Texas’ Public Utility Commission has exercised the 30-day severance clause in its reliability monitoring contract with Texas Reliability Entity.
In a letter to Texas RE CEO Lane Lanford, PUC Executive Director J.P. Urban said the commission is terminating the contract, at the NERC regional entity’s request, effective Nov. 16.
A Texas RE spokesperson acknowledged receiving the letter — which ERO Insider obtained through an open records request — but declined further comment.
As the reliability monitor, Texas RE audited and investigated ERCOT market participants’ compliance with the grid operator’s protocols and operating guides. It reported potential noncompliance with reliability-related regional rules to the PUC and provided the commission testimony and support in enforcement cases, leading to nearly $1.9 million in penalties during the last five years.
Texas RE devoted four of its 64 employees to the monitor’s responsibilities. Its primary mission remains serving as the NERC RE for the Texas Interconnection.
Urban has formed a task force to work with ERCOT staff in ensuring market participants’ data is still evaluated until a new monitor is hired. PUC legal staff will exercise the agency’s enforcement authority.
The termination follows the PUC’s Sept. 24 open meeting, in which commissioners raised the possibility of ending Texas RE’s monitoring contract. They said they were not sure the commission was getting its money’s worth from the RE and questioned whether there was enough transparency for ratepayers. (See PUC Reconsidering Texas RE as Reliability Monitor.)
Lanford said at the time that his organization would “continue to assist if needed to ensure the mutual goal of a highly reliable and secure bulk power system within the Texas Interconnection.”
Andrew Barlow, the PUC’s director of external affairs, said “things are moving forward on the preferences expressed by the commissioners.”
The commissioners have questioned whether they have the authority to make Texas RE its reliability monitor, citing language in the state’s Public Utility Regulatory Act (PURA). During the Sept. 24 meeting, Chair DeAnn Walker said the statute “clearly says” the commission “may delegate” the reliability monitor’s function to an “independent organization.”
That “independent organization” would be ERCOT, not Texas RE, she said. The PURA repeatedly refers to ERCOT as “the independent organization,” never “ERCOT,” Barlow said.
Commissioner Arthur D’Andrea also said he supported giving 30 days’ notice to Texas RE. Commissioner Shelly Botkin requested more time to consider the issue.
Commission staff have drafted amendments to how the PUC implements the PURA that would give it discretion over whether to appoint a reliability monitor and broaden the eligibility criteria when it selects the monitor (50602).
ERCOT served as the reliability monitor until Texas RE was created in 2010. Barlow has pointed out that Texas RE uses ERCOT data for analysis rather than generating its own.
The $5.3 million, four-year monitoring contract was to extend through 2023, up from $4.3 million for the previous four-year term. The increase was another sticking point for the PUC.
The contract was funded through ERCOT’s system administration fee. Because Texas RE was paid through the fourth quarter of this year, it will have to return a pro rata share of the payment.
Barlow said the PUC can’t take the reliability contract out for bids until it knows what the scope of work will be.
“The one thing we do know from the commission’s open meeting discussion is that the future work will be handled differently,” he said.
