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The House State Affairs committee met on June 23rd to hear invited and public testimony on the following charges:

  • Monitor SB 2, relating to the governance of the Public Utility Commission of Texas, the Office of Public Utility Counsel, and the Electric Reliability Council of Texas
  • Examine the efforts of power generation facilities to weatherize their facilities.
  • Review the status of projects intended to reduce transmission congestion within the electrical grid.

A video archive of the hearing can be found here.

 

This report is intended to give you an overview of the discussions 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.

 

Opening Comments

  • Chair Metcalf – Each charge will have a panel of witnesses, questions after; will be hearing invited and public testimony

 

Charge 1: Monitor SB 2, relating to the governance of the Public Utility Commission of Texas, the Office of Public Utility Counsel, and the Electric Reliability Council of Texas

Peter Lake, PUC

  • Electricity market has undergone significant reforms due to SB 3; SB 2 was another key piece of legislation that transformed ERCOT to an independent board
  • Members designated by selection committee; new member selection was completed by the end of 2021, very quick timeline
  • New members have backgrounds in multiple sectors & we’ve seen benefits of that expertise, e.g. have technologists to lend expertise on IT issues, new member with extensive background with O&G

 

Brad Jones, ERCOT

  • Established a new committee focused on Reliability & Markets
  • Committees have been established and populated, all new members have been performing very well

 

Chris Ekoh, OPUC

  • Provides overview of OPUC, represents public in cases before PUC
  • Now have a n independent ERCOT board, 11 members total, 8 independent, CEO is no longer a voting member
  • OPUC continues to be a voting member
  • SB 2 changed board to make director unaffiliated & disinterested, also must be residents of Texas
  • Enhanced oversight authority through the ERCOT subcommittees is being complied with
  • OPUC is working with PUC and ERCOT continuously
  • Regarding topic that came up yesterday on composition of the board members; currently ERCOT is a great board, members are not there because of the money
  • ERCOT needs a compensation package that will make it possible for selection committee to attract new talents that will ensure reliability at an affordable price

 

Peter Lake, PUC

  • Supports Ekoh’s comments, ERCOT board is talented, every member was present in Texas during Uri and understands it can’t happen again

 

Charge 1 Q&A

  • Howard – Asks after who is working together to ensure smooth operation; might also need to look at turnover and salaries; can you address what is going on with retention and recruiting
    • Lake, PUC – At the high level you’re right, PUC has been under-resourced and need to correct that; will work closely with legislature as we go through budgeting to work on those improvements
    • As part of the dynamic between ERCOT and PUC, there wasn’t great communication in the past, led to negative results & very difficult for employees on both sides
    • Established a liaison in both ERCOT and PUC to handle the opposite agency, in addition to weekly meetings between leadership
    • Jones, ERCOT – Spent time to ensure compensation and benefits are competitive, Austin is an extremely competitive place to do business, staying ahead of the curve is a challenge
    • ERCOT attrition is lower than most of the industry, higher than it has been though; strongest driver of retaining employees is the work that they get to do
    • Ekoh, OPUC – OPUC also has a hiring and retention challenge, tight market before Uri and got tighter; challenge in hiring attorneys has more to do with the expertise needed; attorneys often get hired out in a short amount of time
    • May help to make OPUC salary range more in line with other agencies
  • Howard – Should be a high priority, appreciates perspective on smaller agencies & ability to compete with larger agencies; encourages members to advocate for funding necessary to do the work
  • Howard – On RTC, Is staffing an issue? If we had more staff would we be doing this quicker?
    • Lake, PUC – Multiple reasons, this is a software item and that difficult market to hire from in Austin
    • New board members from Dell & Texas Instruments help lend expertise
    • Public likely can’t compete with private
  • Howard – SO new board members could help facilitate?
    • Yes
  • P King – 17 bills passed last session on electricity, asks Lake for a summary report
    • Will get it to you
  • King – Is water adding too much to your plate, would this be better in another agency? Telecomm’s not too much right now, know its mostly de-regulated
    • Would defer to Sunset Commission, they are looking into it right now
    • Water is a much more staff intensive subject to regulate, takes a lot more personnel to work through hearings and rates, covers a lot of utilities
    • Wherever water is, echoes sentiments to help with resources
  • King – How much does it distract you and others from focusing on power?
    • Not sure I can quantify, would need to ask staff and executive director
  • King – Concerned its too much for one agency to have that many big buckets
    • In terms of PUC staff hours per Texan served, probably 10 or 20 times the amount of power
  • Raymond – Asks for something on pay to be put in the interim report for State Affairs, need to look towards private sector; media will be carrying stories on the heat & ability of agencies to handle; even if we don’t put specific recommendations to increase, hope we at least put that its something we need to look at
  • Hunter – ERCOT & PUC got me the information on salaries
  • Hunter – To me one of the biggest problems is communication, legislature shouldn’t be the last to know or learn of crucial issues from others
  • Hunter – Transparency is my big issue, don’t see transparency on the costs & would like to see this going forward
  • Hunter – OPUC is focused on public utilities; ERCOT & PUC should be telling public it will be hot today
  • Chair Metcalf – ON staff, can you go outside of Austin and have them work remotely, have you looked into this?
    • PUC has utilized remote work to the extent possible, especially with software and call center jobs
    • Some other jobs require real-time office hours
    • Jones, ERCOT – Have opened up business to a lot of remote work, have allowed people to work from anywhere in the state

