ERCOT CEO Bill Magness briefed the Texas Public Utility Commission last week on his organization’s response to the intense August heat, when the grid operator met record demand peaks and saw several price spikes.

ERCOT called two energy emergency alerts (EEAs) last month, its first in five years. Staff had warned before the summer began that EEAs were likely, given the system’s tight 8.6% reserve margin, but it did not have to resort to more drastic measures such as rotating outages. (See ERCOT: More Capacity, but Emergency Ops Still Expected.)

“I feel a little like the air traffic controller telling you how great the air show was,” Magness told the PUC during his presentation Thursday. “As you know, [ERCOT doesn’t] fly the planes. I wasn’t out there on a Saturday when it was 105 degrees [Fahrenheit] fixing a tube leak so the plant could run. The entire industry worked very hard under difficult conditions, and that’s how we were able to keep the power on effectively for the state during a very rough period.”

Commissioner Arthur D’Andrea offered thanks and kudos to Magness and the staff, saying, “We asked you to run a grid with very tight reserve margins. You stepped up and have given us reliability and probably the most efficient grid in the world. You’ve saved Texans a lot of money.”

Demand soared in August following the coolest June-July period since 2007. ERCOT set a new all-time peak of 74.7 GW on Aug. 12, smashing the record set in July 2018 by more than 1 GW. In all, the system topped the 2018 record seven times that week.

The Texas grid operator recorded its second-highest demand peak on Aug. 26 at 74.6 GW, along with two other top 10 marks.

Ironically, the EEAs were declared on two of the three days following the record peak, when temperatures and load were lower, but wind production dropped and thermal generation outages increased. Prices briefly hit the $9,000/MWh maximum during both energy alerts.

As he has before, Magness explained that ERCOT sees a trough in wind production during the early afternoon hours, when West Texas winds die down and before the coastal winds pick up.

“We have a fairly consistent pattern established in the summer where the West Texas and the coastal wind support the system at various times of the day,” he said. “As we have an increasing amount of intermittent resources on the system, there’s a divergence between the peak load of the day and when the reserves are lowest.”

Magness said forced outages were to be expected, considering the stress placed on generating units.

“When you’ve been running units through August with that kind of heat,” he said, “running units can become limping units, and limping units can become stopping units, if you don’t let them take a break and fix mechanical problems that come from running them so hard.

“The forced outages are not out of the ordinary, but when combined with a loss of wind generation and continued high load, that’s what took us into the EEAs,” Magness said.

ERCOT filed detailed reports on the Aug. 13 and Aug. 15 EEAs in a reopened docket (27706). The commission also opened a docket to review the grid operator’s summer performance (49852).

The PUC has tentatively scheduled an Oct. 11 workshop for a final and more in-depth debrief on ERCOT’s summer performance. The grid operator and its Independent Market Monitor are among those who will deliver presentations.

Commission Chair DeAnn Walker, who requested Magness’ presentation, said she and Magness will both be attending NERC’s quarterly meeting in November. “NERC is concerned about the reliability of our grid, and Bill and I are going to go tell them we’ve got it,” she said.

ETEC OK to Transfer 35 MW into ERCOT

The commission approved East Texas Electric Cooperative’s (ETEC) request to move 35 MW of load and related facilities into ERCOT from SPP (47898).

ETEC, which provides wholesale service to eight smaller cooperatives straddling the ERCOT, SPP and MISO footprints, said the transfer will reduce energy costs and better balance its load among the three grid operators. The co-op will have 185 MW in ERCOT, 965 in SPP and 450 in MISO when the load transfer is completed during the last three months of 2020.

To transfer the load, ETEC will disconnect three substations from SPP and connect them into ERCOT through interconnections on a 138-kV line transmission line. The co-op and Oncor are responsible for building the interconnections.

PUC Rejects T&D Waiver Request

The PUC denied a petition by Oncor, CenterPoint Energy and Texas-New Mexico Power for a waiver of the commission’s quarterly retail market performance-measure reports, as required of ERCOT, retail providers, and transmission and distribution entities (49301).

The companies said it was “impractical and unduly burdensome” to comply with the rule and its reporting form because of changes over time in the applicable tariff and the market. Walker disagreed with their assertion, saying a rulemaking would be a more appropriate proceeding to change the rule.

“CenterPoint and others have been filing these in May and August, so it can’t be burdensome and impractical,” she said. “This is not the way to fix a rule or a form.”

Hearing Scheduled for El Paso Purchase

The PUC is working to schedule a hearing on an investment fund’s proposed acquisition of El Paso Electric (49849).

Commission staff are trying to schedule a hearing in November. A prehearing conference Thursday will set a procedural schedule and address pending motions.

EPE and J.P. Morgan Investment Management’s Infrastructure Investments Fund announced the $4.3 billion deal June 1. The sale must be approved by EPE shareholders, the city of El Paso, and Texas, New Mexico and federal regulatory agencies.

The parties filed a merger application with the PUC on Aug. 13, starting the 180-day clock to rule on the application. Texas Industrial Energy Consumers, El Paso and the Texas Office of Public Utility Counsel have intervened.

Commission Approves Rate Recovery, $328K in Fees

In other business, the commission approved Southwestern Public Service’s request to recover $2.16 million in rate-case expenses (47588).

The commission also approved six settlement agreements, totaling $328,500 in administrative penalties.

• Electric wholesaler Twin Eagle Resource Management agreed to pay $180,000 for capacity shortfalls, inaccurate telemetry and failure to send notifications to all required parties (49784).
• Retail provider American PowerNet Management was fined $10,000 for a history of failing to timely file annual reports (49408).
• Spark Energy, another retailer, was assessed $90,000 over improper enrollment, bills and disconnection notices (49684).
• Three qualified scheduling entities were fined for violating the use of the emergency response service (ERS) demand response tool. Power Generation Services was fined $8,500 for failing to maintain the required ERS load (49281), the city of Garland was hit with a $25,000 fine for not maintaining the required portfolio-level ERS availability factor (49698), and Links EP was docked $15,000 for not maintaining the required ERS load and availability factor (49731).

— Tom Kleckner