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House State Affairs and Energy Resources met on September 13 to hear invited and public testimony to hear the following interim charge:

  • Monitor and oversee the implementation of relevant legislation passed by the 87th Legislature: SB 3, relating to preparing for, preventing, and responding to weather emergencies and power outages.

An archive of this hearing can be found here.

 

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

 

Monitor and oversee the implementation of relevant legislation passed by the 87th Legislature: SB 3, relating to preparing for, preventing, and responding to weather emergencies and power outages

 

Panel 1

Peter Lake, Public Utility Commission

  • ERCOT set 11 all all-time peak records this summer, but grid managers worked to meet demand every time; did not have to enter into emergency conditions
    • Set all-time peak demand in July 2022 above 80k MW
  • Reforms passed by the legislature have been working; shifted from crisis model to reliability model
  • New ERCOT CEO Pablo Vegas starts next month
  • Phase 1 of weatherization was implemented last winter
    • Continuing with second phase, plan to have adopted at end of the month
  • Continue to work with RRC to identify critical infrastructure; were in place ahead of last winter
    • Worked with RRC completing the map of the natural gas supply chain
  • King – Where at with E3 consultation for a study concerning market design?
    • Working on it; will present to the public this fall; will present to legislature early 2023
  • King – See trying to implement that before next session? What steps needed?
    • No, want legislative input; will have public comment, vote among the commission, present to the legislature
  • King – Adopted contingent on the legislature’s concurrence? Do not want implementation before legislative approval
    • Will be formal adoption with deference to the legislature
  • Raymond – What was the last year that set the peak record before this?
    • 2019
  • Hunter – Provides an example where 50% of a bill was a “delivery charge” and looks like “cramming” – is PUC looking at this?
    • Would be happy to look at that; have been trying to communicate why there are increased costs to consumer like PUC is procuring more megawatts
  • Hunter – In July is a court order and PUC makes a decision to increase a charge to public on their phone bill?
    • Yes, at direction of the court
  • Hunter – Did they tell you to raise these bills without communicating to the public?
    • Were not given guidance to do so
  • Hunter – Legislature is not to blame for this, is an administrative move by PUC; need to communicate this to the public
  • Howard – Notes house passed a bill to fix that, but was vetoed
  • Howard – Public comment concerning E3 study will be over the holidays? Need to be cognizant of timing to get public comment
    • Working backwards from the start of session; will think about it
  • Howard – Looking at a load serving entity option that would require MOUs, reps, and co-ops purchase sufficient capacity?
    • Looking at different ways to require companies that receive revenue from households show how they are going to provide reliable power
  • Howard – LSE option seems preferential to PUC? Shift in capacity responsibility to retailer?
    • Are several different LSEs proposals that require them to comply in some form
    • Currently responsibility falls on ERCOT; seems “odd” – landed on LSEs because we do not want a centralized capacity market and did not want to do a curtailment on the generation side
  • Reynolds – Some consumers facing additional costs because of securitization matters from Uri?
    • Correct, but some are also receiving benefit of price shock protection
  • Reynolds – What are we doing to help those on fixed incomes? Increased calls for assistance?
    • Re-established an office of protection and a resource line; yes
    • Will ask for more funds to increase consumer support
  • Reynolds – Did you look at impact that climate change may have on extreme weather?
    • Incorporated feedback from wide range of experts; building systems and market to be able to respond to a range of weather scenarios
  • Reynolds – Energy efficiency a part of this equation?
    • Yes; first cut is to ensure consumers are getting bang for buck and second to focus on biggest drivers of energy consumption and leverage dollars on those resources
    • Commissioner Jackson is focused on energy efficiency
  • Craddick – Asks Lake to speak on gas desk information issue; what information going to ask for?
    • ERCOT control room has no intent in procuring gas on pipelines; no intention to make natural gas less friendly and are increasing coordination through TERC
    • Will defer to Jones
  • Craddick – How does FERC handle when things are down?
    • Are not under FERC jurisdiction; not aware
  • Craddick – How do you feel about the gas issue?
    • Supportive of anything that will get gas to generators
  • Craddick – Jones will come back as a consultant?
    • Brad Jones, ERCOT – Have no plans to
  • King – What are these preliminary recommendations from E3?
    • Have a line of sight on improving reliability at a reasonable cost; have not made recommendations, just given feedback
  • King – When open up to public comment? Tight timeline
    • 60 days and initial amount is 30-40 days for public comment; will be flexible
  • Herrero and Lake discuss the independent market monitor
  • Herrero – Should be an IMM for natural gas?
    • Do not know if things that have worked in electricity markets will work for gas

