Felix A from El Paso, TX. New to deregulated market auditing. My Texas commercial clients get bills from their REP that show four main charge categories: energy, capacity, transmission, and ancillary services. I understand the energy charge — that is the kWh rate from the supply contract. But capacity, transmission, and ancillary are all listed as pass-throughs and I have no idea how to verify whether the amounts are correct. Where do I find the actual rates to compare against? And what are ancillary services anyway?
ERCOT bill breakdown — what are all these charges and how do I audit them
Felix, good question. In ERCOT — which is the Texas grid operator — the four products are: energy (the wholesale cost of the actual electricity), capacity (currently called the ORDC — Operating Reserve Demand Curve — adder in ERCOT, which works differently from PJM capacity), transmission (the cost of moving power from the generator to the customer delivery point), and ancillary services (regulation, reserves, and other grid stability services). Each one has a published rate or can be calculated from ERCOT market data.
Felix, I am in Texas too and this confused me at first. Here is the practical version. For transmission: check the ERCOT transmission service rates published on the ERCOT website. They are stated as $/4CP which is based on the four coincident peaks — the customer demand during the four highest system peak hours in June through September. If you know the client 4CP value, you can calculate the correct transmission charge. For ancillary services: these are published daily by ERCOT and change constantly. Your REP should be billing a weighted average based on the client load profile. For the ORDC adder: this is embedded in the real-time energy price during scarcity conditions. Most REP contracts either include it in the fixed energy rate or pass it through separately.
Mitchell, that is helpful. How do I find my client 4CP value? Is it on the bill?
The 4CP tag is assigned by the utility (the Transmission and Distribution Service Provider — Oncor, AEP Texas, CenterPoint, etc.) and should be on the utility delivery bill under Transmission Cost of Service or similar heading. It is measured in kW. If you cannot find it on the bill, request it directly from the TDSP. Once you have the 4CP value, multiply it by the ERCOT published transmission rate for that year to get the correct monthly transmission charge. Compare that to what the REP is billing.
Found the 4CP tag on my client Oncor delivery bill. It says 187 kW. ERCOT transmission rate for 2016 is $4.39/kW/month. So the correct transmission charge should be 187 times $4.39 equals $821/month. The REP is billing $967/month for transmission. That is $146/month too high. Is the REP marking it up?
Felix, that $146/month difference could be a markup, a calculation error, or it could include ERCOT administrative fees that are technically part of transmission. Check the REP contract for how they define transmission pass-through charges. If it says actual cost, the $146 markup is not justified. If it says cost plus administrative fees, you are in the same territory as Vince described in the earlier thread about REP markups. Either way, $146/month is $1,752/year that deserves a conversation with the REP.