§25.504(e)). These plans must be approved by the commission and are reviewed every two years or after significant market changes (§25.504(f)).?

• Definitions:?

• Market Power: The ability to control prices or exclude competition (§25.504(b)).?

• Market Power Abuse: Practices that unreasonably restrict or impair competition, such as predatory pricing, withholding production, and collusion (§25.504(b)).?

• Market Power Threshold:?

• Entities with less than 5% of ERCOT’s installed capacity are presumed not to have market power (§25.504(c)).?

• Controlling 5% or more doesn’t automatically mean market power; further proof is required (§25.504(c)).?

Insights For Compliance:?

• Utilities should dedicate resources to ensuring potential Class C violations such as untimely reporting, not addressing customer complaints promptly, and not maintaining accurate registration information do not occur. These smaller things can sometimes be overlooked or slip through the cracks and with a price tag attached to those mistakes now it could be wise to invest in building good internal processes to catch any potential violation.?

• Power generators should focus on understanding and adhering to the definitions of market power and market power abuse, and proactively submit Voluntary Mitigation Plans (VMPs) to demonstrate compliance.?

By implementing these measures, both utilities and generators can navigate the new PUC regulations effectively and maintain operational integrity.?