 

Christi Craddick, Railroad Commission

  • Almost done with SB 3 implementation
  • Outside of SB 3 RRC updated the curtailment rule; one of the changes includes prioritization of those that purchase uninterruptable natural gas contracts
  • Have adopted a number of rules including the critical infrastructure designation rule
  • Have proposed Rule 65 which requires operators to communicate TDU status and have re-opened public comment
  • Electricity supply chain map finalized version released September 1; will have monthly data updates and will formally adopt updates twice a year
  • Weatherization Rule 66 final rule adopted August 30 and received a record number of public comments
    • Focuses on facility preparation and performance through specific mandates to ensure weatherization to prevent weather-related stoppage
    • Power outages do not refer to weather-related stoppage
    • The rule has a number of other requirements related to training
    • Operators will be required to submit a sworn attestation annually with the commission
    • Commission will conduct proactive inspections for violations
    • Will have stiff penalties of $1m per day for violations that align with statute
  • 95k have filed for critical designation
  • Guidance document on this weatherization will be out next Monday September 19
    • Industry asked for it to not be in statute and to be a living document
  • Overviews work of the Energy Reliability Council
  • Goldman – RRC has worked swiftly; have more work to do next session?
    • Do not see anything else that needs to be addressed legislatively
  • Howard – Enforcement mechanism is entity does not use best practices?
    • RRC will inspect and if someone chooses to not weatherize have penalization table; could potentially be referred to the attorney general
  • Howard – Largest categories for shutdowns during Uri were shut ins; how does that play into enforcement mechanism?
    • Weatherization requirements versus government mandated production are different
  • Howard – Appropriate for gas end concerning IMM?
    • Are producing 31 BCF in the state and only using 38% of the gas the state produces
  • Howard – Why cannot publish data on inter-state versus intra-state?
    • Are in a free market; have not heard about why an IMM would make things more reliable
  • Howard – Firm contracts not possible for some?
    • Do not know
  • Howard – Appreciate your work with state climatologist; will have forecasting on extreme weather events?
    • Correct
  • Raymond – Weatherization has been completed?
    • Weatherization rules do not go into effect until Monday, but they will have 2-2.5 months to be into compliance
  • Raymond – What percentage of all locations have been inspected?
    • Do not know the answer to that; goal is to do 7k this winter which is a majority
  • Darby – Communication about critical sites to TDUs?
    • Coordinating with TDUs and have specific ID numbers
  • Herrero – Provision within RRC to keep gas prices at a reasonable level? Will follow up
    • Have a code of conduct concerning gas prices; customers can file complaints
  • Herrero – Enforcement on this violation?
    • Differs formal versus informal; will have hearings for formal complaints and judge can put a penalty in place
  • Herrero – If there is a finding and assessment, end consumer receives those funds back?
    • Depends on entity and could be in the order/not

 

Nim Kidd, Texas Division of Emergency Management and Texas Energy Reliability Council

