Texas regulators on Thursday pushed ahead with commission staff’s proposal to re-design the ERCOT market, directing the grid operator to work with it in implementing the two-phase approach.
In a 35-minute discussion, the Public Utility Commission did not address the 54 stakeholder comments it received on staff’s Dec. 6 strawman proposal, sticking to language in staff’s original memo. (See PUC Narrows Options for ERCOT Market Redesign.)
In two orders, the commissioners agreed to adopt the strawman as its market redesign blueprint and ordered ERCOT to take the strawman’s Phase 1 blueprint and file a comprehensive implementation report on the plan by Jan. 10. The commissioners also directed the ISO to prepare nodal protocol revision requests for their approval, potentially sidelining ERCOT’s stakeholder process.
Phase 1’s order involves modifying the operating reserve demand curve (ORDC); allowing for “more targeted response” to increase the use of load resources; reforming emergency response service; and adding new ancillary service products.
The PUC ordered ERCOT to make the ORDC changes effective Jan. 1. The modifications include setting the curve’s minimum contingency level to 3,000 MW and eventually decoupling the systemwide offer cap and the value of lost load, now set at $5,000/MWh.
The commission earlier this month lowered the high systemwide offer cap to $5,000/MWh. (See Texas PUC Pushes 44% Reduction in ERCOT Offer Cap.)
PUC Chair Peter Lake (2nd from right) explains his thoughts on the ERCOT market redesign. | Texas Admin Monitor
PUC Chair Peter Lake also asked commission staff to work with ERCOT in “crystalizing” the major “abstract” concepts of Phase 2, which is described in the second order. He said staff should focus on Phase 2’s backstop reliability service proposal first and then the load-side reliability mechanism he has been promoting since October.
Neither order had been filed as of Thursday evening.
The PUC did not discuss the cost impact of its proposals.
ERCOT’s Kenan Ögelman, vice president of commercial operations, told the PUC that ERCOT staff would target a Feb. 15 deadline to provide the inputs, specifications, quantification and relevant metrics it would need to design and build each of the Phase 2 proposals.
Alison Silverstein, a former PUC and FERC staffer, said in a fiery response to RTO Insider that she was “deeply disappointed” by the commission’s actions. She said the commissioners should have called for “much more” analysis of both phases’ reliability, market and cost impacts and should include better stakeholder and public input going forward.
“Today the commission voted to implement many Phase 1 measures that will have interacting effects on resource and system operating capabilities and costs, without any clear analysis of whether and how it will all work together or what it could cost Texas electric customers,” Silverstein said. “We don’t know whether all these measures will collectively help or hurt day-to-day resource availability and reliability, and there has been zero calculation of how much additional money they will suck out of Texas electric customers’ wallets.
“I’m willing to pay more for better reliability, as are many Texans, but it’s the commission’s responsibility to make sure that we get what we pay for. Today, the PUC abdicated that responsibility,” Silverstein said.
Consultant Doug Lewin of Stoic Energy, who live-tweeted the open meeting, said although there will be a cost analysis on the load side reliability mechanism and the backstop reliability service, “it still seems to me like they’re missing an integrative look at system needs.”
“How big should the backstop reliability service be? What are we basing that on: a detailed, transparent analysis?” he said in an email to RTO Insider.
Both Lewin and Silverstein said the FERC-NERC investigation of Winter Storm Uri’s devasting power outages in Texas and elsewhere was largely ignored by the PUC. The report laid the blame for the nation’s largest controlled load shed at the foot of the natural gas industry and listed 28 recommendations to prevent a reoccurrence. (See FERC, NERC Release Final Texas Storm Report.)
“There was a lot of discussion at the legislature and in the press about how the 2011 recommendations were largely ignored,” Lewin said. “How seriously are we taking this more recent set of recommendations?”
ERCOT said in a statement that the PUC’s proposals “will require a lot of coordination among all the market participants and market experts,” calling them “the most significant and important changes … since [the market’s] migration to a competitive market almost a quarter-century ago.”
“ERCOT is glad to be able to assist the PUC in this effort and will continue to work closely with the agency to meet the aggressive timeline,” a spokesperson said.
“It is unprecedented to make so many substantive, market and cost changes with such minimal regulatory process and public and stakeholder input,” Silverstein said. “The pace and scope of the PUC’s decisions today may pass legal standards for Texas administrative law practice, but it violates sensible practices for sound public policy and public-interest decision-making.”
The open meeting was punctuated by almost 50 minutes of public comments, organized by the Sierra Club, Public Citizen and Texas Campaign for the Environment. The groups asked the PUC to prioritize public input in their decision-making and consider “people-first solutions.”
To make their point, the group’s members held up a symbolic power line, decorated with 350 icicles, each representing the names of 10 people asking the commission to weatherize the Texas grid to “protect and benefit the people of Texas, rather than the profits of Texas energy companies.”
The wide range of comments called for energy efficiency and demand response measures that decrease energy consumption. One speaker tearfully recounted her granddaughter being forced to go without power for 60 hours and then another 30 without water.
“You need to start being accountable to the people of Texas,” another person said.
Emma Pabst, a representative for the Sierra Club’s Beyond Coal Campaign, called for an energy grid “that works first and foremost for our communities.”
“The fossil fuel industry left us to die during the [February] freeze,” Pabst said. “Natural gas made $11 billion, while we were left to die in our homes.”
