TITLE 16. ECONOMIC REGULATION

PART 2. PUBLIC UTILITY COMMISSION OF TEXAS

CHAPTER 25. SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS

SUBCHAPTER S. WHOLESALE MARKETS

The Public Utility Commission of Texas (commission) proposes new 16 Texas Administrative Code (TAC) §25.520 relating to Firm Fuel Supply Service (FFSS). This proposed rule will implement Public Utility Regulatory Act (PURA) §39.159, as enacted by Senate Bill (SB) 3 during the Texas 87th Regular Legislative Session. The new rule will establish the criteria for a resource to participate in the Firm Fuel Supply Service (FFSS) program and the requirements for ERCOT to implement the FFSS program.

Growth Impact Statement

The agency provides the following governmental growth impact statement for the proposed rule, as required by Texas Government Code §2001.0221. The agency has determined that for each year of the first five years that the proposed rule is in effect, the following statements will apply:

(1) the proposed rule will not create a government program and will not eliminate a government program;

(2) implementation of the proposed rule will not require the creation of new employee positions and will not require the elimination of existing employee positions;

(3) implementation of the proposed rule will not require an increase and will not require a decrease in future legislative appropriations to the agency;

(4) the proposed rule will not require an increase and will not require a decrease in fees paid to the agency;

(5) the proposed rule will create a new regulation to implement requirements under amended PURA §39.159;

(6) the proposed rule will not expand, limit, or repeal an existing regulation;

(7) the proposed rule will not change the number of individuals subject to the rule's applicability; and

(8) the proposed rule will not affect this state's economy.

Fiscal Impact on Small and Micro-Businesses and Rural Communities

There is no adverse economic effect anticipated for small businesses, micro-businesses, or rural communities as a result of implementing the proposed rule. Accordingly, no economic impact statement or regulatory flexibility analysis is required under Texas Government Code §2006.002(c).

Takings Impact Analysis

The commission has determined that the proposed rule will not be a taking of private property as defined in chapter 2007 of the Texas Government Code.

Fiscal Impact on State and Local Government

Ms. Horn, Sr. Counsel, Rules and Projects Division, has determined that for the first five-year period the proposed rule is in effect, there will be fiscal implications for the state or for units of local government under Texas Government Code §2001.024(a)(4) as a result of enforcing or administering the sections. A municipally owned utility that is a load serving entity will be charged by ERCOT for the firm fuel supply service based upon the load serving entity's load ratio share during the relevant FFSS obligation period.

Public Benefits

Ms. Horn has determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing the section will be increased reliability during, or in preparation for, a natural gas curtailment or other fuel supply disruption. There will be no probable economic cost to persons required to comply with the rule under Texas Government Code §2001.024(a)(5).

Local Employment Impact Statement

For each year of the first five years the proposed section is in effect, there should be no effect on a local economy; therefore, no local employment impact statement is required under Texas Government Code §2001.022.

Costs to Regulated Persons

Texas Government Code §2001.0045(b) does not apply to this rulemaking because the commission is expressly excluded under subsection §2001.0045(c)(7).

Public Hearing

Commission staff will conduct a public hearing on this rulemaking if requested in accordance with Texas Government Code §2001.029. The request for a public hearing must be received by November 14, 2025. If a request for public hearing is received, commission staff will file in this project a notice of hearing.

Public Comments

Interested persons may file comments electronically through the interchange on the commission's website or by submitting a paper copy to Central Records, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326. Comments must be filed by November 21, 2025. Comments should be organized in a manner consistent with the organization of the proposed rule. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed rule. The commission also requests any data, research, or analysis from any person required to comply with the proposed rule or any other interested person. The commission will consider the costs and benefits in deciding whether to modify the proposed rule on adoption. All comments should refer to Project Number 58434.

In addition to general comments on the text of the proposed rule, the commission invites interested persons to address the following specific questions:

(1) If the offers submitted by resources under proposed subsections (c)(1) and (c)(2) are insufficient for ERCOT to allocate 70% of the budget to those resources, as required by proposed subsection (d)(2), how should the awards be allocated?

