PUCT Just Opened ERCOT's $5,000/MWh Offer Cap for Its First Five-Year Review, With Comments Due September 17
The Public Utility Commission of Texas opened Project 59550 on March 23, 2026, launching the first quinquennial review of the ERCOT system-wide offer cap programs under 16 TAC §25.509(d). Written comments are due Thursday, September 17, 2026, and the outcome will reset the ceiling on wholesale scarcity pricing that every Texas commercial fixed-rate quote is built against.
Project 59550 is the first quinquennial review of ERCOT's three system-wide offer cap programs under 16 TAC §25.509(d) and PURA §39.160(f). PUCT Staff filed Item 1, the control-number request, on March 23, 2026, and Item 2, the Questions for Comments memorandum, on August 20, 2026. Comments must reference Project No. 59550 and are due at interchange.puc.texas.gov by September 17, 2026. The full filing index is at the PUCT Project 59550 docket.
The five-year clock started with Senate Bill 3, adopted by the 88th Legislature in 2023. Sections 18 and 35 of SB 3 amended PURA §39.160(f) to require the Commission to review each system-wide offer cap program at least once every five years. The PUCT's implementing rule at 16 TAC §25.509(d) tightened that to a specific calendar trigger: "Beginning January 1, 2026, and every five years thereafter, the commission will review each of the system-wide offer cap programs."
The three programs on the table are the High System-Wide Offer Cap (HCAP), currently $5,000 per MWh, the Low System-Wide Offer Cap (LCAP), currently the greater of $2,000 per MWh or 50 times the ERCOT natural gas price index, and the Emergency Pricing Program (EPP), a $2,000/MWh ceiling designed to activate during prolonged scarcity events.
How Often the Market Actually Hits the $5,000 Cap
Wholesale prices have cleared at the HCAP for a total of 1.22 hours since the cap was reduced to $5,000 per MWh on January 1, 2022, and none of those hours have occurred since 2023, according to Potomac Economics, ERCOT's Independent Market Monitor, in its 2025 State of the Market Report.
That is a sharp break from the pre-Uri era. Hours priced at the offer cap averaged 82 per year from 2016 through 2021 under the prior $9,000 per MWh ceiling. Since the ERCOT market notice reducing the cap to $5,000 took effect, cap-cleared hours have effectively disappeared:
| Year | Hours priced at HCAP | ORDC-adder hours | Peaker Net Margin ($/MW-year) |
|---|---|---|---|
| 2022 | 0 | 1,458 | not triggered |
| 2023 | 1.22 | 773 | $263,968 (2nd highest ever) |
| 2024 | 0 | 161 | not triggered |
| 2025 | 0 | 57 | ~$79,000 (down 21%) |
Two forces drove the collapse: roughly 20 GW of solar plus battery capacity added since 2021 that flattens the late-afternoon peak, and mid-summer weather that has stayed below the extremes of 2011, 2019, and 2023. The 2025 IMM report notes that 18 percent of supply offers were still submitted at the cap in 2025, but almost none of that quantity actually cleared. The Peaker Net Margin threshold of $315,000 per MW-year (three times the legacy CONE of $105/kW-year) has been triggered only once in ERCOT history, on February 16, 2021, during Winter Storm Uri.
The Three Programs Under Review, in Plain Terms
Each program serves a different function, and Project 59550 opens each one for comment individually. The distinctions matter because a stakeholder can support keeping the HCAP steady while asking for a stricter EPP, or vice versa.
- HCAP (High System-Wide Offer Cap): $5,000 per MWh. The ceiling on any single generator offer during normal operation. This is the number every fixed-rate REP builds a scarcity-hour risk premium against.
- LCAP (Low System-Wide Offer Cap): the greater of $2,000 per MWh or 50 times the ERCOT natural gas price index value. Applies once the Peaker Net Margin threshold is reached, which caps upside for the remainder of that calendar year.
- EPP (Emergency Pricing Program): $2,000 per MWh. Activates when the sum of the Real-Time Market system lambda, the On-Line Reserve Price Adder, and the On-Line Reliability Deployment Price Adder equals or exceeds the HCAP for a total of 12 hours within any rolling 24-hour period. The EPP has never been triggered since it was approved by the Commission in December 2023.
What Staff Is Asking Stakeholders
The August 20 Staff memorandum frames the review around whether each program should be adjusted, retained, or restructured. The core questions in play:
- Does the current HCAP of $5,000 per MWh still reflect an appropriate ceiling for generator offers, given observed market conditions since 2022?
- Is the LCAP formula (the greater of $2,000 per MWh or 50 times the natural gas index) still fit for purpose, and should the coefficient or the gas-index basis be updated?
- Does the EPP's 12-hour rolling-window trigger properly balance consumer protection with reliability incentives, and should the $2,000 per MWh emergency cap be changed?
- Should the Peaker Net Margin threshold remain at three times CONE, and should the CONE value used for that calculation be refreshed from its legacy $105/kW-year figure?
Any change on any of the four questions resets pricing math for every ERCOT-cleared wholesale hour for the next five years.
What Happened the Last Time the Cap Moved
The current $5,000 per MWh HCAP was adopted in December 2021 through PUCT Project 52631, which reduced the ceiling from the pre-Uri level of $9,000 per MWh via an ERCOT market notice effective January 1, 2022. That stakeholder record predicts the shape of the Project 59550 record.