  • In 48 days owe the legislature a report on the reliability and stability of the electric supply chain
    • Report must include related recommendations
  • Have had over 13 meetings and have three scheduled for the future; overviews the creation of additional subcommittees
  • Is a lot of work to be done for this report; heard from industry and will give deference to them to write the content of the report
  • Craddick – Not clear what is going on over there and are asking for a tremendous amount of money; heard your testimony from the Senate and seems you think you have overall authority
    • Was not intent of testimony; committees are self-selected
    • Responsible for the outcome of the committee; committees are putting together sections of the report
  • Craddick – Have the authority to lay out recommendation without committee vote?
    • I am not making any of the recommendations; not a part of the subcommittees
  • Craddick – For or against a gas desk? What does that have to do with stability of the grid? Colleges are not wanting to control the gas market in the state
    • Neutral against that, is an upcoming industry meeting to discuss that issue
    • Not an expert to answer that question
  • Darby – Asks about the gas desk, promulgated through work in TDEM or TERC?
    • Did not hear about it until it came up in discussions in TERC subcommittee
  • Darby – Before legislation TERC has been informal group to facilitate offline communication between stakeholders; legislature has exempted these discussions from PIRs
  • Darby – Have “creeping administrationalism” here; want to ensure everyone stays in their lane – concerned about the gas desk conversations
    • Have not been involved in TERC before was given responsibility in statute
  • Craddick – Maybe the legislature needs to go back and look at this to ensure it is understood it is not TERC’s responsibility to make policy
  • Raymond – See “creeping administrationalism” on a state and national level
  • Reynolds – Role is to put the industry together to write this report, tying to help us learn from industry?
    • Yes

 

Brad Jones, Interim CEO Electric Reliability Council of Texas

  • Will be interim CEO until the end of September; have been here for a year and a half
  • Expect new CEO to be on position October 1
  • Primary thing SB 3 gave us was weatherization; began inspections
  • Had two significant cold days last winter and did not have shut offs due to failed weatherization
  • Have operated the grid more conservatively; have noted 8 separate occasions could have been in emergency conditions if were operating like we did previously
  • Calling for conservation earlier than we ever have; small actions kept grid away from emergency
  • TERC has been a valuable communication and coordination asset
  • This is the second hottest summer ever, especially in Austin
  • Have had three goals: review reliability changes, work with PUC to prepare for future (including renewables), to begin process of restoring trust between legislators, ERCOT, PUC, and the public
  • Goldman – A generator went offline this summer and notified the pipeline; are they required to notify ERCOT?
    • Generator notified ERCOT gas supply would go offline due to maintenance; worked through TERC to determine supplier and they moved maintenance after contacted
  • Goldman – When are you notified of this?
    • Every morning, if not several days in advanced; if doing planned maintenance ERCOT has complete authority over this
  • Goldman – Grid secured during conservation requests?
    • Correct
  • Craddick – Can clearly define what a gas desk is?
    • Would like one “desk” position at ERCOT to gather information on the natural gas system; could even manage all fuel resources such as coal or renewables
  • Craddick – Anticipating putting anything into effect before the legislature meets?
    • Original hope was gas companies would voluntarily provide ERCOT with information
  • Craddick – Believe it is within ERCOT’s jurisdiction? Would be a policy change?
    • Only on a voluntary basis; believe it is a gap to be filled concerning reliability
  • Craddick – A lot of companies not willing to give out information; how manage?
    • Think if clearly define information, industry would be responsive
  • Craddick – Believe this is a policy change; ERCOT did “terribly” before, why give more responsibility
  • Craddick – PUC was given this proposal and voted it down
    • Was not aware of that
  • Hunter – Where was the generator that broke down? Representatives of that area should be included in this; reiterates is not TERC’s role to make policy
    • Around Corpus Christi
  • Howard – Asks about national grid
    • Developer plans to put in a DC line between East Texas and Mississippi/Alabama
    • Are referring to a concept to allow quickly restoring grid in the case of a blackout to operate with the Eastern grid without being subject to federal guidelines
    • Have a study that has validated this idea and potential sites
  • Howard – Conservation request is scary given what happened during Uri; had a large effect?
    • Had about 500 MW online when requested this summer
  • Howard and Jones discuss how Bitcoin comes offline during times of need
  • Howard – How would the gas desk interplay with TERC?
    • TERC is the venue where discussions are had; ISOs have this type of information under federal; need something not as big and more operational
  • Howard – You believe Craddick and other’s concerns are due to misunderstandings?
    • Yes, aim to clarify at next TERC meeting
  • Howard – This is not a public meeting, how are people supposed to know? Is a disconnect
    • Have a chance to resolve disconnect
  • Reynolds – Recommendations for a more reliable grid? Notes possibility of individuals to not comply to conservation requests
    • Future will be dominated by renewables, but need ensure there is other dispatchable generation available when solar/wind not available
    • Interconnection solar requests are 64k MW; far above natural gas
    • Need to change how our market attracts and maintains dispatchable resources
  • Darby – Hired someone to work this gas desk? Cannot secure data from generators?
    • Hired an advisor to determine how desk would be formulated and what data would be needed
    • Most information can come from generators, but some components need to come from the gas side
  • Darby – What information are you looking for?
    • Like if a compressor station is out; operational capability overall
    • Will share what information we are looking for on September 26
    • TERC does not have access to this information, just began this conversation
    • Reiterates hope for voluntary participation by gas companies
  • Slawson – Concerned about impact wind/solar has on attracting and maintaining dispatchables
    • Can solve this problem independently as wind/solar see Texas as the primary location to locate
    • Cost reduction from solar/renewables will be more than resolving this dispatchable problem and PUC is engaged in working through this issue

