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 §25.521 relating to Large Load Demand Management Service. This proposed rule will implement Public Utility Regulatory Act (PURA) §39.170 as enacted by Senate Bill 6 during the Texas 89th Regular Legislative Session. The proposed rule will require ERCOT to ensure that each electric cooperative, transmission and distribution utility, and municipally owned utility serving a transmission-voltage customer develops a protocol to allow the transmission-voltage customers to be curtailed during firm load shed; require ERCOT to develop a reliability service to competitively procure demand reductions from large load customers; and establish a framework for the 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;

(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

Jessie 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 section. A municipally owned utility that is a load serving entity will be charged by ERCOT for the large load demand management service (LLDMS) based upon the load serving entity's load ratio share during the relevant LLDMS 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. 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

The 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 September 4, 2026. 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 September 4, 2026. Comments should be organized in a manner consistent with the organization of the proposed rules. 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 information related to the cost, benefit, or effect of the proposed rule, including any applicable data, research, and analysis. The commission will consider the costs and benefits in deciding whether to modify the proposed rules on adoption. All comments should refer to Project Number 58482.

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

Proposed subsection (f)(1)(C) authorizes payment to a qualified scheduling entity representing a large load customer that is not instructed by ERCOT to deploy but is subject to availability verification during the Large Load Demand Management Service (LLDMS) obligation period. Should a large load customer that is available but not ultimately instructed to deploy during the LLDMS obligation period be compensated some percentage of the market clearing price for the large load customer's availability to reduce demand during the LLDMS obligation period? If so, what is an appropriate payment to the large load customer for their availability during the LLDMS obligation period?

Proposed subsection (f)(4) imposes a maximum budget of $54 million in a calendar year. What is an appropriate budget for the LLDMS program?

What cadence should ERCOT use to assess an extreme weather condition and how far in advance should ERCOT start the auction to procure LLDMS?

Should ERCOT be allowed to deploy LLDMS for transmission emergencies? If so, what limitations, if any, should the Commission impose on this authority?

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 rule is proposed under Public Utility Regulatory Act (PURA) §14.001, which grants the commission the general power to regulate and supervise the business of each public utility within its jurisdiction and to do anything specifically designated or implied by this title that is necessary and convenient to the exercise of that power and jurisdiction. §14.002, which authorizes the commission to adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction; §39.151, which specifies that ERCOT is directly responsible and accountable to the commission; and§39.170, which requires the commission to require ERCOT to ensure that each electric cooperative, transmission and distribution utility, and municipally owned utility serving a transmission-voltage customer develops a protocols, including installation of any necessary equipment or technology before the customer is interconnected, to allow the load to be curtailed during firm load shed, and requires the commission to require ERCOT to develop a reliability service to competitively procure demand reductions from large load customers to be deployed in the event of an anticipated emergency condition.

Cross Reference to Statute: Public Utility Regulatory Act §14.001; §14.002; §39.151; and §39.170.

§25.521. Large Load Demand Management Service (LLDMS).

(a) Directive to ERCOT.

(1) ERCOT must ensure that each electric cooperative, transmission and distribution utility, and municipally owned utility serving a transmission-voltage customer develops a protocol, including the installation of any necessary equipment or technology before the customer is interconnected, to allow the load to be curtailed during firm load shed. This subsection applies to a load interconnected after December 31, 2025, that is not:

(A) load operated by a critical load industrial customer, as defined by Public Utility Regulatory Act (PURA) §17.002; or

(B) designated as a critical natural gas facility under PURA §38.074.

(2) ERCOT must develop a Large Load Demand Management Service (LLDMS) to competitively procure demand reductions from large load customers consistent with this section.

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

(1) Extreme weather condition--A weather condition that creates a significant risk for an energy emergency alert (EEA) event.

(2) Large load customer--An entity with a total non-coincident peak demand at a single site that is equal to or greater than 75 megawatts (MW).

(3) LLDMS obligation period--The period identified in a LLDMS agreement through which a procured large load customer is obligated to provide LLDMS.

(4) Transmission emergency--A condition in which an element on the transmission system is operating above its emergency rating such that it creates a significant risk of firm load shed.

(c) Participation. Participation in LLDMS is limited to large load customers that pre-qualify for participation at least annually.

(1) Pre-qualification. ERCOT must establish criteria for a large load customer to pre-qualify for participation in LLDMS. The criteria for pre-qualification must include the following minimum requirements:

(A) the large load customer must offer at least 1 MW of demand reduction; and

(B) the large load customer must pass a price responsive test in compliance with ERCOT protocols.