Parties supporting a deeper cut to about $4,500 per MWh included Hunt Energy Network, the Office of Public Utility Counsel, NextEra Energy Resources, East Texas Electric Cooperatives, and the City of Houston. Parties opposing deep cuts, arguing that a lower cap would weaken investment and demand-response incentives, included Texas Industrial Energy Consumers, the Texas Advanced Energy Business Alliance, Intersect Power, and the Texas Solar Power Association. The Commission settled at $5,000 per MWh as a middle-ground compromise.
Expect the same fault line in Project 59550. Load-side parties will point to the near-zero cap hours and push for a lower HCAP or a stricter LCAP formula. Generator-side and solar-storage parties will point to reliability, capacity investment, and demand-response signals to hold the cap steady or nudge it higher.
The TxCP Offer-Cap Exposure Score
Commercial buyers should not read "the cap has not been hit since 2023" as "the cap does not matter to my contract price." REPs price forward risk into every fixed-rate offer, and the offer cap is the mathematical ceiling that scarcity-hour risk premium is calculated against. A lower cap tightens that premium; a higher cap widens it. The TxCP Offer-Cap Exposure Score is a four-question read to gauge whether the Project 59550 outcome will show up in your next quote:
- Contract duration: Does your fixed-rate contract extend past January 1, 2027? If yes, its price already reflects an assumption about the cap outcome.
- Renewal window: Are you renewing between now and Q2 2027? Any price you sign in that window will be quoted against unresolved cap policy.
- Index exposure: Do you hold an indexed, heat-rate, or block-and-index product? Your settled cost is directly exposed to any hour at the cap, even one.
- Peak-load share: What share of your load falls in the ERCOT 4CP intervals (June through September, 3 to 6 p.m.)? That share is where cap policy translates most directly into real cost, both through the TCRI (TxCP Commercial Rate Index) and through 4CP transmission charges.
Answering "yes" or "significant" to three or four of these places a business in the cohort where Project 59550 will materially change 2027 through 2029 fixed-rate quotes. One or two, and the exposure is real but manageable inside a normal renewal cycle.
What Commercial Buyers Should Do Before September 17
Two practical steps. First, if a renewal quote is in hand this month, ask the REP directly whether the price assumes the current $5,000 HCAP survives or a $4,000 to $4,500 outcome is already baked in. The answer is knowable, and it moves the number. Second, under PURA §39.160(f) and the Commission's rules of procedure, Project 59550 accepts comments from any interested party, not only registered utilities or REPs. A short letter documenting the operational impact of a cap change is the accepted mechanism for load-side parties to be on the record.
Context from the live data at texascommercialplans.com: the current TxCP catalog holds 8,876 active commercial plans across the five TDU territories, with the long-term (24 to 60-month) average at 6.93 cents per kWh and the short-term (12-month) average at 7.96 cents. That 1.03-cent short-term premium is where cap-policy uncertainty and forward-curve risk tend to accumulate first. For the broader hedge-versus-index tradeoff, see the TxCP guide on fixed versus variable rate commercial plans, and for the most recent weekly rate movement, the September 8 weekly market report.
The Commission's decision timeline after September 17 typically runs three to nine months to a final order, which puts the earliest binding change effective in mid-2027, and the outer bound in 2028. That gives Texas commercial buyers a defined window to lock, extend, or index against, once the direction of the ruling becomes clearer through the comment record.
]]>Frequently Asked Questions
What is PUCT Project 59550?
PUCT Project 59550 is the first quinquennial review of ERCOT's three system-wide offer cap programs (HCAP, LCAP, and EPP) under 16 TAC §25.509(d) and PURA §39.160(f). PUCT Staff opened the docket on March 23, 2026, filed a Questions for Comments memorandum on August 20, 2026, and set September 17, 2026 as the comment deadline.
What is the current ERCOT system-wide offer cap?
The High System-Wide Offer Cap (HCAP) is $5,000 per MWh, effective since January 1, 2022. The Low System-Wide Offer Cap (LCAP) is the greater of $2,000 per MWh or 50 times the ERCOT natural gas price index value. The Emergency Pricing Program (EPP) sets an emergency ceiling of $2,000 per MWh once its trigger conditions are met.
How often has ERCOT actually hit the $5,000 offer cap?
Wholesale prices have cleared at the $5,000 HCAP for a total of 1.22 hours since it took effect on January 1, 2022, and none of those hours occurred in 2024 or 2025, according to Potomac Economics, ERCOT's Independent Market Monitor, in its 2025 State of the Market Report.
What is the ERCOT Emergency Pricing Program (EPP)?
The EPP is a mechanism required by Senate Bill 3 (2023) that drops the system-wide cap to $2,000 per MWh once the sum of ERCOT's real-time system lambda, the On-Line Reserve Price Adder, and the On-Line Reliability Deployment Price Adder equals or exceeds the HCAP for a total of 12 hours within any rolling 24-hour period. The EPP has never been triggered since it was approved in December 2023.
How can Texas commercial buyers comment on Project 59550?
Any interested party can file a comment referencing Project No. 59550 at interchange.puc.texas.gov by September 17, 2026. Comments are not limited to utilities or REPs; a short letter documenting the operational impact of a cap change from a commercial or industrial buyer is an accepted filing under PURA §39.160(f).