 

Charge 1 Public Testimony

Larry Linenschmidt, Self, Citizens Climate Lobby

  • Theologically conservative Christian & conservative voter
  • Should consider impact of climate change in any discussion of electric grid, should encourage PUC to reduce greenhouse gas emissions by 50% by 2030 and net zero by 2050
  • Should facilitate expansion of transmission lines in TX
  • Should rescind SB 1938, limits competition
  • Should clean up methane leaks & flaring
  • Many Christian leaders recognize the threat of climate change, military leaders are preparing for effects

 

Charge 2: Examine the efforts of power generation facilities to weatherize their facilities.

Panel 1

Will McAdams, PUC

  • SB 3 required utilities and generation to weatherize, PUC decided to implement a 2 phase approach, Phase 1 addressed the coming winter, Phase 2 would address both winter & summer months
  • Of 302 generation resources inspected by ERCOT, ERCOT identified deficiencies only at 10, as of Jan 17th all but three of these had been addressed
  • Out of 22 TSPs, ERCOT identified deficiencies at 6, but these were minor
  • Winter Storm Landon was second highest winter demand period, 68 gigawatts, Uri would’ve been 76 gigawatts if system had remained operational
  • During Landon, experienced roughly 7k megawatts of forced outage, below average
  • PUC has issued revision to weatherization rule as part of Phase 2, taking public comment on this and it is due at the end of today
  • Revision concerns standards for hot and cold critical components, training on weather prep; key components to consider
  • PUC may require generation resource and substation prep where it will perform in a 95th percentile event, would include things like 2011 icing and 1989 freeze; for summer it would’ve included 2011 drought of record
  • Generation and wires companies may harden facilities against events, would change over time as more event data updates the model
  • Substations would be inspected once every 3 years, ERCOT could direct more on a risk/reliability basis
  • Would also require facility owners to attest facilities will meet the required standard
  • Already seeing big improvements to reliability

 

Woody Rickerson, ERCOT

  • After Phase 1 rulemaking, ERCOT inspected units representing 85% of the lost megawatt hours during Uri; ERCOT did this with contractors
  • Performance during February winter storm was good
  • Looking forward to Phase 2 rulemaking, as soon as final rule is out will build complete staff, have skeleton staff currently
  • Also doing summer inspections, but don’t have a rule behind those yet

 

Charge 2 Panel 1 Q&A

  • Raymond – You mean the winter of 2022?
    • Rickerson, ERCOT – Yes, February of 2022
  • Raymond – 302 units inspected, so these were 302 during that didn’t have proper weatherization?
    • After Uri, saw that 55k megawatts had some sort of weather-related problem, 85% of those problems turned out to be 302 units
  • Raymond – So we needed 76k megawatts during Uri
    • McAdams – Would have been 76k megawatts
  • Raymond – So you feel comfortable that the improvements made would’ve accounted for that 76k?
    • Let me check the solar & wind and will get back to you
  • Raymond – 100-year event doesn’t mean it can’t happen next year, or year after; you feel comfortable had this rule been in place in 2021
    • It would’ve improved grid reliability, rule made a significant difference in improving outage rate on the fleet
    • Only so much you can do on line loss, metal sheering, etc., but prep efforts improved reliability
  • Raymond – When was the last time demand had gotten to 68k megawatts like in February
    • Rickerson, ERCOT – Uri was the previous peak, built up to 69k before outages began; before that the previous peak would’ve been 65k
  • Raymond – This is my point, got to 69k in 2021, 68k in 2022
    • 2011 and 1989 storms were both pretty severe
    • McAdams, PUC – Recent events reflected both severity of the storm and increased load on the grid
  • Howard – Looking back at previous years, also would’ve had lower demand
  • Howard – Regarding Phase 1 & 2 standards, generators items came from FERC & NERC and other report; were there some you used, some you didn’t use?
    • Staff was instructed to follow the high level recommendations, can’t speak to following every aspect of the report
  • Howard – And you looked beyond temperature to humidity, windchill, etc.?
    • Correct
    • For Phase 2, we have sustained temperatures over 168 hours
  • Howard – You’ll be able to include things beyond temperature in Phase 2 as you did in Phase 1? E.g. metal sheering, humidity in addition to cold, wind, etc.
    • From PUC’s point of view, important to have a rule that can be inspected, some aspects may be beyond scope of what the inspector can conduct
    • If generators attest they have hardened beyond a certain threshold, it is on them to account for all of the factors
  • Howard – Not suggesting they inspect these aspects, but asking if rule will include these factors?
    • Can dig into rule and discuss it
  • Howard – Climatologist is supposed to be incorporated into this planning
    • Rickerson, ERCOT – Part of rule is ERCOT will produce a weather report every 5 years, ERCOT has two climatologists that work with the state climatologist
    • Phase 2 rule uses that to help set a baseline for the standard
  • Howard – ERCOT has meteorologists? Can you tell me the difference between climatologist and meteorologist?
    • Yes, ERCOT has meteorologists
  • Howard – Meteorologists look at short term trends, collaboration with state climatologist has not been extensive; is there any other aspect of this in the Phase 2 rule? Will be critical to look at this for grid reliability
    • ERCOT makes grid reliability forecasts 15 years out
  • Howard – Would you consider incorporating the work of the climatologist?
    • Certainly
    • McAdams, PUC – Forecasts are important to consider for the investing market
  • Howard – Would you see any value in funding prospective studies on extreme weather trends to help address long-term weather?
    • More information on weather the PUC has the better