(2) Ineligibility. A large load customer participating in the following services or program in the ERCOT market is not eligible to participate in LLDMS:

(A) a different reliability service;

(B) an ancillary service;

(D) a demand response program in which the large load customer curtails in response to the wholesale price of electricity;

(E) an ERCOT-procured contract for capacity;

(F) a net metering arrangement that imposes a curtailment obligation on the large load customer under PURA §39.169;

(G) firming service under PURA §39.1592 and §25.65 of this title (relating to Firming Program Requirements for Electric Generation Facilities in the ERCOT Region);

(H) a demand response product, program, or service administered by a transmission and distribution service provider; or

(I) the Voluntary Early Curtailment Load program, as defined in ERCOT protocols, or its successor program.

(d) Procurement. ERCOT may procure LLDMS from a large load customer on an as needed basis to help prevent an anticipated EEA event due to an extreme weather condition or alleviate an actual EEA event due to an extreme weather condition.

(1) Request for proposal. ERCOT may issue a request for proposal to large load customers that are pre-qualified to participate in LLDMS:

(A) based on monthly probabilistic modeling that identifies an elevated risk for an EEA event in the modeled month;

(B) based on weekly weather forecasting that identifies an elevated risk for an EEA event during the forecasted week;

(D) during an EEA event due to an extreme weather condition.

(2) Quantity. The total quantity of MW that ERCOT procures for an LLDMS obligation period must be based on a risk assessment informed by probabilistic modeling.

(3) Submitted offer.

(A) Submission. A qualified scheduling entity (QSE) must submit an offer to ERCOT on behalf of a large load customer that is pre-qualified to participate in LLDMS. The offer must be expressed in dollars per megawatt hour units.

(B) Rejection. ERCOT must reject an offer that is:

(i) unreasonable;

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

(iii) submitted on behalf of a large load customer that failed to comply with ERCOT instructions to deploy during the previous LLDMS obligation period;

(iv) inconsistent with any other requirement established in ERCOT protocols; or

(v) greater than $5,000 per megawatt hour.

(e) Deployment.

(1) Prior to deployment, ERCOT must provide at least 24-hour notice to a QSE that a large load customer represented by the QSE may be deployed to reduce its load during the LLDMS obligation period.

(2) ERCOT may deploy a large load customer as necessary to help maintain reliability during an EEA event due to an extreme weather condition throughout the LLDMS obligation period.

(3) When deployed by ERCOT, a large load customer must deploy consistent with its obligations and must remain deployed:

(A) for the duration of the EEA event; or

(B) until the large load customer can be recalled safely, as determined and communicated by ERCOT.

(f) Payment and charges.

(1) ERCOT must pay a QSE that represents a large load customer participating in LLDMS as follows:

(A) all payments must be based on a single clearing price;

(B) awards must be settled monthly after availability data is confirmed;

(C) A QSE representing a large load customer that is not instructed by ERCOT to deploy but is subject to availability verification during the LLDMS obligation period may receive a payment based on 25% of the market clearing price; and

(D) A QSE representing a large load customer that deploys consistent with ERCOT instructions during the LLDMS obligation period may receive payment based on 100% of the market clearing price associated with the deployed capacity.

(2) ERCOT must include load reduction under this section when calculating price adjustments for reliability deployments.

(3) ERCOT must charge each load serving entity for LLDMS deployment costs based upon the LSE's load ratio share during the procurement period.

(4) ERCOT may spend a maximum of $54 million in procurement costs during a calendar year.

(g) Compliance.

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

(2) ERCOT must establish criteria to suspend a large load customer 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.

(h) After action reporting requirement. Not later than 60 days after an event in which ERCOT procures LLDMS, ERCOT must file a report with the commission detailing:

(1) the number of large load customers that submitted offers;

(2) the number of megawatts procured;

(3) the highest offer;

(4) the lowest offer;

(5) the cleared price;

(6) the duration of deployment, as applicable;

(7) performance during deployment, as applicable; and

(8) any recommendation to revise LLDMS.

(i) Implementation. ERCOT must develop, in consultation with commission staff, additional procedures, including registration requirements for the large load customers participating in LLDMS, guides, technical requirements, protocols, or other standards that are consistent with this section and that ERCOT finds necessary to develop LLDMS.

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 July 30, 2026.

TRD-202603227

Katelyn Lewis

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: September 13, 2026

For further information, please call: (512) 936-7044