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The Public Utility Commission met on July 20 to take up a number of items. The commission focused on discussion concerning electricity market design changes made by the legislature. A video of the meeting and the agenda can be found here.

 

This report is intended to give you an overview and highlight the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Items not discussed: 3-6, 8-12, 15, 17-22, and 27

 

Items on Consent Agenda Approved (3-6, 8-11, 15, 17-22, and 27)

 

Public Testimony

Mike Peterson, Bridge Studios

  • PUC has failed to meet its mission
  • Unable to make clear rules about providing energy
  • We run the risk of the studio leaving entirely
  • I have two companies willing to service the project, but the PUC has been unclear on rules
  • PUC would rather maintain the shadow of destructive power

 

Items 35, Project No. 54455 – CY 2023 Rulemaking Calendar and 36, Project No. 55156 – Implementation Activities 88th Legislature

David Smeltzer, Commission Staff

  • Requesting green light on first set of rulemakings that we would like to move forward with
  • We split rules by industry
  • Things with identifiable statutory deadlines will be addressed first
  • A few items were chosen for high priority
  • Glotfelty- A lot of people were appreciative of the workshop that y’all had
  • McAdams- Industry input was well taken. I believe that we need to endorse the plan and follow it as much as we can
  • Cobos- I think this is a good plan to move forward
  • Staff- We sent this list to the Governor’s office and we will keep you advised as we get input on that
  • Jackson- Very well done, thank you for working members of the public on this

 

Item 37 Discussion and possible action regarding agency review by Sunset Advisory Commission, operating budget, strategic plan, appropriations request, project assignments, correspondence, staff reports, agency administrative issues, agency organization, fiscal matters, and personnel policy.

PUC Staff

  • I filed a memo reminding staff about our 7-day deadline on filings
  • It is not appropriate to ask you to consider items 48 hours in advance
  • Memos should clearly state why information is late filed
  • This is the type of information that is helpful
  • Jackson- Our expectation is that we adhere to the 7-day deadline, though extenuating circumstances can be accepted
  • Staff- Tom Hunter is retiring from the agency; David Gordon has agreed to take over his role

 

Item 2 Docket No. 48836; SOAH Docket No. 473-19-1422.WS – Petition of Paloma Lake Municipal Utility District No. 1, Paloma Lake Municipal Utility District No. 2, Vista Oaks Municipal Utility District, Williamson County Municipal Utility District No. 10, and Williamson County Municipal Utility District No. 11 Appealing the Wholesale Water and Wastewater Rates Imposed by the City of Round Rock. (Order on Appeal)

  • Cobos- I am preparing a memo and would request that we postpone this to the next memo

 

Item 7 Docket No. 53920 – Application of Texas Water Utilities, LP and Creek Water Utility LLC for Sale, Transfer, or Merger of Facilities and Certificate Rights Marion County. (Order on Appeal)

  • McAdams- I do not agree with the assertions of Texas Water Utilities. Concurrent CCN amendments are allowed in an SDM proceeding for efficiency but the rules do not supplant the rules governing a CCN amendment
  • McAdams- I believe a notice is required; I move for the Commission to issue an order upholding the ALJ’s required notice and denying the interim appeal
  • Cobos- I agree with McAdams
  • Motion Carries

 

Item 16 Docket No. 53625; SOAH Docket No. 473-22-00991 – Application of Southwestern Electric Power Company for Certificate of Convenience and Necessity Authorization and Related Relief for the Acquisition of Generation Facilities. (Order on Rehearing)

  • McAdams- I move to extend the time required on the motions for rehearing to the maximum extent permitted by law
  • Motion Carries

 

Item 25 Project No. 53298 – Wholesale Electric Market Design Implementation.

  • Cobos- I am generally in agreement with all the recommendations that staff provided. Page 3 of the memo. Clarification that “Other than natural gas” does not include coal or nuclear
  • Staff- ERCOT has to issue the RFP by August 1, that is why they need these parameters
  • Staff – $54b was the cost cap and we want to keep that the same; recommend a change on the offer cap
  • Staff – The latest offer is around $12 per MMBtu ($9k per megawatt)
  • McAdams- It would be nice to see how this plays before we open up this service
  • Jackson- ERCOT should continue to use a single clearing price and take out any offers which are outliers

 

Item 26 Project No. 54444 – CY 2023 Reports of the Electric Reliability Council of Texas. (Discussion and possible action)

