Introduction and Overview
Under Texas law, the Electric Reliability Council of Texas (“ERCOT”), the independent system operator for the electric grid, is subject to pervasive oversight by the Public Utility Commission of Texas (“PUCT”). The statute gives the PUCT authority to delegate to ERCOT the authority to write rules governing reliability-related grid operations, and the PUCT has so delegated. Thus, a convoluted array of reliability, operations, and commercial settlement rules (collectively, the “Protocols”) has been adopted by ERCOT.
Consistent with the notion that the PUCT pervasively oversees ERCOT, the statute authorizes persons aggrieved by a final ERCOT decision (e.g., a decision by the ERCOT Board of Directors to adopt a revision to its Protocols) to appeal that decision to the PUCT.
Additionally, again consistent with the notion of PUCT oversight of ERCOT, the Texas Legislature has declared that no ERCOT rule revision may take final effect until the PUCT has formally approved ERCOT’s action to revise its binding documents (such as Protocols, Planning Guides, etc.; for convenience, this article refers to all ERCOT rules as “Protocols”). The statute requires ERCOT to develop its own procedures for considering and adopting ERCOT Protocols and Protocol revisions. But they cannot take final effect until the PUCT “approves” them.
Given the material (sometimes massive) commercial impact that ERCOT Protocols have on market participants, it is important that market participants have the right to appeal those decisions, and they have done so. But the upshot of two recent decisions by the Supreme Court of Texas and the Fifteenth Court of Appeals is that any such appeals are effectively limited to motions for reconsideration by the ERCOT Board or the PUCT. Motions for reconsideration are rarely successful. This, then, begs the question: Is this the framework for appeals that the Texas Legislature intended?
The Statutes, Protocols, and Rules Governing ERCOT Final Action and PUCT Review
The provisions of the Texas Utilities Code that govern the electricity system are generally contained in Title II of that Code and are known as the “Public Utility Regulatory Act” or “PURA.” PURA Section 39.151(a) directs that an independent organization must be established to “ensure the reliability and adequacy of the regional electrical network,” “ensure that electricity production and delivery are accurately accounted for among the generators and wholesale buyers and sellers in the region,” to maintain and process information essential to customers’ exercise of retail choice, and to ensure non-discriminatory access to the transmission and distribution (“T&D”) system.
PURA Section 39.151 also directs, in subsection (d), that the PUCT is to adopt and enforce rules related to grid reliability and related to accounting for the production and delivery of electricity, or it may delegate that responsibility to ERCOT. That subsection specifies that ERCOT is “directly responsible and accountable to” the PUCT, and the PUCT “has complete authority to oversee and investigate [ERCOT’s] finances, budget, and operations as necessary to ensure the organization’s accountability and to ensure that the organization adequately performs the organization’s functions and duties.” Thus, ERCOT has broad Protocol-adoption authority and is subject to pervasive PUC oversight.
Regarding those Protocols, PURA Section 39.151(g-6) mandates that ERCOT have “a formal process for adopting new protocols or revisions to existing protocols” and that process “must require that new or revised protocols may not take effect until the commission [PUCT] approves a market impact statement describing the new or revised protocols.” Doubling down on that PUCT-approval requirement, subsection (g-6) goes on to say: “Protocols adopted by [ERCOT] . . . are subject to commission oversight and review and may not take effect before receiving commission approval.” Thus, it’s clear that the Legislature has conditioned the effectiveness of ERCOT Protocols and Protocol revisions on receipt of PUCT approval.
Regarding disputes concerning ERCOT’s performance, PURA 39.151(d-4) empowers the PUCT to “resolve disputes between an affected person and [ERCOT] and adopt procedures for the efficient resolution of such disputes.”
The PUCT has promulgated a rule to address that dispute-resolution process. That rule, at 16 Texas Administrative Code (“TAC”) Section 22.251, authorizes complaints against ERCOT (in subsection (c)(2)): “An affected entity may file a complaint with the commission, setting forth any ERCOT conduct that is alleged to be in violation of any law that the commission has jurisdiction to administer, any order or rule of the commission, or any protocol, procedure, or binding document adopted by ERCOT in accordance with any law that the commission has jurisdiction to administer.”
The timeline established by the PUCT’s rule (in subsection (e)(1)) is that a complainant must file its formal complaint against ERCOT at the PUCT within 35 days after the ERCOT action complained of, and if the ERCOT action has been addressed by alternative dispute resolution (“ADR”) conducted under ERCOT’s Protocols, that means within 35 days of completion of that ADR process.
