PUCT issues draft report in Project 58484 recommending Texas shift from 4CP to multi-peak transmission cost methodology — final rules required by December 31, 2026

Opening

On March 16, 2026, the Public Utility Commission of Texas (PUCT) issued a draft report in Project No. 58484, “Evaluation of Transmission Cost Recovery,” presenting six recommendations to overhaul ERCOT’s four coincident peak (4CP) transmission cost methodology. The draft report followed a workshop and two rounds of public comments since the project opened August 1, 2025, pursuant to Texas Senate Bill 6 (signed June 2025). The Commission must amend its rules no later than December 31, 2026.

What Happened / Key Facts

Project 58484 background: PUCT staff opened this project August 1, 2025, required by SB 6’s mandate to evaluate whether the existing 4CP methodology continues to “appropriately assign costs for transmission investments” and whether retail ratemaking “appropriately charges system costs to each customer class.” The December 31, 2026 final-rule deadline is statutory.

The 4CP avoidance problem: Under the current methodology, ERCOT charges wholesale transmission costs to distribution service providers (DSPs) based on each DSP’s load share during four summer coincident peak intervals (June, July, August, September — one peak per month). Large flexible loads — primarily crypto miners and some data centers — systematically curtail consumption during predicted peak windows to minimize their 4CP “tag” and avoid proportional transmission charges. The PUCT draft report finds this mechanism “does not capture winter scarcity events” and allows sophisticated customers to reduce charges without reducing actual system costs.

Documented residential cost-shift: In the CenterPoint Energy Houston Electric service territory in 2023, residential customers used 33% of system electricity but were allocated 49% of transmission costs — a 16-percentage-point overallocation gap. In 2018, the gap was 12.6 percentage points (34% usage / 46.6% allocation), meaning the disparity has widened as 4CP avoidance has become more widespread. The number of customers actively participating in 4CP avoidance programs increased from 418 in 2022 to 1,080 in 2024, per PUCT staff findings.

A 500 MW large load can avoid $33.4 million per year in transmission charges by successfully curtailing during the four 15-minute peak intervals — at the current ERCOT transmission rate of $66.76/kW-year. This is the per-project order of magnitude of the cost shifted to other ratepayers.

Six draft recommendations:

1. Shift from 4CP to “a methodology utilizing a greater number of coincident peaks”
2. Lengthen the interval over which each coincident peak is measured
3. Eliminate interconnection cost allowances for large load customers
4. Require large load customers to pay a portion of system upgrade costs
5. Mandate annual updates to transmission cost recovery factor class allocation values (instead of only updating during rate proceedings)
6. Impose minimum demand charges “based on contracted peak demand” for 10–15 years for large loads

ERCOT transmission investment context: ERCOT is projected to invest $14.9 billion in new, repaired, and upgraded transmission lines in 2025-2027, compared to $7.2 billion in 2022-2024 — a 50% increase driven in significant part by large-load interconnection requests. As of November 2025, the ERCOT interconnection queue contained approximately 226 GW (later revised to ~445 GW of large load requests) with 77% from data centers.

Residential dollar quantification gap: No proceeding document in Project 58484, no PUCT staff analysis, and no stakeholder filing identified in available sources quantifies the aggregate annual dollar amount that Texas residential customers would save from the 4CP methodology reform. This is the specific number needed to close the Texas entry in the five-state ratepayer cost-shift map. The per-project avoidance figure ($33.4M/year per 500 MW) provides a floor estimate, but the aggregate residential-bill impact requires PUCT actuarial modeling not yet published.

Comment deadline: April 13, 2026, for public comments on the draft recommendations.

Five parallel PUCT rulemaking tracks (all pursuant to SB 6):

• Project 58481: Large-load interconnection standards (16 TAC §25.194) — draft rule published March 12, 2026; comments due April 17, 2026
• Project 58479: Net-metering co-location rules — draft published Fall 2025; adoption targeted early 2026
• Project 58480: Large-load forecasting (defines “large load” as ≥10 MW) — draft published Fall 2025; adoption targeted early 2026
• Project 58482: Reliability/demand reduction service — scoping January 2026; adoption later 2026
• Project 58484: Transmission cost allocation (4CP review) — draft report March 16, 2026; final rules December 31, 2026

Why This Event Matters

The 4CP avoidance problem is the ERCOT-specific mechanism through which data centers and crypto miners have shifted transmission infrastructure costs onto residential ratepayers. Unlike PJM states, where the cost-shift operates through capacity-market pricing and ratebase inclusion, ERCOT’s deregulated structure routes the shift through the 4CP wholesale transmission charge allocation. The draft report is the first formal PUCT determination that the 4CP methodology is inadequate — confirming what SB 6 presumed when it mandated the review.

The residential cost-shift in CenterPoint’s territory (33% of energy use / 49% of transmission charges) is the quantified evidence that the mechanism is producing outsized residential overcharges. The gap’s widening from 2018 to 2023 corresponds precisely to the growth of organized 4CP avoidance participation (418 → 1,080 participants). The six draft recommendations address both the methodology flaw and the forward-looking large-load cost-allocation gap, but the final rules are not yet adopted.

This is a watch task: the December 31, 2026 final-rule deadline has not passed, and the six draft recommendations remain proposals subject to stakeholder comment and Commission revision. The dollar magnitude of residential savings from any adopted methodology change is not yet quantified in any public document.

Broader Context

Governor Abbott’s June 10, 2026 directive — issued the day before this research pass — orders PUCT to “initiate action to reduce residential ratepayers’ transmission costs” by July 31, 2026, and directs PUCT and ERCOT jointly to submit a memo by July 17, 2026 identifying steps they can take under existing authority. Abbott pledged to bring legislation in the 90th session (January 2027) to codify the cost-allocation requirements. This directive is downstream of SB 6’s 4CP review mandate and accelerates the administrative timeline already set in Project 58484.

See 2026-06-10–abbott-directive-puct-ercot-data-center-infrastructure-costs for the Abbott directive.

Research Gaps

• Dollar quantification of aggregate residential transmission savings from 4CP reform — requires PUCT actuarial modeling not yet publicly released
• Final text of Project 58484 final rules (deadline December 31, 2026) — document when published
• Final text of Project 58481 rule 16 TAC §25.194 — still in comment period as of this research pass
• Stakeholder comment record on draft recommendations (April 13, 2026 deadline) — named parties filing for vs. against
• ERCOT curtailment hardware compliance by named miners (Riot Platforms specifically) — compliance under post-December 31, 2025 requirement not confirmed in public filings
• Post-comment modifications to the six draft recommendations

Related Entries

• 2025-06-20–texas-sb-6-large-load-interconnection-signed
• 2026-06-10–abbott-directive-puct-ercot-data-center-infrastructure-costs
• texas-4cp-transmission-cost-allocation-reform — mechanism note
• ai-datacenter-cost-shift-by-design-socialization-channels
• ai-datacenter-grid-strain-ratepayer-cost-shift-named-state-quantification
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