AUSTIN, Texas — ERCOT surprised the market this week when it said it plans to increase operating reserves by requesting an additional 3,000 MW of capacity to shore up the grid for the upcoming winter.
In a market notice issued Monday afternoon, the grid operator said its first monthly resource adequacy assessment indicates that if it experiences severe weather this winter similar to Winter Storm Elliott last December, it would face an “elevated” risk of entering into an energy emergency alert (EEA) during its projected peak demand. It said that risk, a 19.9% probability, exceeds NERC’s acceptable elevated risk threshold of 10%.
ERCOT said significant peak load growth since last winter, recent and proposed retirements of dispatchable generation and extreme weather events during the past few winters led to issuing a request for proposals. A list of dispatchable resources that it said could be “potentially” eligible to offer capacity and respond to the RFP included mothballed and seasonally mothballed dispatchable resources (as of Dec. 1) and dispatchable resources that have been decommissioned since December 2020.
Dispatchable resources currently in the interconnection queue that feasibly could be accelerated into commercial operations by Jan. 4 also could be eligible, ERCOT said. Resources have until Nov. 6 to respond to the RFP. Awards for three-month contracts (December-February) will be announced Nov. 23.
Speaking at the Gulf Coast Power Association’s Annual Fall Conference on Tuesday, ERCOT CEO Pablo Vegas expressed hope that some resources that have indicated they will be mothballed or enter seasonal operations “could stick around for this winter and help out with potentially managing an extreme weather event.”
“We want to try to get the risk of an EEA condition down below 10%,” Vegas said.
All but four of the 20 resources listed in the market notice would provide no more than 78 MW of winter sustained capability. Three of the four largest — CPS Energy’s two coal-fired units at the J.T. Deely plant and Austin Energy’s Decker Creek Unit 2 steam generator, each providing 420 to 428 MW of capacity — were decommissioned in 2018 and 2022, respectively.
“We are not considering bringing Deely Units 1 and 2 out of retirement. We made a commitment to our community that those would be retired,” CPS spokesperson Dana Sotoodeh said in an email.
An Austin Energy spokesman said there are no plans to bring Decker 2 out of retirement.
The fourth, a 292-MW gas unit outside Corpus Christi, has been approved by ERCOT to indefinitely suspend operations on Nov. 24. (See “ERCOT Evaluating RMR Options,” Texas Public Utility Commission Briefs: Aug. 24, 2023.)
Stoic Energy’s Doug Lewin referred to the units as “zombie power plants” and said ERCOT was trying to “bring [them] back to life.”
Another market insider, who goes by ERCOT Traders Anon on X (formerly known as Twitter), said ERCOT’s action is a capacity auction with two months’ lead time. They said this presents a gaming opportunity to marginal units that can “mothball and wait for an out-of-market RFP prior to a peak season.”
“What a mess. Nothing good will come from this,” they posted.
The news caused some GCPA speakers to scramble in revising their discussion points. Dan Jones, a retired ERCOT staffer who still consults with the grid operator, added a new question to the resource adequacy panel that he moderated.
“I just think it was a lot of surprise, really, to see the magnitude of the notice. Everyone else in the hall was pretty surprised,” he said.
ERCOT COO Woody Rickerson said the 19.9% risk of emergency conditions was an increase from last year’s 7% and “not acceptable.”
“It’s too high,” he said. “That 3,000 MW is enough to reduce the probability of going into EEA.”
Asked by an audience member about the probability of getting the RFP’s full 3,000 MW, Rickerson said, “I think that’s a really big question that’s going to get answered in the next couple of months.
“This is also a way of testing what the market is capable of,” he added. “What is out there? And what will the cost be? Just because we’re asking for up to 3,000 MW doesn’t mean that we will have signed contracts. We may not get that much, or it may be too expensive. I think this exercise will help educate us as to what the market is capable of providing.”