 

Michele Richmond, Texas Competitive Power Advocates

  • TCPA members are supportive of grid preparedness in heat and cold, before SB 3 was adopted members were working on weatherization, had analyzed Uri, and already started improvements
  • Members have spent in excess of $120m for weatherization
  • Have also put in place additional fuel resiliency measures, incl. dual fuel, fuel storage, etc.
  • TCPA filed comments at NERC and will be filing comments on Phase 2 at PUC
  • Important to consider balance between summer and winter, e.g. resources in Northeast benefit from enclosed building during winter, but may impede summer cooling in TX; PUC has done a good job of balancing needs so far
  • TCPA members are uniquely positioned, independent generators do not get cost recovery on expenditures; continues to be unfunded mandate that the market currently doesn’t support, no economic signal so far, particularly for older plants
  • What makes sense for older plants is different than newer plants
  • $30m in federal grant money is available for weatherization, but needs 15% state match, would appreciate state effort
  • Other focus is making sure rules passed are not discriminatory against larger multi-unit resources requiring much greater expenditures
  • Also need to recognize that there are unanticipated failures, wise to make this a preparedness standard rather than performance standard
  • Timeline should be considered, specialized work with limited contractors
  • Resources should have appropriate time allotted to take units offline and complete weatherization measures
  • Raymond – You referenced a unit built in 1957, how many other units are from that time period?
    • Can get this for you, have resources built in 50s, 60s, 70s
  • Raymond – I guess the older the are the more costly they are?
    • Much like a car, the older the unit likely the more it costs to fix
  • Raymond – Have you started looking at what it costs to replace & present to the legislature
    • 1957 unit typically only runs about 2 weeks out of the year, put into service under a RUC regularly, wear & tear is significant and not intended
    • Running units like this under conservative market posture is stressing units, will end up with units mothballed sooner than they need to be
  • Raymond – Looking at TX growth, someone needs to tell us about next 20 to 30 years and making investments we need to make into very old facilities
    • Believe in competitive markets, once Phase 2 is adopted hopefully that will send the correct economic signals
    • Investors want regulatory certainty, the more we tinker with design the longer you’ll see a delay in vestment
    • Members want to invest in ERCOT, but can’t get finance; no stable & consistent revenue stream they can take to investors
    • Have looked at PUC’s reqs, need to adopt a reliability standard and say how much needs to come from dispatchable resources; market will respond
    • Need to value reliable resources that can turn on and off, some of PUC’s rule does this be recognizing reliability of e.g. gas plant with firm fuel
  • King – Handley unit is the 1957?
    • No, close, but no the oldest, Mountain Creek is the 1957 unit
  • King – Can you send me an email with recommendations that would bring certainty for financing; asked investors what they wanted to invest in Texas & the biggest thing was certainty
  • Shaheen – You said a company wanted to build a gas plant but couldn’t get funding; statements yesterday were that capital markets preferred renewables, hearing now there are issues with LNG because there isn’t a predictable revenue stream
  • Shaheen – Texas is >100k megawatts if everything is running, built on free market; what is different now that makes it not predictable?
    • Number of things, ESG requirements are a factor, preference towards renewables, production tax credit allowing bid ins at low prices
    • Have had energy-only market and don’t pay for availability and dispatch based on lowest cost, renewables are often dispatched first as it is cheaper
    • Makes a less predictable revenue stream when generators are paid only when they perform
    • Hard to say and predict when units will be running
  • Shaheen – So an energy-only market where you have artificial stimulus is making energy-only model much more unpredictable, so this is impacting the dispatchable end less predictable?
    • This is one factor
  • Shaheen – That’s why TCPA likes the possible concept of pricing on capacity
    • Supportive of ORDC because it values dispatchable resources for reliability they provide
    • Understand why we have conservative operations, but don’t have a market designed on those conservative operations; market is designed to pay on scarcity
    • No economic signal to generation owners that ERCOT needs them
  • Shaheen – Had a good discussion on the LSE obligation, still don’t understand how the dollars flow
    • Don’t think this has been fleshed out
  • Shaheen – Will need to see a diagram, don’t understand how dollars flow in that model
  • King – When original market was set up to be a free market approach to electricity, lines & poles left as a regulated entity, seems like we really don’t have a free market but we’re pretending like it is
  • King – Things that have changed since 1991, have outside things affecting the market like subsidies for wind, ESG has come in changing how funders rate good investments, a lot of pressure against hydrocarbons
  • King – Seems like there are too many outside factors skewing the free market
    • There are many factors, some of the aspects are designed to minimize the out of market actions to mimic a free market, like the ORDC
    • Correct that it isn’t a free market, free market wouldn’t have a price cap, wouldn’t have mandates to produce
    • There is a balance, can have a competitive market where consumers don’t bear the risk, but don’t want so much risk that it is a complete barrier to investing
    • What the PUC is looking at right now does strike that balance
    • Want to make sure gas generators aren’t just on interstate pipelines, Handley is on intrastate and want to ensure we have market incentives for generators to build in those locations
  • King – Not suggesting we move to regulated market, but have a different market than what we did before
  • Howard – Free market doesn’t mean you support only one segment of the industry
    • No, members have a lot of different generation assets
  • Howard – Certain products could deliver cheaper and may skew market towards those, need to balance with reliability and that is what PUC is working on; uncertainty is high because rules haven’t been hammered
  • Howard – When we’re talking about 1991 market, outside impacts were probably different than what they are today, will be a wide variety; ESG can affect, but not the causative factor
    • Correct, many different factors
  • Howard and Richmond discuss market factors; Richmond notes TCPA has a mix of market investments, incl. items like solar and batteries, can change the resource to be more reliable
    • Making sure you value the type of resource you want, TCPA hears this as reliable resources

