The Texas Public Utility Commission has said that Texas retail electric providers cannot change their existing fixed electric rate contracts with residential and small commercial (<50 kW) customers due to changes in the level of the price cap in the state's wholesale electric market.® has previously cautioned Texas electric customers that some retail electric providers may attempt to pass-on to customers higher costs resulting from the higher wholesale price caps (which increased from $3,000/MWh to $4,500/MWh this summer and are scheduled to increase to $9,000/MWh in 2015).

Under Texas law, residential and small commercial electric customers who have fixed rate electric contracts are guaranteed that, when they sign up for such a contract, their electric rate won't change during the term of that contract, except for certain permissible changes in government fees or wires charges imposed by the delivery utilities like Oncor, CenterPoint, and AEP.

Specifically, PUC rules provide that a fixed electric rate may change only due to a change in law or regulation which occurs that, "impose[s] new or modified fees or costs on a REP [retail electric provider] that are beyond the REP's control."

The PUC had previously declined to say whether it considered the higher wholesale electric price cap a change in law or regulation which allowed retail electric providers to change their existing fixed electric rate provided to small customers.

Now, however, the PUC has come out saying that retail electric providers cannot change the existing fixed rate provided to a small customer due to the higher wholesale price cap.  Specifically, the PUC has concluded that the higher price cap does not "impose" a fee on REPs, nor does it "mandate" any specific costs, and therefore a change in a customer's fixed electric rate is not permissible.

While this is a win for Texas electric customers, it is essentially short-lived.  As existing fixed electric rate contracts expire, retail providers will be able to adjust their pricing to reflect the higher costs of the new wholesale price cap.

That means customers need to be more vigilant about shopping for the lowest electric rate, and ensure that when their fixed rate contract is up, they shop around for the lowest rate.