(2) What process should be used to establish the heat rate and offer cap described in proposed subsection (e)?

Each set of comments should include a standalone executive summary as the last page of the filing. This executive summary must be clearly labeled with the submitting entity's name and should include a bulleted list covering each substantive recommendation made in the comments.

Statutory Authority

The amendment is proposed under Public Utility Regulatory Act (PURA) §39.151, which grants the commission authority to oversee ERCOT; and §39.159, which requires the commission to ensure that ERCOT procures ancillary or reliability services on a competitive basis to increase reliability during extreme cold weather conditions and during times of low non-dispatchable power produced in the ERCOT region.

Cross Reference to Statute: Public Utility Regulatory Act §39.151 and §39.159.

§25.520. Firm Fuel Supply Service (FFSS).

(a) Purpose. The purpose of this section is to promote reliability through the procurement of FFSS for deployment during the winter season.

(b) Definitions. The following words and terms, when used in this section, have the following meanings unless the context indicates otherwise:

(1) FFSS obligation period--a period that coincides with the winter season for which a resource is obligated to provide FFSS.

(2) FFSS resource--a generation resource that ERCOT procures for FFSS.

(3) Market clearing price--the dollar amount per megawatt (MW) that is awarded for an FFSS resource that ERCOT procures for a winter season.

(4) Offer cap--the maximum dollar amount per MW that a qualified scheduling entity (QSE) representing a resource may offer into the FFSS program.

(5) Winter season--November 15 through March 15.

(c) Resource requirements for FFSS eligibility. A resource that meets the following requirements is eligible and may be selected by ERCOT in the procurement process to provide FFSS:

(1) successfully demonstrates dual fuel capability, the ability to establish and burn an alternative onsite stored fuel, and has onsite fuel storage capability;

(2) has an onsite natural gas or fuel oil storage capability or off-site natural gas storage where the resource or QSE owns and controls the natural gas storage and pipeline to deliver the required amount of reserve natural gas to the resource from the storage facility; or

(3) has a transportation contract with a natural gas pipeline that is a critical natural gas facility, as defined in §25.52 of this title (relating to Reliability and Continuity of Service), and:

(A) is subject to the jurisdiction of the Federal Energy Regulatory Commission under the Natural Gas Act (15 U.S.C. §17 et seq);

(B) is an intrastate natural gas pipeline that is not operated by a gas utility, as defined in Title 3 of the Texas Utilities Code; or

(C) is an intrastate pipeline that is owned or operated by a gas utility, as defined in Title 3 of the Texas Utilities Code, that:

(i) provides only transmission service in accordance with its gas utility tariff;

(ii) certifies that if the gas utility reduces firm deliveries to customers pursuant to §7.455 of this title (relating to Curtailment Standards), the intrastate pipeline will have sufficient operational capacity, including sufficient pipeline pressure, to provide the volume of gas required for the transportation path between the storage facility and FFSS resource to provide continuous service in the event of a curtailment; and

(iii) certifies that the pipeline has not curtailed deliveries of gas, under §7.455 of this title or an order issued by the Railroad Commission of Texas, to a resource that was subject to a firm transportation agreement during a curtailment event that occurred after January 1, 2021.

(d) FFSS procurement. ERCOT must procure FFSS ahead of each winter season to help maintain reliability during, or in preparation for, a natural gas curtailment or other fuel supply disruption.

(1) ERCOT may spend a maximum of $54 million in standby payments to procure FFSS during a single winter season. ERCOT may reject an offer that a QSE submits on behalf of a resource if ERCOT determines that:

(A) the offer is unreasonable;

(B) the offer is an outlier when evaluating the parameters of an acceptable offer;

(C) ERCOT lacks a sufficient basis to verify whether the resource complied with ERCOT established performance standards in an event in which the resource was deployed by ERCOT during the preceding FFSS obligation period;

(D) the QSE representing the resource fails to reserve sufficient fuel for the first deployment for the FFSS obligation period; or

(E) the QSE representing the resource fails to reserve sufficient emissions allowances or credits to meet at least three deployments for the FFSS obligation period.