 

Julia Harvey, Texas Electric Cooperatives

  • Provides overview of TEC, not-for-profit electric cooperatives, major market participant today
  • Unique position on weatherization, have members all across the state
  • TEC perspective is that rule allows for differing situations around the state, TEC wants a rule that allows some discretion for operators to respond to unique conditions
  • Much of the issue during Uri is due to design of generation being centered around extreme heat rather than cold
  • Have instituted more rigorous testing, insulated components, installed enclosures, etc.
  • Multiple coops have augmented with dual fuel, firm fuel, etc.
  • Fleet in a better position for extreme heat, redundant HVAC, etc.
  • In an okay position regarding water, some use groundwater for cooling; not foreseeing issues with that this year
  • Hurricane preparedness is part of weatherization, incl. proactive communication in advance of a storm, prepositioning resources
  • Raymond – Regarding Rep. Hunter’s comments on TEC’s members moving in urban areas, can you speak to this?
    • Many areas that used to be remote and rural are growing
    • Coops are characterized by a rural posture, 6 meters/mile
  • Raymond – Is it that you’re serving the same area, but more populated? Thought he meant you had moved into more populated areas?
    • Still same area but people have moved in
  • Raymond – IS this what you meant Rep. Hunter?
  • Hunter – No
  • Raymond – What’s going on
    • My understanding was Rep. Hunter was referencing a coop who outsourced billing to urban areas
  • Hunter – Coops are getting more urbanized, so in part correct; some coops are 3rd partying out to urban regions
  • Raymond – What do they do if they don’t have the people in those areas to do the work?
    • In general coops endeavor to do the work locally, more cost effective to use a 3rd party in some cases
  • Raymond – Want to know about 2 coops, Brazos Valley who would’ve been in trouble, South Texas who performed well because they had reserves, so you remember that?
  • Raymond – South Texas had saved through the years and they were able to deal with very high cost and some of the others were going to go bankrupt, would have problems if we hadn’t helped them
  • Raymond – Curious is Brazos and South Texas were taken care of
    • Don’t have insight into their current financial posture
    • Brazos is in a bankruptcy proceeding, South Texas was able to perform
  • Raymond – Bill we passed will help Brazos, correct?
    • That is one tool
  • Raymond – Don’t recall we did something to help coops who managed themselves well through the years but still took a big hit, curious what our bill did for South Texas
    • Securitization created tool to help Brazos minimize costs, didn’t directly help other coops but there is a systemwide benefits
    • SB 3 and other critical load provisions could help South Texas
  • Raymond – So we didn’t really do anything to help them for the hit they took?
    • Wouldn’t say there was a direct mechanism
  • Raymond – Upset assistance wasn’t provided