 

Tom Oney, State Energy Plan Advisory Committee and Lower Colorado River Authority

  • 4 members were appointed from the Governor, Lt. Governor, and Speaker of the House
  • Submitted a plan and recommendations concerning reliability to the legislature on September 1
  • All committee members recommendations that did not receive a consensus report are included in the addendum
  • Recommendations continued collaboration between RRC and PUC data
  • Further steps to facilitate increased access to this data for planning
  • Comprehensive steps of prioritization standards electric service to critical loads
  • Key reliability issue will be to ensure adequate dispatchable generation
  • Recommend the PUC establish a clear reliability metric
  • Recommend PUC focus on completing Phase 2 review and cost benefit analysis
  • Recommend PUC complete expansion of firm fuel supply services and continue studying demand response solutions
  • Appreciate all parties who provided insight
  • Darby – short time frame for committee to meet, only met twice and had draft at second meeting so concerned about lack of transparency
  • Darby – recommendations on last page, if you have said you extra capacity but cannot delivery it then you need to go to market place to buy enough? What do you mean by supplanting with other dispatchable generation technologies?
    • IT was a recommended added by one of the committee members, it received a vote to make it into the report and notes the same language was in a version in SB 3
    • Thinks intent is that if a provider fails to deliver what they have scheduled or predicted they would need to buy ancillary services from ERCOT, be responsible or a product they bought to make up the differences
    • There are many ways they can do it but the report is silent to the how
  • Darby – concern about this recommendation being discriminatory, have you studied this to see what this means and how it would cost the consumer?
    • No, if they do not provide what they have been scheduled to provide there is a deficiency that will be paid on the load side, thinks this exists on the dispatchable side
  • Darby – job of ERCOT to not discriminate against providers
    • Agree
    • There needs to be additional dispatchable generation
  • Darby – newer plants have more efficiencies and cost less than older plants?
    • Yes, presumably so
  • Darby – do recommendations discourage investors in new technology, because they are moved to the back of the line?
    • No, don’t think that is intended to shove anyone to the back of the line and goal was to level the playing field
    • Think intent was that those new MW don’t get paid more
  • Darby – Would have rather heard from Wilson but appreciate the testifier’s comments
  • Howard – Question on discriminatory practice, confirms it was not in the passed legislation, correct?
    • That is correct, it was removed
  • Howard – Did the committee member who voted for this recommendation vote for the plan?
    • Actually, no. He supported the recommendation but did not vote for the plan.
  • Howard – Concerned about limited timeframe
    • Yes, there was a limited timeframe but notes it was fully vetted
  • Howard – Asked about membership of the committee
    • A wind provider/developer proposed the recommendation but unable to speak to the appointments
  • Howard – Need a real plan going forward, asked about timing
    • Defer to legislature, if they want to provide more time then they can do that
    • Statute provides for an advisory committee, feel like they met the statutory requirements
  • Slawson – Statement in the plan about relying on renewables allows for concerns on supply
    • Thinks report was giving a warning, saying you need to look closer at dispatchable energy use to and what can be done to fill in the gaps