Regarding the ADR process, the ERCOT Protocols require any party seeking to challenge an ERCOT Board action that adopts a Protocol or a Protocol revision to initiate an ADR process administered by ERCOT. That process, outlined in Protocol Section 20, sets a timeline that does not require an initial meeting regarding the dispute until 75 days after the initiation of the ADR, and provides ERCOT with at least 30 days after that initial meeting to resolve the dispute. (ERCOT Protocol Section 20.5(4) and (5)). The PUCT’s rule requires a complainant to comply with ERCOT’s ADR procedures before filing a formal complaint at the PUCT unless the PUCT grants an exception to that requirement based on good cause shown (16 TAC Section 22.251(d)).
After the complaint is filed, under the PUC’s rules, ERCOT has 28 days to file a response, the PUCT Staff has 45 days after complaint filing to file its comments, and the complainant has 55 days after filing to respond.
If the complainant seeks to suspend the result of ERCOT’s complained-of conduct during the pendency of the complaint proceeding, it must specifically move for such suspension and provide its evaluation of the harms that will result from not suspending ERCOT’s action, the likelihood of its success on the merits of its complaint, and any other relevant factors (16 TAC Section 22.251(j)(1)). The administrative law judge (“ALJ”) is empowered by subsection (j)(2) of the rule to order suspension for good cause shown.
The Court Decisions in RWE and Aspire
In 2021, after the chaos of winter storm Uri, RWE Renewables Americas, LLC and TX Hereford Wind, LLC filed suit in the Texas Third Court of Appeals, challenging the PUCT’s approval of ERCOT’s Nodal Protocol Revision Request 1081, which the PUCT approved in a July 16, 2021, order issued in PUC Project No. 52307. The issue presented to the court was whether the PUCT’s action to approve the ERCOT Board-adopted Protocol revision was a “rule” subject to the Texas Administrative Procedure Act (“APA”). The Third Court of Appeals determined that it was; the Supreme Court of Texas issued its decision on June 14, 2024, overturning the Court of Appeals’ decision and holding that the PUCT’s approval was not a “rule.” PUC v. RWE Renewables Americas, LLC, 691 S.W.3d 484, 486, 492 (Tex. 2024). Thus, the PUCT did not have to follow the APA’s notice-and-comment rulemaking process in “approving” the ERCOT Board-adopted Protocol revision, because the PUCT’s action was merely a “ratification” of ERCOT’s action, not a PUCT “adoption” of its own rule. Id. at 491-92.
Consequently, there is no direct appeal to the Court of Appeals available to challenge the PUCT’s “approval” of an ERCOT Protocol revision, since the direct appeal is available only to challenge PUCT adoption of a competition rule. Id.
In 2024, Aspire Power Ventures, LP filed suit in Travis County, Texas District Court, asserting, among other things, that ERCOT’s adoption of certain Protocol revisions was unlawful because the Protocols are “rules” within the definition in the APA, and ERCOT used its own procedures, not the APA-specified notice-and-comment procedures for adoption of Texas administrative agency “rules.” The Fifteenth Court of Appeals (which is a new court with jurisdiction over challenges to agency rules) held on March 26, 2026, that the ERCOT Protocols are not APA “rules,” based on the Supreme Court of Texas’s reasoning in RWE that there is a distinction between ERCOT’s “adoption” of the Protocols and the PUCT’s “approval.” Aspire Power Ventures, LP v. PUC, No. 15-24-00118-CV, 2026 WL 844708, at *3, *4 (Tex. App.—15th Dist. Mar. 26, 2026). The Aspire court reasoned that if the PUCT’s approval did not convert the Protocols into “rules” governed by the APA, then ERCOT’s adoption of the Protocols in the first place did not make the Protocols “rules.” Id. at *4. Further, because the ERCOT Protocols are not rules, no direct appeal of them as “competition rules” is available. Id. Instead, said the Aspire court, the PUCT has exclusive jurisdiction over ERCOT due to the “pervasive regulatory” scheme established by PURA, and in order to successfully advance a challenge to the ERCOT Board’s adoption of ERCOT Protocol revisions, a challenger must “exhaust all available administrative remedies before turning to the court.” Id. *7. Thus, said the Fifteenth Court of Appeals, to challenge the ERCOT Board’s adoption of a Protocol or Protocol revision, the challenger must “follow the process for review of ERCOT protocols contained in the PUC’s rules: pursuing alternative dispute resolution with ERCOT, then filing a complaint with the PUC, then filing a suit for judicial review under the substantial evidence rule.” Id.