 

Charge 2 Public Testimony

Larry Linenschmidt, Citizens Climate Lobby, Self

  • In favor of winterization and preparation for all types of weather
  • Deals stuck to bring generators here didn’t include winterization, state should absorb that cost
  • If we don’t attract investment in generation, transmission, etc., won’t be able to continue to grow; regulatory certainty is essential
  • Glad to hear the idea of state climatologist being part of future planning, universities have excellent resources and should utilize them
  • Should also think of ways to incentivize people to insulate their homes, huge energy saving potential there
  • Lack of recognition of impact on pollution on health of Texas, Milton Friedman said we should tax pollution; should consider this
  • Texas’ carbon-intensive economy could face difficulties selling carbon intensive products to other markets
  • Need to make way for clean energy sources to work, good for health, economy, and future of the state
  • Howard – Do you have info on cost savings from energy efficient building codes compared to new generation?
    • Have seen data, but not prepared with it, but very important question
    • Texas should consider this, also EVs; would be great if state fleet was EVs
    • Many houses built 30 and 40 years ago do not have effective insulation, would lower individual energy bills
    • Uri hurt lower income individuals tremendously, need to be thinking of providing for them and protecting their health
  • Howard – So a more holistic approach rather than focusing on certain areas
    • Holistic is great way to think of it, clean energy, investment, etc.
    • Should get powerlines going from West Texas to South Texas
  • Raymond – You said it would be good for state fleets to be EVs, fleets are scattered and we don’t have the charging infrastructure; not sure if there is room in the interim report, but guessing we’re behind on charging infrastructure
  • Raymond – Could put up amounts to fund, possibly with a local match
    • And perhaps you could focus on the metropolitan centers of Texas, I-35 corridor etc.
  • Raymond – That’s where most cars will be anyway
    • Would be good for the state, all metropolitan areas have air pollution issues and more cars on the road makes a difference
    • Highlights impact of road cars, coal plants, etc.
  • Raymond – Do we know if the Texas coal plants are largely low sulfur?
    • Not sure

 

Charge 3: Review the status of projects intended to reduce transmission congestion within the electrical grid.

Jimmy Glotfelty, PUC

  • PUC has been busy implementing changes from SB 3
  • Transmission grid in ERCOT has been mischaracterized, media is reporting it is in jeopardy, but grid is the strongest component of electric system in ERCOT
  • Challenges lie on the generation and demand sides
  • Grid issue is congestion, inability to move power, stability situation limiting power flow, generators building behind congestion areas, etc.
  • Congestion costs have reached $1.6b this year, higher than past years
  • Won’t eliminate congestion on the system, conditions change rapidly, but need to address the costliest restraints
  • Should evaluate increasing voltage to 500k volts, would require many changes, needs to be comprehensive
  • PUC has acted to resolve congestion issues in the RGV, 7 major constraints hopefully solved with one action; PUC ordered a series of transmission lines to be built, incl. stringing new line on existing tower and expediting a new line
  • SB 1281 would reinstitute consumer benefit test for new transmission, will identify new transmission that will eliminate congestion, comments due July 8th on the new rule
  • Rulemaking hopefully completed within the next few months and test will be used this year
  • Also working to streamline transmission planning process, hopefully have an initial plan out soon for discussion

 

Woody Rickerson, ERCOT

  • Provides overview of ERCOT transmission system, 1k units connected to consumers now, only 800 during Uri
  • Trends are that generators are getting smaller, seeing very little thermal interconnecting, and generation is being located further from load
  • Power is needing to travel 100s of miles to get to major load centers, requires much more complex delivery system; a lot of this is driven by wind and solar hotspots are not near major load areas
  • ERCOT conducts a long-term 15-year-out system assessment, done every 2 years and published to the web
  • This info feeds into a 5-year plan done every year, used to generate new transmission projects which the TSPs then build; work with TSPs to plug holes
  • When looking at needs, divided broadly into 1) rebuild needed for a reliability issue and 2) those built for economic issues
  • Economic issues projects have to do with congestion, e.g. building lines that cost less overall than the economic impact of the congestion
  • SB 1281 put in place the consumer benefit test, can be thought of as what consumers pay; some projects well be positive for production costs and justify cost of line, consumer benefit tests test the other side of the line and whether it will be beneficial for consumers
  • On the reliability side, Generic Transmission Constraints (GTC) are stability constraints, as power is shipped across the state, sometimes need to restrict wind and solar to protect stability of the transmission lines
  • If congestion is great enough, economic project is justified, ERCOT is continually looking at what congestion is and what the fix is
  • Will have a new economic measure called resiliency, specifics still being determined, hopefully will allow ERCOT to evaluate the function of the grid with an extended outage of a transmission line, in rulemaking right now
  • RGV line project had resiliency factored in
  •  Examples of projects: $500m West Texas project in study right now to serve oil field load, $1.2b project in RGV in process of getting CCNs and rights-of-way, Corpus Christi North Shore currently under construction & expected complete in 2024
  • At any given time, numerous projects being routed, constructed, etc.
  • All time system peak was set on Monday, a little over 76k megawatts, have served over 70k megawatts at multiple points recently with zero congestion; outages disturb this