 

Panel 2

Paul Cyrier, Texas Competitive Power Advocates

  • Represent power generators and wholesale power marketers
  • Gas supply and transportation services as the largest costs
  • Transparency does not currently apply to intrastate pipeline, transportation or storage practices
    • For example can set peaks above market price
  • Intrastate pipeline functions as a monopoly and intrastate pipeline buyers are at a disadvantage
    • Are also a disadvantage to those who are currently in the market and potential future investment
  • During Winter Storm Uri, pipelines set up revenue windfall streams; intrastate pipelines have kept these profits
  • To be clear, no one wants to regulate gas commodity prices
  • Legislature should create legislation to require intrastate pipelines provide transparency of data on a publicly available website
  • Legislature should require intrastate pipelines capacity release program shippers to re-sell additional capacity on a secondary market
  • Legislature should intrastate pipelines require separate marketing and transmission functions; market affiliates create an
  • Should strengthen regulatory oversight; should specify what constitutes uncompetitive and enforcement of unreasonable requirements/rules/rates
    • Should add clawback provisions to ensure those who violate this are not rewarded
  • Should create a customer bill of rights for gas customers
  • Darby – Barriers to generators trying to have firm gas and the transportation to get there?
    • Many do purchase that to ensure reliability; entails significant fixed costs and no way to recover
    • Peak low capacity plants are less likely to hold firm transport/storage because of high fixed cost and unpredictability of when they run

 

Vincent DiCosimo, Texas Pipeline Association

  • 427k miles of pipelines Texas has; have a free market design
  • On an intrastate basis, operate with contracts; is a risk of no ROI
    • On an interstate basis there is a guaranteed return
  • Are losing the opportunity for other natural gas basins in this country
  • If ERCOT wants a gas desk should ask the following: how much gas on a peak day without solar and without wind in your portfolio, how much is under firm transport/gas contracts
  • South Texas pipeline gave notice to that generator three months before they went offline
  • Weatherization is the only way this industry makes money
  • Darby – Have some questions from Craddick, would be problematic to share contract information?
    • Agrees
  • Darby – Disclosure of gas information will move molecules faster?
    • No; not sure what that gas desk does and would not enhance reliability or prevent what happened in Uri
  • Darby and DiCosimo discuss firm versus spot contracts
  • Darby – Capacity release in contracts? Inhibited by geographic location
    • Is in contracts today; can only think of one case were generating unit sits behind a pipe

 

Dean Foreman, American Petroleum Institute

  • Puzzled by some of the debate from a mitigation standpoint; if do not choose to mitigate risk, costs are higher
  • Permian Basin is fundamentally enabled because of the intrastate pipeline system
  • Have a number of options within the market that can be used to address points brought up today; cannot have FERC regulations apply to intrastate pipelines

 

Q&A Panel 2

  • Darby – Barriers that prevent generators from acting on these?
    • Foreman – Many have bet big on natural gas and did not expect extreme penetration of renewables; variability is one of the issues
    • Foreman – System is one of the most successful in the nation
  • Howard – Cyrier could you respond to the two testimonies after you?
    • Cyrier – Do not support FERC style regulation, want market transparency and fairness
    • Cyrier – Pipelines that have market power do what they will to maintain monopoly; will add significant price adders or deny those points
    • Cyrier – In last 10 years things have changed in terms of reasonableness; exploitation of shale gas and increase in gas fire generation
    • Cyrier – Complaint process with RRC is extremely long, expensive, and low success rate
    • Foreman – Variability is a business risk; are market-based fixes and incentivization
  • Shaheen – Main problem is no competition? Why a problem now?
    • Cyrier – Has always been a competitive negotiation, has been recognition that the RRC is not regulating them
  • Shaheen – Price difference between a single pipeline and a generating site
    • Foreman – In theory there would be, but are difference
    • DiCosimo – Remedy exists already the marketplace is already there; this year storage is up 30%
    • Cyrier – Storage is up; storage prices have gone up and can restrict access to storage
  • Shaheen – Frustrated with these two industries cannot come to an agreement; if the legislature has to do it, we will not get it right

