The head of Texas’ Public Utility Commission told state lawmakers last week they will get a chance to vet ERCOT’s market redesign early next year before it becomes operational.

During a joint hearing on Sept. 13 before the Texas House of Representatives’ State Affairs and Energy Resources committees, PUC Chair Peter Lake said he intends to publicly present the proposed market design in November. That will give stakeholders, who are expecting the proposal to drop after the Nov. 8 mid-term elections, just enough time to comment before the holiday season’s quiet period.

State Rep. Phil King (R) pressed Lake on whether lawmakers would have a chance to pass judgement on the market design when the 88th Texas Legislature begins Jan. 10. He said his biggest concern is the uncertainty investors see in the market’s future design.

“We’re trying to get people to invest in the market. I think it’s critically important before anything gets implemented that the legislature have a role in affirming that because, otherwise, you’re not going to have certainty for the industry going forward,” King told Lake. “At the end of the day, there just needs to be a marriage between what the PUC comes up with and what the legislature wants. And if there’s not, we’re just going to create a lot of confusion.”

“We would be grateful for that affirmation when it gets to that point,” Lake said. “We’ll always be mindful of how damaging uncertainty in the investor marketplace can be. It’s taken us a long time to get to this point. I want to start putting steel on the ground as soon as possible.”

“Many legislative members would rather these kinds of major policy changes not be made at the agency, asserting that is their domain,” tweeted Austin-based energy consultant Doug Lewin.

Lake said the commission has already received the first component of a consulting firm’s review of the proposed design. He said the commissioners “synthesized” that report and have sent it back to the consultants to “iterate and continue narrowing the filter … to drive towards a final market product.”

“We’ll present a final product to you all that is as ready as possible to be plugged into ERCOT,” Lake said.

The Phase II proposal has sometimes been described as a “capacity-light” market with a load-side reliability mechanism and a backstop reliability service. (See PUC Forges Ahead with ERCOT Market Redesign.)

Coincidentally, E3 Consulting, which is reviewing the PUC’s proposal, also developed the load-side reliability obligation mechanism that may be the central part of the market design. E3’s proposal introduces a formal reliability standard for load-serving entities and a mechanism to ensure sufficient resources to meet this standard.

“It seems to make sense that the companies that get paid for providing power should do it reliably, and so that’s what we’re working through now,” Lake said, noting the commission unanimously approved the Phase II design last December.

ERCOT CEO Brad Jones | © RTO Insider LLC

“The blueprint … is designed so that we can go through the different iterations with these consultants to capture the features of each concept and integrate those into a hybrid while discarding the flaws,” he said.

Speaking on the same panel with Lake, ERCOT’s Brad Jones — interim CEO “at least for the next 17 days and five hours,” he said when introduced — defended his proposal to add a gas desk to the grid operator’s control room. Jones has been publicly promoting the idea of ERCOT operators monitoring gas availability and restrictions for gas-fired power plants as early as January.

“There’s not a great deal of transparency around the operations of our natural gas system. That information doesn’t usually flow to us,” Jones said in January during an education session for the Board of Directors. (See ERCOT Preps for 2nd Cold Snap of Year.)

‘They Want it to Stay Private’

Gas industry representatives pushed back during the hearing against the desk and a similar proposal for a gas market monitor.

“As an agency, we don’t understand what a gas desk and a market monitor is because we are in a free market in the state,” said Christi Craddick, who sits on the intrastate gas-regulating Railroad Commission. “I’m not clear what a gas desk or an independent market monitor is, [or] how that would resolve or make the electricity grid even more reliable. That’s not clear to me.”

Rep. Tom Craddick (R) from gas-rich West Texas, who is also Christi Craddick’s father, said he does not want a gas desk proposed until the legislature can opine on it.

“I believe it’s a policy change,” he told Jones. “My constituents don’t like the idea. They don’t want to give you all that information. They want it to stay private.”

“There’s been a lot of confusion around this and hopefully, we can begin to resolve some of that confusion,” Jones said, explaining that the desk would have nothing to do with trading gas commodities.

“It’s just an accident of the words that we use when we first began discussing this concept,” he said. “It only makes sense as gas is a significant contributor to over half of our generation fleet. This is purely operational information. Is a [pipeline] operating? Is a compressor station out? Is there maintenance been done?”

Jones stressed the information would be voluntarily provided by gas operators.

“There’s a lot of people who are not willing to give you that information or wanting it out,” Rep. Craddick said. “So how are you going to have them give it to you?”

“That’s where I’m facing opportunity. Most people know that I’m a very positive person, and I’m just positive enough to believe we can make this work,” Jones responded. “If we can get down to the fact that it’s really just operational information that is necessary for ERCOT to operate the system. I’m still very hopeful that we can get to that place where the gas companies will recognize moderate amounts of information … it’s purely for improving reliability