 

Charge 3 Q&A

  • Hunter – So the public has to pay a lot considering all of the congestion
    • Rickerson, ERCOT – There is a wires charge
  • Hunter – Bottom line is congestion costs the consumer
    • Does cost the consumer
  • Hunter – Congestion is a term of art, asks witnesses to define congestion; need to explain to the public that there are costs coming
    • Congestion is when a consumer doesn’t have access to the cheapest generation
    • Glotfelty, PUC – System is not able to move lower cost power to higher cost areas
  • Hunter – You had 7 constraints in the RGV? Are they being fixed?
    • In process of being fixed
  • Hunter – So we need to tell public that high costs are coming and some is due to congestion
  • Hunter – Congestion costs have been north of $100m?
    • Rickerson, ERCOT – Not sure
    • Glotfelty, PUC – IMM report stated above $1b
  • Hunter – Who pays for that?
    • Consumers
  • Hunter – Would like ERCOT and PUC to give the committee an explanation so we can communicate with the public & then maybe improve it; need to be open about how much it is costing everyone
  • King – Congestion is like a traffic jam on roads, line down is like an accident; could you remind me what a nodal market system is?
    • Rickerson, ERCOT – If there is no congestion on a system, then one unit sets price for the entire grid
    • If a line gets overloaded, nodal prices provide incentive for generation on one end of a line to run and generation on the other end will shut off
    • System to get rid of all congestion, but consumers will pay huge amount in wires charges; part of ERCOT’s job is to balance those things
    • SB 1281 gave us the consumer benefit test as another tool to look at this
    • Glotfelty, PUC – Going to a nodal system highlighted where there was more congestion on the system; nodal market gives you topology to look at for problems
  • Darby – Since 2017, consumers have spent over $8.4b in congestion costs; filed HB 1607 to help address this, but didn’t pass
  • Darby – HB 1607 tried to expedite process for determining where new transmission can be; frustrated that we’re still in rulemaking on this issue & have delayed new transmission projects
  • Darby – Happy that GTCs in RGV have moved forward by PUC order, built GTCs for the rest of the state are still languishing in rulemaking; have projects ready to go, but frustrated by lack of transmission availability
  • Darby – Operators now have to curtail available production, has resulted in millions of additional expenses
  • Darby – What are we doing to get this moving?
    • PUC has had a lot of rulemakings, PUC priority after last session was for those required to be completed by 12/31 of 2021, now in second batch of rulemaking expected to be done before next session
  • Darby – Is ERCOT moving forward with moving transmission projects along without waiting on rulemaking?
    • Rickerson, ERCOT – Yes, suite of tools are fully capable of supporting consumer benefit test; ready to use tools, just need rule
  • Darby – Frustrating, waiting on PUC to give him the rule to work under
    • Glotfelty, PUC – Painful to see delays in the process, PUC hoping to make process more streamlined to help projects happen quickly
  • Darby – Commission acted under executive order to move some projects forward, would hope same attitude would exist on the rest of the GTCs

 

Jason Ryan, CenterPoint Energy

  • Electric TDU in Houston; Houston is growing significantly and not expected to slow down
  • Electrification of transportation sector will also expand need to bring transmission power into Houston
  • Less than 3% of state area, but almost 30% of electric usage, insufficient generation within the footprint to serve customers, need to bring transmission into Houston
  • On many days importing most of the power into Houston, can be 60% of need
  • Appreciates benefit test in SB 1281, CenterPoint has identified 6 projects that would qualify for the test and could be implemented as soon as rule is ready
  • Legislature should consider backend timeline, incl. approval process for CCN, currently about a year
  • For critical need projects, shortens process by half; should look at shortening these projects by half as well
  • CenterPoint could see unique challenges to deliver power based on import and hot day need, have taken steps to ensure tools are available like SB 3’s load management, emergency mobile generation, etc.
  • Raymond – Have you used a load management program?
    • Had it implemented over last winter, tested it, but never got to triggers in legislation where it would’ve been used
  • Raymond – Would’ve been used during Uri?
    • Yes, same with mobile generation, would’ve allowed us to rotate outages; would’ve still be very bad, but survivable
  • Raymond – Concerned about load shed in Houston?
    • Look at ERCOT app, does reflect tight grid conditions, ready to implement those tools
    • Little CenterPoint can do outside of those things given CenterPoint doesn’t generate