 

Panel 3

Todd Staples, Texas Oil and Gas Association

  • Amount of natural gas infrastructure is growing
  • Members are doing work to be winter-ready; industry is ready to ensure what happened during Uri will not happen again
  • ERCOT and NGSA analysis concluded fuel limitations were only 12-15% the cause of power outages at generation facilities
  • Production disruptions will occur no matter what in this industry; legislature should not weigh in on this matter concerning a gas desk

 

Jason Modglin, Alliance of Energy Producers

  • Producers have been working to meet same/above production levels pre-pandemic
  • Have worked with the RRC to implement SB 3 and prevent pitfalls
  • Welcome continued collaboration between PUC and RRC to target and avoid net taker leases
  • Security concerns about the supply map about why they are/are not on the map
  • Field operations are different than a power plant; do not weatherize the same

 

Michele Richmond, Texas Competitive Power Advocates

  • Represent dispatchable generators in the ERCOT market; focused on market design changes
  • Will continue to see the same tight conditions as we saw this year; would like to see regulatory certainty to incentivize new investment in the market
  • Conservative grid operations have not allowed the market to put resources on the market economically
  • Concerned about another bill that would add on issues in the future
  • Need a reliability standard in ERCOT; need to achieve through competitive market not out of market actions
  • Concerned about RUCs that force a typically gas generator online when it is not economic for them to do so

 

Q&A Panel 3

  • Smithee – Hope SB 3 did solve the problem like most testifiers are saying; will be more diverse generation and need to plan 50 years in the future; are not in a place to ditch renewables and will need them in the future
    • Staples – Think SB 3 did great in terms of load shed and critical load designation; are right population and energy demand will grow and will need a smart diverse portfolio
  • King – Number of members who want to build powerplants?
    • Richmond – Have been a number who are willing, but need a market structure with the ability to recover some of those costs
  • King – That was the system set up in the 90s
    • Richmond – Now have a greater emphasis with reliability, need to balance with affordability since PUC has been working on market redesign
  • King – Discusses the reforms that happened in the 90s; now just need some adjustments; may need assist in power plant building, but are not in a dire situation
  • Reynolds – Should procure more gas transportation and storage?
    • Staples – Market participants are doing that
  • Reynolds – Capacity release market feasible for intrastate system?
    • Staples – Can be made in the contractual details now
  • Reynolds – Effectiveness of the utility code and protections to pipeline customers?
    • Staples – Current system addresses a multitude of issues currently
  • Reynolds – Heard ERCOT and PUC testimony, engaged in offering input in their plans?
    • Staples – Have given input, but do not know if it has been taken; are solutions being looked at that could add billions in cost to ratepayers
    • Richmond – Have been very involved; they are headed down the right path and do not know if there is enough information to estimate costs of their proposed plans
    • Richmond – Problem with intrastate versus interstate, only get paid for fuel burned to produce power; Richmond discusses this further
    • Modglin – Were not a part of the process; has been frustrated having to wait and see what is going to happened; concerned about a gas desk plan

 

Panel 4

Julia Harvey, Texas Electric Cooperatives

  • Now have too much information on natural gas load and have above average amounts of requests for critical designation status
  • Revise definition of critical facilities and is too broad where the designation has become meaningless
  • Critical designation does not keep supply chain intact; need to ensure robust weatherization to these facilities
  • Burden should not be on the electric provider to make judgement calls on these industries; RRC or other entity could take this on or electric providers could have access to the newly created map
  • Are eager to resolve uncertainty concerning ERCOT market design; looking forward for PUC’s to release independent study concerning market design
  • Underperforming resources that are causing the cause should be assigned to the cost and not passed down to the consumer

 

Tanya Baer Miller, Texas Solar Power Association

  • Currently 8.6k MW of solar on the gird and will be another 6.1k MW expected to come on by the end of the year
  • Solar industry does not believe they can currently provide 24hr 365 energy coverage, but industry continues to invest billions to provide peak energy
  • Have been estimates that solar has saved Texans $20m per day this summer in terms of fuel costs
  • Do not believe solar is not a cause of additional costs that have been spoken about
  • Has been discussion that solar to buy firm power; would be inequitable and is not technologically neutral
  • Members are adding battery storage with currently 227 MW of attached storage and 638 MW will be added by the end of the year

