Regulators this week hiked by nearly 20 percent the fee that supports the state’s principal electricity grid operator.
In a 3-0 vote Thursday, the Texas Public Utility Commission agreed to raise the “System Administration Fee” From 46.5 cents to 55.6 cents per megawatt hour. The fee supports operations at the Electric Reliability Council of Texas, or ERCOT, which oversees the transmission grid in about 85 percent of the state.
The nine-cent fee hike, the largest since at least 2009, will be applied to wholesale power purchases, meaning that it won’t go directly into home bills. But it’s sure to trickle down anyway, and could increase your energy costs by 10 cents or more each month.
Each of the three PUC commissioners expressed dismay at raising the ERCOT fee, but said the hike was necessary to finance technology improvements and to comply with new directives.
“We don’t like to see fee increases (but) this was necessitated by a big investment in IT,” said PUC chairwoman Donna Nelson.
“I don’t want to see double digit increases in the future — this is a one-time deal,” said Commissioner Kenneth Anderson.
Besides new technology-related projects and other new responsibilities — including those mandated by federal regulators — ERCOT also claimed it needs extra money to keep up with inflation.
But the fee, like a sales tax, 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 per megawatt hour in 2003, then later to 41.7 cents, and most recently to 46.5 cents.
This means that ERCOT is already raising more money today from this fee than raised in previous years.
Consider that in 2009, when the fee was set at 41.7 cents, it generated about $128.5 million for ERCOT. In 2015, with it set at 46.5 cents, it’s estimated to have generated about $159.5 million. That’s about a 24 percent revenue jump.
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 less than 10 years.
The nine-cent increase also represents a more than 65 percent increase from the 2003 rate.
ERCOT recognizes that this hike is substantial, but it insists it has — and will remain — a faithful steward of ratepayer money.
“ERCOT knows that it must manage resources carefully on behalf of market participants and Texas consumers who pay to support ERCOT’s operations,” it wrote in a filing at the PUC.
R.A. Dyer is a policy analyst for TCAP, a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.