 

Ellen Buck, Oncor

  • Still seeing areas of fast demand growth like West Texas, large load connections on I-35 corridor as businesses grow
  • Traditional generation resources are located far from load
  • System needs to be resilient, reliable, and dynamic
  • How demand is growing and where existing and new generation is located, coupled with capacity, is primarily why we see congestion today, e.g. ends of the transmission systems around CREZ and areas of customer demand
  • Highlights Carrolton area seeing rapidly increasing congestion in 2019, project helped alleviate congestion
  • West Texas saw congestion starting in 2017, In 2020, Oncor, LCRA, and AEP partnered to connect transmission to Delaware basin
  • Blockchain, fracking & drilling, fleet EV, datacenters, semiconductors, etc. all contributing to increases in demand; continuing to see greater utilization
  • SB 1281 allows for implementation of consumer benefits test and plan for long term needs of the grid, need to factor in system demand that may be coming online further out
  • Need to plan for stresses on the system and take into account historical operating conditions
  • Raymond – Congestion examples were Carrolton and Delaware Basin, asks for a walkthrough of what was done in the Delaware Basin
    • By late 2020, saw rapid expansion in the Delaware Basin, on the end of the ERCOT system and saw constraints on ability to deliver power, partnered with LCRA & AEP
  • Raymond – When where these projects?
    • 2020 and 2021
  • Raymond – Growing demand?
    • Yes, continuing to see growing demand, taking action to address growth
  • Raymond – Do they give you forecasts on how long the growth will occur
    • Misalignment on O&G growth and need, Oncor did some self-assessments
    • Also seeing increased focused on electrification of the industry
  • Raymond – Remember being told a couple years ago that some of the highest rates were in those areas, has that been corrected?
    • In pre-2020 timeframe that was due to transmission limits, but significant amount has been built in that area
  • Raymond – Have demands been residential as well?
    • Small amount of growth in that area, but most associated with O&G production
  • Raymond – Were there to be residential growth you’ll be able to support that?
    • Yes, transmission is agnostic to type of load

 

Wayman Smith, AEP

  • Provides overview of AEP operations in Texas
  • In recent years, AEP has added 360 miles of new transmission, rebuilt 1,300 miles of existing transmission
  • Regarding lower RGV, area poses unique challenges, heavily dependent on imports of energy, weather is volatile & peak need can be in winter; much of the generation is not conventional, area depends on three existing transmission lines to import power
  • Ability to import is also variable and dependent on generation in RGV as it is a stability concern
  • Looked at many scenarios, extreme weather events, lower renewable output, etc. when developing lower RGV
  • Other areas of the grid need to be looked at similarly, SB 1281 lays groundwork
  • Highlights Coastal Bend project in Corpus Christi, had 2 industrial load facilities signed and were able to get approval for upgrade allowing 1 gigawatt transmission
  • Would like to see the ability to build headroom into some areas so capacity is available to serve loads that show up
  • Typically can meet timeline of direct connect facilities, longer system upgrades that need CCNs where we see difficulties
  • Would like to see new criteria looking at looking at losses of multiple transmission lines; e.g. losing one, adjusting generation, and then losing another; planning this way also helps with congestion
  • Another thing that is telling is the ERCOT summer construction outage moratorium, this is indicative that we don’t have enough capacity on the system
  • Should figure out a way to be more proactive with load headroom
  • Should consider extreme weather events and other unique area factors, e.g. in RGV the high number of variable resources
  • Raymond – On Corpus Christi, can you get specific on competition with Louisiana?
    • Several other places that are shortlisted for loads, constantly in competition with other areas like Louisiana
  • Raymond – Refinery related?
    • LNG, on in particular, and also steel
  • Raymond – Are we winning?
    • We’ve won some, we’ve lost some
  • Raymond – Should keep Rep. Hunter and others informed, helps when you’re approaching PUC, etc.
  • Raymond – Lots of growth in the RGV; are you getting what you need in terms of getting headroom to prepare for the growth?
    • One LNG project in the area can take up 1k megawatts worth of transmission projects
  • Raymond – IS PUC working with you enough to take care of growth in Cameron and Hidalgo?
    • Very pleased with interaction and direction from the PUC regarding the lower RGV; had proposed the specific upgrades 5-10 years prior and each time would eat up the capacity
    • Have been multiple attempts, so very appreciative of PUC’s efforts to act quickly and get a large solution in place
  • Raymond – Have a great delegation down there, will have a new Senator as well; you may think of meeting periodically with the delegation and inform them of what you see on the horizon
  • Hernandez – On your map, is the substation Frontera in Texas?
    • Yes
  • Hernandez – Anything that crosses?
    • There are existing interconnections, incl. asynchronous connection, HVDC connection; multiples

