Transmission Cost Recovery Evaluation — the 4CP Review

Senate Bill 6 directed the PUCT to evaluate whether ERCOT's four coincident peak (4CP) method — the framework that has allocated wholesale transmission costs for decades — should change. Project 58484 was that study, and its outcome now drives the Project 58000 rulemaking.

What we filed

Initial comments (September 2025) responded to staff's eleven questions on the pros, cons, and alternatives to 4CP. The coalition's position: 4CP has served Texas well — it reflects cost causation, functions as ERCOT's largest and most effective demand response resource, and supports industrial competitiveness at a time when Texas industrial rates have been rising relative to neighboring states. If the Commission modified anything, the only data-supported change would be a single floating winter coincident peak — a "5CP" — because winter high-load events are sporadic and episodic rather than monthly.

Comments on staff's workshop questions (November 2025) reinforced that case, showing that staff's own workshop data confirmed a predominantly summer-peaking system consistent with a 4CP or 5CP design.

Comments on the staff draft report (April 2026) responded point-by-point to staff's six draft recommendations:

• Supported a CP-based approach but opposed eliminating 4CP as an option and opposed shoulder-month CPs — from 2020 through 2024, zero non-summer months exceeded 90% of system peak, and only one of 280 daily peaks above 85% fell in a shoulder month. A 12CP method "which treats a shoulder month the same as a peak summer month, is simply not supported by the data."
• Urged retention of the 15-minute measurement interval — its sharpness "is a feature" that targets response at actual scarcity — and strong opposition to anything longer than 30 minutes.
• Argued that interconnection cost allowances and system-upgrade cost assignment belong in the Project 58481 interconnection rulemaking, not the allocation study.
• Opposed a minimum demand charge outright — it "risks encouraging full consumption during times of transmission scarcity" — and proposed guardrails if one were adopted anyway: new interconnecting loads only, a term no longer than ten years, applicability limited to very large interconnections (on the order of 400 MW) creating genuine stranded-asset risk, and only a modest portion of transmission charges.
• Proposed a new recommendation: keep wholesale and retail allocation methods aligned, preserving the demand response price signal end-to-end.

The stakeholder field

Thirty-four parties filed in the final comment round, and the record maps the whole Texas transmission debate. Transmission utilities, municipal utilities, and cooperatives coalesced around a 12CP methodology, citing staff's data showing residential customers paying a larger share of wholesale transmission costs than their share of peak demand. Consumer advocates pushed further, toward energy-based or year-round allocation. Data-center and flexible-load interests accepted that 4CP would change and generally endorsed higher CP counts with minimum demand charges for new loads — while warning against punitive design. Industrial consumers — the Steel Mills alongside TIEC, TEBA, and other manufacturer groups — formed the organized case for retaining the concentrated summer-peak signal, supplemented at most by the addition of a single winter peak signal. Understanding where each camp stands is essential context for the Project 58000 endgame.

Where it stands

Staff's final recommendations moved to a 12CP methodology plus a minimum billing demand for large loads, and the Commission carried that framework into the Project 58000 proposal for publication in June 2026, where the rulemaking is now under way. The 58484 record, including staff's own peak-distribution data and thirty-four parties' positions, is the evidentiary foundation for the fight over the final rule. Governor Abbott's June 2026 letter directing the Commission to ensure data centers pay their full infrastructure costs has added political pressure — and may help distinguish long-standing industrial load from the new large loads driving the transmission buildout.

This summary is drawn from documents on the public record and is provided for general information. It is not legal advice, and it does not disclose any confidential client matter.