Woody Rickerson, ERCOT

  • Memo is divided into 2 parts
  • Part A describes determination of the adequacy; when resource owners look at the chart, they will provide a temperature and windspeed to ERCOT
  • McAdams- What are they comparing that to?
    • To the 95th percentile in the chart
  • When they show us their winter declaration they will use those two numbers to calculate the number that is equivalent
  • If that calculated design temperature is less than the number in the chart, then we will consider that preparation to have met the standard
  • If it comes out to be higher, then they will have to do extra work to get that number down
  • There may be some places that do not have that number, so they will have to derive one
  • Part B is the evaluation of failures
  • What happens if there is a failure?
  • If the facility has an apparent weather related failure when the ambient temperature is above the chart value we have to investigate
  • If the wind speed and temp result in a number below the standard, then they are probably OK
  • We won’t consider that to be a violation
  • If the calculated wind chill value is above that standard, then we will assess
  • McAdams- Some questions needed to be answered and I believe they have been. Generators and operators will report to ERCOT with their preparations for weather in a given zone
  • McAdams- If they have prepared for a temperature higher than what ERCOT determines, additional work will be required. If it’s below, no additional prep is required
  • McAdams- In the event of a failure, ERCOT will determine if the failure occurred at a value higher than the chart value
  • McAdams- Then they will consider the effect of wind chill. If the actual wind chill temperature is above the chart value then ERCOT may determine if standards failed to be met
  • In order to make this as simple as possible for a resource owner, this other stuff only applies if the temperature is above that chart value
  • Staff- Just to be clear, when an entity is reporting its windspeed and temperature to ERCOT, they will pass one of many tests required by the rule.
  • McAdams- Gotcha. I’ve reached out to a few major generators. They all believe this is a workable plan and that they could work to comply
  • McAdams- This is not a gotcha system and there is clarity
  • Jackson- This demonstrates to me that the process is working
  • Cobos- as the process evolves, I think it is important that the industry rises to the standards that we have put in place. We have come a long way, and I think we will garner more benefits in the future
  • Glotfelty- I think we have ended up in a great spot
  • McAdams- I move to direct ERCOT to adopt the methodology described in their memo
  • Cobos- second
  • McAdams- We need this tied to their memorandum so that if this becomes a dispute we have this tied to their memo
  • Staff- if you want to take a vote we can write up an order
  • Staff- as an alternative we can provide a memo consistent with discussion and provides direction to ERCOT
  • McAdams- I move to direct staff to draft a memo consistent with discussion and provides direction to ERCOT
  • Motion Carries

 

Item 29 Project No. 54941 – Power Generation Company (PGC) and Self-Generator (SG) Compliance Updates Under 16 TAC § 25.109(A)(3)(A). (Discussion and possible action)

Mariah Benson, PUC Staff

  • We updated multiple rules
  • We included a requirement for them to demonstrate compliance with the updated requirements
  • Over 280 generators have not filed that form, so we are recommending that the deadline be extended to August 18th. 40% of the market has not yet filed
  • After August 18th, we will determine potential compliance violations
  • A lot of those companies may no longer be in the market, so we are really just trying to get a since of what the market is
  • Jackson- Non-compliance will be submitted to our enforcement division after August 18th

 

Item 30 Project No. 37344 – Information Related to the Entergy Regional State Committee. (Discussion and possible action)

  • Cobos- I wanted to provide an update. MISO is undertaking a long range transmission planning initiative on a traunched basis
  • Cobos- A significant topic is how the cost of those projects will be allocated. MISO is reaching out to us for our input
  • Cobos- The ERC resolution is requesting develop a cost allocation policy that is not based on postage stamp cost allocation
  • Cobos- This would allocate costs to people who may not receive any benefits. We want to better align costs based on expected benefits
  • Cobos- we have kept in touch with MISO and will continue to be involved in those discussion. I am reporting on this as president of the ERC and wanted to bring this to your attention
  • McAdams- How do you think this will go?
    • Cobos- the two other regions are OK with postage stamp allocation. We have a different footprint in the south, with different factors affecting our region
    • Cobos- We want to ensure that costs are allocated in a fair and equitable to make sure that our companies are not paying for things they don’t need
  • McAdams- Hopefully that MISO south and the Entergy states will be heard more in the ISO
    • Cobos- I do think that it is important that we provide a voice for the MISO South subregion
  • Glotfelty- Postage stamp pricing works in Texas and it is really hard to pin all costs on a cost causation when you are looking at such a massive system. In all of these other regions, we don’t have the benefit of a single jurisdiction
  • Glotfelty- know why it is this way, I think it will change one day. We need to work for our regulated utilities
  • McAdams- ERCOT has a more integrated region and MISO has this one line. In ERCOT you can see those benefits
  • Cobos-The ERCOT market is an integrated system in one state. When you have only a portion of one subregion within Texas, it is harder to see how building power lines in Arkansas will benefit Texans
  • Glotfelty- Your position is right and it will change when it changes and you are supporting the position that benefits our rate payers, so thank you

 

Item 32 Project No. 41210 – Information Related to the Southwest Power Pool Regional State Committee. (Discussion and possible action)

  • McAdams- Yesterday, Austin hosted an in-person meeting of the Resources and Energy Adequacy Research team. We discussed flexibility and ramp associated with capacity obligations
  • McAdams- We discussed a policy that will determine the expected load-carrying capability as well as the performance-based accreditation methodology
  • McAdams- We have discussed possibilities of retaining generators from facilities that are planning to retire. We discussed how maintenance outages affect capacity obligations
  • McAdams- Ultimately, all these topics fed into a scheduling and work plan which is consistent with what ERCOT is trying to develop
  • McAdams- The next meeting will be in Dallas. It will involve reliability and energy leaders. There is heavy interest in providing forums for reliability standards on a national basis
  • McAdams- E3 will be presenting to talk about valuing availability. I think it will be a very interesting conversation. ERCOT has been invited
  • Glotfelty- I hope that ERCOT is there

 

Item 33 Discussion and possible action on electric reliability; electric market development; power-to-choose website; ERCOT oversight; transmission planning, construction, and cost recovery; and electric reliability standards and organizations arising under federal law.

