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PEC prepares for increases in ERCOT pass-through charges

PEC Transmission Cost of Service Pass-Through

This chart compares the Transmission Cost of Service Pass-Through charge paid by Pedernales Electric Cooperative members on a month-to-month basis if the charge was re-evaluated twice a year rather than once. The blue shows current changes from month to month, while the orange indicates the monthly changes in the TCOS charge if it was calculated every six months instead. Courtesy slide

Transmission Cost of Service charges on electric bills from Pedernales Electric Cooperative soon could be listed as Transmission Cost of Service Pass-Through charges — and most likely will increase. Also, the annual implementation of the pass-through charge might occur twice a year rather than once a year, according to a proposal made by PEC staff to the Board of Directors at its regular meeting Nov. 19. The meeting was held at PEC headquarters, 201 S. Avenue F in Johnson City. 

If approved by the board at its Dec. 17 meeting, the new language and procedures will go into effect March 1, 2022. Tariff and Business rules then will be updated to reflect current pass-through charges every June 1 and Oct. 1.

“Changing the name to include ‘pass-through’ will make sure that the nature of the charge is clear to members,” said PEC Rates Manager Natalia Mack. “PEC does not control this charge. It is just a pass-through.” 

TCOS is passed along to electric customers from the Electric Reliability Council of Texas (ERCOT), which operates the state’s electric grid. The pass-through is the cost that PEC incurs to have access to the ERCOT transmission system. It is based on the actual cost of transmitting electricity to members, which, for PEC, is about $90 million a year. 

According to Mack’s presentation to the Board of Directors, about $1.77 is added on average to each member’s bill to cover the cost of transmission. That cost fluctuates as demand increases. By calculating the TCOS pass-through every six months instead of every 12 months, the charge would decrease in the summer months and increase in the winter months, evening it out over the year.

Recently, the pass-through rate has been on the rise. 

“The rate is growing at a faster pace than we are growing, and we are growing really fast,” Mack said. “Over the past five years, the … increase has been 4 percent a year. This year alone, the increase has been over 8 percent.” 

Changing the update to twice a year would lower the monthly amount in high-demand months. The total amount paid by members over the year would remain the same but with less ups and downs over the 12-month period.