Under 4CP, large businesses can reduce their electricity bills on a year-ahead basis by cutting back on their power consumption during only four discrete high-usage days.
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Rep. Drew Darby
The Texas Public Utility Commission should allow residential customers to employ strategies like those employed by large industrial energy customers to lower their energy costs, a key Texas lawmaker has said in a letter to the regulatory agency.
State Rep. Drew Darby, chair of the House Committee on Energy Resources, told the PUC in his June 25 note to the agency’s five commissioners that it is unfair that residential customers cannot employ certain consumption strategies as a bulwark against high transmission utility charges. Industrial customers currently have this ability under ERCOT’s “Four Coincident Peak” rules.
Darby noted that the PUC is under a legislative mandate to examine and reform those rules — they are known as “4CP” under regulatory parlance — and that as part of that examination, the agency should address the disparity between what is available to large load customers and residential ones. “Residential ratepayers are left absorbing a growing share of costs, costs that, in many cases, were driven by infrastructure investments sized to serve large commercial loads, not the households now paying for them,” he wrote.
Under 4CP, large businesses can reduce their electricity bills on a year-ahead basis by cutting back on their power consumption during only four discrete high-usage days. Large-load industrial customers commonly leverage these rules to save on their year-ahead transmission costs.
“RESIDENTIAL CUSTOMERS ENJOY NO EQUIVALENT RIGHT”
In a June 25 letter to the PUC’s five commissioners, Darby said the rule unfairly disadvantages the little guy because “residential customers enjoy no equivalent right.” He commended the PUC’s recent acknowledgment that it would move away from the current 4CP rules and said the next “logical” step would be for the PUC to permit residential customers to similarly employ energy demand strategies to save on their electric bills.
“Because transmission costs are fixed, cost allocation is a zero-sum exercise,” he stated. “When sophisticated commercial customers successfully reduce their share of transmission costs in a given year, the remainder is redistributed to customers who have no mechanism to respond. …This is not a neutral outcome.”
Darby noted that Senate Bill 6 (which the Texas Legislature adopted in 2025) required the PUC to “evaluate whether the commission’s retail ratemaking practices ensure that transmission cost recovery appropriately charges the system costs that are caused by each customer class.” Therefore, the PUC must reform the “outdated” four coincident-peak methodology, wrote Darby. He also noted that reforming the 4CP rules has long been a recommendation by ERCOT’s Independent Market Monitor.
“When the Legislature passed Senate Bill 6 in the 89th Legislative Session, we did so with a clear purpose: to modernize Texas energy regulation and ensure that ordinary Texans do not bear a disproportionate share of rising infrastructure costs,” wrote Darby. “That purpose grows more urgent by the day. Energy demand is climbing, transmission costs are projected to increase substantially, and yet residential customers remain locked out of the cost-management tools routinely available to large commercial and industrial users.
“The PUC has both the authority and the obligation to ensure that all customer classes pay just and reasonable rates for transmission services, and the current structure falls short of that standard for residential customers.”
The PUC continues reviewing 4CP rules with and staff has floated the idea of increasing the number of measurable coincident peaks to 12. The Steering Committee of Cities Served by Oncor, a municipal group, is engaged in this matter and PUC Chair Thomas Gleeson has committed to have changes in place by the end of 2026. You can read Chairman Darby’s letter on the PUC website and find out more about the rulemaking under Dockets 58484 and 58000.