C Gelmine, ERCOT

  • We reviewed the 88th legislature recommendations. There will probably be more work to be done
  • Our focus was on an ORDC change. We recommended that we proceed with the board recommendation
  • The second component was around the dispatchable DRRS program
  • We are laying that out and identifying an option that is deliverable by the December 2024 deadline
  • The last one is PCM
  • By statute there are some guardrails around what to do moving forward
  • We will need 2 and a half to three years to fill in all the gaps once we establish problems in our workshops
  • Jackson- You outlined that there is a potential need for additional work. I would like to see a workflow process set forth. If we can delineate that it would streamline the process and meet the endgame
  • Jackson- I expect to start next week so that our staffs can come together so that we can start getting something in place
  • Glotfelty- That is exactly what I was thinking. If we can show the industry, the commission, and the board a document that would show what is being worked on, that would develop certainty in the market
  • McAdams- It can give us targets to hold us accountable
  • Cobos- It will help us, ERCOT, stakeholders. It will give us a general target that we can show to the legislature
  • Staff- We have been discussing this internally and we will create a work team that will get you to a place where you can track these projects more easily
  • Staff- I don’t think that it is realistic for us to have this ready by the next meeting
  • Cobos- On reliability standards, you do not have a completion timeline. Can you outline that?
    • ERCOT staff- we have laid out some milestones. We are planning on having that information by the second open meeting in august. The work should be completed by November
  • Cobos- Does that include the completion of the Ball study?
    • Staff-we have not started on that yet
  • Cobos- Have you hired a vendor?
    • Staff- We have not
  • Cobos- I think that is very important to our goals
  • Jackson- I think this is why a workflow would be so helpful
  • McAdams- All roads lead to Christmas. Once we center around what the standard is, we need to codify it as an agency rule. There is a goal that we will achieve a standard. The legislature spoke to that during session
  • Cobos- The Value of lost load study is extremely important, because one hasn’t been done before at ERCOT
  • Cobos- the next topic I wanted to touch on is Real Time Co-optimization. RTC will be implemented before the next EMS upgrade
    • ERCOT Staff- We have a window of opportunity before the next upgrade to get the effort kicked off
  • Jackson- Why is this a good window?
    • ERCOT Staff- we have resources because we are not working on another upgrade
  • Cobos- If we don’t get there by the next upgrade it would be delayed for years
  • McAdams- to delay it further would be a huge problem. That project needs to be completed before EMS freezes us out again
  • Cobos- The main priority from my perspective is to reduce RUCK or it will need to be bridged. I think it is important that we start taking steps in that direction
  • McAdams- This is a bridge to DRRS. This is something that we can implement sooner than DRRS coming online. This will enable us to induce market behaviors. Commit to the energy market
  • McAdams- Ultimately DRRS will take some time. There will be a beta-testing period where we deal with issues that ERCOT will work through. I’m open to those types of parameters
  • McAdams- We cannot continue acting under emergency protocols
  • Cobos- It increases self-commitment to reduce RUCK and will reduce volatility. This is a bridge to long term market reforms. I don’t think its tied to one mechanism but tied to long term reform
  • Glotfelty- I hope that we ultimately get back to a market structure that relies on itself. At some point we just need to let the market work
  • Glotfelty- We created these problems with our initial market interference
  • McAdams- The legislature is allowing us the discretion to create a bridge solution. We have had a bunch of emergency conditions and measures were necessary
  • Cobos- HB 1500 makes it clear that there must be an evaluation of the cost of new entry. I think that we need to initiate a key study into the cost of new entry. My understanding is that there is no detailed study to determine the cost of new entry
  • Cobos- the other markets conduct a regular CONE study. MISO does this Markets in New England do this
  • Cobos- I think ERCOT needs to move towards hiring a consultant to start this study. We need to get started sooner rather than later
  • McAdams- It establishes the need case. I think it would be essential to our evaluation process. Is this part of the decisions that we need to make
    • ERCOT staff- I do think that a CONE study aligns with the statute. We got our current number from a 2012 study; there has not been a recent study on the real number
    • That is an important data point
  • Jackson- It sounds like we have alignment there
  • Cobos- I would like to get an update on where you are at
  • Jackson- Lets put that in the work plan
  • Jackson- On the ORDC we will discuss that at the next August meeting; ERCOT will move forward with the stakeholder discussions on the DRR; I expect that ERCOT and PUC staff will start working on a workflow next week

Meeting Adjourned