The Upshot
The consequences of the RWE and Aspire decisions are that the full ERCOT ADR process and the PUC formal complaint process must be followed before one can successfully pursue a court challenge to ERCOT’s adoption of a Protocol or a Protocol revision. But what does that mean practically? In short, due to the applicable timelines, a challenger will be forced to repeatedly ask ERCOT and the PUCT to reconsider decisions they have already made to adopt and approve the relevant Protocol language.
Why is that?
Recall that under the ERCOT ADR Protocol, after a complainant files a complaint, there is no requirement that ERCOT convene even an initial meeting with the complainant until 75 days after the ADR is initiated by the complainant. Then, ERCOT has at least 30 days after that meeting to issue an order resolving the dispute (i.e., accepting or rejecting the complaint). Thus, 105 days can elapse from the filing of the complaint to its resolution.
But the Protocol, or a Protocol revision, is likely to be effective within 105 days of the filing of the complaint (i.e., the initiation of the ADR). Under recent practice, ERCOT files with the PUCT for approval of its Protocol adoption or Protocol revision adoption within a handful of days of such adoption by the ERCOT Board, and the PUCT often acts within 30-45 days thereafter. (See PUCT Project No. 54445, Review of Protocols Adopted by the Independent Organization). In some circumstances, the PUCT acts even faster. For the current, hotly contentious “Batch Zero” Protocol and Planning Guide revisions, ERCOT Board approval occurred on June 2nd, and the PUCT plans to take up the approval on June 18th—merely sixteen days after the ERCOT Board action. Thus, in many, and perhaps most, cases, the PUCT approval action will occur within 45 to 90 days after the ERCOT Board adopts a Protocol or a Protocol revision. That means that if the ERCOT decision resolving a complaint filed via the ERCOT ADR process is issued 105 days after the ADR is initiated, the ERCOT decision will be issued after the PUCT has already approved the Protocol or Protocol revision. And under the ERCOT Protocols, a PUCT-approved Protocol or Protocol revision takes effect on the first day of the month following PUCT approval. (ERCOT Protocol Section 21.6(1)). Thus, it is highly likely that the Protocol or Protocol revision will already be effective 105 days after initiation of the ADR.
This raises the natural question: How likely is it that ERCOT will issue a decision reversing its Board’s decision to adopt a Protocol or Protocol revision that the PUCT has already approved and that may already have taken effect?
The timeline gets even more interesting for a complaint at the PUCT following ERCOT Board action. Recall that the PUCT rule requires a complaint to be filed after completion of the ERCOT ADR process. So, if the complaint is filed, e.g., 106 days after initiation of the ADR (after ERCOT has rejected the ADR complaint on its merits), it is again quite likely that PUCT approval of the challenged Protocol or Protocol revision has already occurred, and the Protocol or Protocol revision might already be effective. But that’s just at the time of the initial complaint filing. ERCOT has 28 days thereafter to file its response, and PUCT Staff has 17 days after ERCOT’s response to file its own comments. Only then will the case proceed. Most PUCT complaint cases take many months to resolve. So, by the time the parties have presented their briefing and the matter is before the PUCT Commissioners for decision, the PUCT’s approval of the relevant Protocol or Protocol revision will be many months in the past, and the relevant language will have been in effect in the market for quite some time.
Again, the natural question is: How likely is it that, many months after issuing an order saying “yes” to the Protocol or a Protocol revision, the PUCT will change its mind and say “no”?
The overall upshot is that, in both the ERCOT ADR process and the formal complaint process at the PUCT, the challenger will ask ERCOT or the PUCT to reverse its decision and say “no” after it has already taken formal action to say “yes.” Lawyers commonly opine, based on their experience and statistical analyses, that the odds of success for a petition for reconsideration by a court or tribunal are very, very low. (See, e.g., Rehearing Practice in the Courts of Appeal: They Heard You The First Time, And Other Rules Of Thumb, Introduction by Steven K. Hayes, Presented at State Bar of Texas 24th Annual Advanced Civil Appellate Practice Course, September 2-3, 2010, Austin, Texas, at 1 (“Only a minute fraction of motions for rehearing succeed.”); While Tempting, PTAB Requests for Rehearing Face Long Odds, Jason N. Mock, Michael R. Houston, Foley & Lardner LLP, PTAB Trial Insights, October 15, 2019 (reporting denial rates of 90 percent or higher for motions for rehearing by the United States Patent Trial and Appeal Board)).
But that’s the position in which any challenger to an ERCOT Protocol or Protocol revision adoption decision is now put—before it can access the courts, the challenger is first forced to make serial requests for reconsideration by the same body that previously approved the action. Is that what the Texas Legislature intended?