 

Lynnae Willet, EDF Renewables, Texas Solar Power Association

  • Provides overview of EDF Renewables & TSPA
  • Congestion affects all parties, increases costs, harms investments; GTCs are a particularly troublesome problem, ERCOT puts GTCs on existing lines to avoid voltage collapse and severely limits transmission
  • Very few solutions have been implemented for GTCs due to ERCOTs outdated analysis, 18 GTCs are limiting flow throughout the grid, placed with little notice and cannot be predicted
  • GTCs can severely limit transmission of power during peak periods, leads to loss of capacity and millions in economic impact
  • Cost to consumers keeps growing, on pace to another >$2b this year, $1.6b year-to-date
  • Additional transmission lines could reduce consumer costs and increase reliability, new transmission investments are needed every year to keep up with growth
  • SB 1281 sponsored by Rep. King can help with this, PUC is currently in rulemaking that can take 6-12 months, ERCOT has stopped critical decisions while the rule is in process
  • Texas should: 1) urge PUC to swiftly implement SB 1281, 2) direct ERCOT to expedite analysis of pending projects combined with test in SB 1281, can roll in rule when complete, 3) should pass bills next session to further expedite high priority projects
  • Shaheen – Solar is providing 9k megawatts to Texas right now
  • Shaheen – Solar is a very nice fit for the state, can you comment on when solar can rely more on batteries to make solar more stable?
    • Will confer with associations and provide info to you

 

Lee Bratcher, Texas Blockchain Council

  • Bitcoin mining is relieving grid congestion; are the top two employers in at least 2 Texas Counties
  • Is a unique load acts leak demand side battery and turns off during peak demand
  • Bitcoin miners are location agnostic; look to relieve congestion and collocate next to wind/solar
    • Changes economic model for wind/solar
  • Are a flexible load and can turn off within section as part of economic dispatch or ancillary services
  • Have a flat load profile and run continuously unless turned off during high/peak demand
  • Howard – Appreciate your working with the IT caucus; using a huge amount of energy, but can improve the grid?
    • Can move to demand, work with renewables, and will not need continuous power as they are price responsive
  • Howard – How many companies are participating?
    • 1100 mW bitcoin mining in ERCOT; does more balance than batteries in the supply side
    • 90 in the association, but are 15 industrial scale bitcoin mines in the state
  • Howard – What do you bring to state?
    • Job creation and tax revenue; estimate 2k jobs created directly, 20k ancillary jobs
  • Howard – Impact of Uri?
    • Turned off for several days because it was the “right” thing to do; turn off once reach strike prices
  • Raymond – Why to ended up in smaller towns? Is cheaper?
    • Yes, and especially the excess wind in rural areas
    • 60% are powered by renewables around the world
  • Raymond – Considered moving to Webb or other counties in South Texas? Want follow up
    • Notes Fort Worth first city to mine that went towards city’s balance sheet
  • Shaheen – Long term vision of this? Most of miners located here?
    • 9% of global bitcoin mining happens in state; growing to 20% but mining is geographically dependent

 

Warren Lasher, Lasher Energy Consulting

  • Here as a resource; former ERCOT director of system planning
  • Transmission congestion cannot be directly compared to the cost of transmission
    • Need to consider the consumer in this case
  • Congestion costs are a part of the market; problem is situation where there is persistent congestion like in Houston, the Valley, or the Permian Basin
  • Market always has opportunities for consumers to protect themselves through congestion revenue rights
  • Need to identify projects that are cost-effective; SB 1281 took a step in that direction
  • Howard – Tying market to access to capacity?
    • Fundamental idea is to tie market outcome to reliability outcome
  • Howard – Transmission project planning looked at through the lens of issues like eminent domain? Anything we can do about that?
    • For the most part is blind to siting issues, is some back and forth between transmission planners; is an area of concern
  • Howard – Realistic to expedite current process?
    • Yes, will take time and something the PUC needs to consider

 

Public Testimony Charge 3

Larry Linenschmidt, Citizens Climate Lobby, Self

  • Echoes member comments about the costs, congestion is an urgent issue
  • Appreciates passage of SB 1281
  • Complicated, but cost is burdensome and transmission is needed to accommodate growth
  • Distributed energy, e.g. solar on rooftops, would take away a lot of transmission needs, need to think of how to incentivize that