Texas PUC Staff "Support" Eliminating Small Fish Swim Free Rule

Paul Ring | Source: Energy Choice Matters | Posted 09/21/2024

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As such, these small fish can bid at levels, such as above marginal cost, without de jure concern about being alleged to be exercising market power through such bids (in practice, while some small fish have used the rule, other non-legal concerns, including the potential for negative press or other attention, have led the small fish rule to be utilized less than perhaps originally anticipated as a means of driving shortage pricing, though instances of small fish bidding above marginal cost do still occur)

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Staff of the Texas PUC expressed support for eliminating the “small fish” rule and changing the allocation of transmission costs, among other recommendations, in response to the ERCOT Independent Market Monitor's report. The “small fish” rule exempts generators with less than 5% market share from market power concerns, but staff suggested re-evaluating its necessity due to evolving market conditions and the introduction of more effective pricing mechanisms.

Moreover, staff recommended moving away from the 4CP method for transmission cost allocation, proposing alternatives that align with regulatory requirements and grid developments. Additionally, they endorsed revisiting net metering eligibility for certain entities like data centers and crypto-currency mines to encourage real-time participation in the market rather than circumventing cost allocations, reflecting a concerted effort by staff to provide formal opinions on market recommendations.

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Texas PUC Staff "Support" Eliminating Small Fish Swim Free Rule

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