(2) ERCOT must ensure that at least 70% of the $54 million budget for procurement costs is allocated to resources that are eligible to provide FFSS under subsection (c)(1) or (2) of this section, unless insufficient offers were submitted for resources under those subsections.

(e) Offer cap. The offer cap must be calculated as a function of maximum hours per deployment (hours), heat rate (MMBtu/MWh), and fuel price ($/MMBtu), using the following equation: Offer cap ($/MW) = hours * heat rate * fuel price.

(1) The fuel price for resources eligible to provide FFSS under subsection (c)(1) and (2) of this section must be based on the projected price of fuel oil for the upcoming winter season.

(2) The fuel price for resources eligible to provide FFSS under subsection (c)(3) of this section must be based on the projected price of natural gas for the upcoming winter season.

(3) ERCOT must establish a single heat rate for each category of resources that are eligible to provide FFSS under subsection (c) of this section. The heat rate for each category must account for the specific characteristics of the resource types that are eligible to provide FFSS under requirements for that category.

(f) FFSS program requirements. In addition to program requirements established by ERCOT, the following requirements apply to the FFSS program.

(1) An FFSS resource must be represented by a QSE.

(2) ERCOT must establish qualifications for a QSE to represent an FFSS resource.

(3) ERCOT must establish performance criteria for an FFSS resource and a QSE representing an FFSS resource.

(4) An FFSS resource's offer must be submitted to ERCOT through a QSE representing the FFSS resource.

(5) ERCOT may deploy FFSS as necessary throughout the FFSS obligation period.

(6) When deployed by ERCOT, an FFSS resource must deploy consistent with its obligations and must remain deployed until the earlier of:

(A) exhaustion of the fuel reserved to generate at the MW level and for the specified duration associated with the FFSS award, including any fuel that was restocked following approval or instruction by ERCOT;

(B) the fuel supply disruption no longer exists; or

(7) ERCOT may limit the restocking of fuel to manage the overall cost of the service or for reliability needs.

(8) ERCOT must establish procedures for testing an FFSS resource.

(g) FFSS payment and charges.

(1) ERCOT must make a payment to each QSE representing an FFSS resource based on a market clearing price mechanism, subject to modifications determined by ERCOT based on the FFSS resource's availability during an FFSS obligation period and the FFSS resource's performance in a deployment event.

(2) ERCOT must charge each load serving entity (LSE) for FFSS procurement costs based upon the LSE's load ratio share during the relevant FFSS obligation period.

(3) Non-procurement costs may be charged to an LSE based on the LSE's load ratio share during the FFSS resource's deployment.

(h) Compliance.

(1) ERCOT must establish criteria to reduce a QSE's payment, claw back a QSE's payment, suspend a QSE from participation in FFSS, or any combination thereof, based on the QSE's failure to meet its FFSS obligation under this section or a related ERCOT protocol. ERCOT must also establish criteria for subsequent reinstatement.

(2) ERCOT must establish criteria to suspend an FFSS resource based on noncompliance with this section or a related ERCOT protocol. ERCOT must also establish criteria for subsequent reinstatement.

(3) ERCOT must notify the commission of all alleged instances of noncompliance with this section or a related ERCOT protocol.

(4) ERCOT must maintain records relating to any alleged noncompliance with this section or a related ERCOT protocol.

(i) Reporting. Prior to the start of each winter season, ERCOT must publicly report the number and type of FFSS resources providing the service, the market clearing prices, the amount of reserved fuel associated with each FFSS award, the highest and lowest offers, the number of MW associated with each FFSS award, and the projected total cost in standby payments to procure FFSS for that obligation period.

(j) Implementation. ERCOT must develop, in consultation with commission staff, additional procedures, guides, technical requirements, protocols, or other standards that are consistent with this section and that ERCOT finds necessary to implement FFSS, including development of a standard FFSS agreement and specific performance guidelines.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 23, 2025.

TRD-202503818

Andrea Gonzalez

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: December 7, 2025

For further information, please call: (512) 936-7244