 

Caitlin Smith, Jupiter Power and Energy Storage Coalition

  • Previously worked with the IMM for ERCOT
  • Members hold 650 MW hours of standalone battery energy storage in ERCOT; is fully dispatchable
  • Competitive energy market has brought on 2.5k MW of battery energy storage
  • Batteries help during sudden frequency dips like when wind and solar are down
    • When there is congestion in the system, batteries can be used to provide support
  • Want to see regulatory certainty especially in terms of new technologies like batteries and solar
  • Want to maintain the competitive nature of storage assets

 

Katie Coleman, Texas Association of Manufacturers

  • Members are some of the largest consumers of electricity in the state
  • Reliability is the number one issue and objective; need to evaluate possible market changes with additional reliability and what we are getting and at what cost
  • Concerned about shifting from a pay for performance to a pay for existing model
  • Pay for energy and backup reserves; payments for operating reserves has exceeded $2b and ancillary services has exceeded $1m
  • Have exceeded the price entry to encourage new gas generators, should achieve better reliability to enhancements to this model
    • Better way to give market certainty is to provide additional incentives
  • Phase 2 study that is ongoing; is difficult to give concrete recommendations since it is not public yet; have provided recommendations to PUC on what we think would work
  • Two gas generators in bankruptcy
  • Believes critical infrastructure designation could be done in a more efficient way; would like that to be a seasonal designation to apply during the winter months

 

Q&A Panel 4

  • Raymond – Concerning solar farms; have a lot going on in the state?
    • Miller – Will get back to you
  • King – Are there any solar facilities that do not participate in 312s and 313s?
    • Miller – Will get back to you

 

Panel 5

Shelly Botkin, Texas Public Power Association

  • Most of members are located and participate in the ERCOT market
  • Represent larger systems including CPS, Austin Energy, Denton, and College Station
  • Members have been actively engaged in providing comments about ERCOT procurement methodology
  • Phase 2 of market design Commissioner should consider a robust analysis of the proposals on the table; most members have not made comment since they have not been released

 

Jason Ryan, CenterPoint Energy

  • Serve 2.7m homes and businesses and operate one of the largest gas utilities in the nation
  • Have a compact service territory but support 25% of the usage of the state
    • Add 50k electric meters a year
  • Import 60% of power to serve customers; will continue to grow as population rises
  • Overviews resilience components of SB 3
  • Were disproportionally affected by loadshed operations during Uri; SB 3 has added a seasonal loadshedding provision that aims to prevent this
  • State plan had important recommendations related to transmission planning; as SB 1281 is implemented, will know if more work needs to be done
  • Rolled out a new resiliency plan based upon bills from last session including HB 2483
  • Recommend looking at load management on residential side as there are more Tesla batteries and generators on the grid than ever before

Jim Greer, Oncor

  • Serve customers in the DFW, Permian Basin, and Central Texas
  • More can be done to enhance resiliency of the grid and respond to customer load growth
  • SB 1281 was a step forward in reducing process constraints
  • Ways to get transmission built quicker; need to prioritize actual load and load already in the interconnection cue
  • Is opportunity to introduce CCN process to reduce timeline to 6-9 months

 

Q&A Panel 5

  • Raymond – What does it look like for residential load shed?
    • Ryan – Are commercial customers, could be big box retail, or schools with large gyms
  • Raymond – Can pay to go offline?
    • Ryan – Could compensate customers for complying; is a tool
    • Ryan – Program was in the $3m over the winter, is a lot cheaper than turning on mobile generation
  • Raymond – Fastest growing demand?
    • Greer – Load growth is the highest seen in over 30 years
  • Raymond – Was told 1.1k people coming into the state a day, has to be more than that; notes there are water scarcity issues; need to figure out how to keep up with this
  • Geren – Why takes so long to get a CCN? Lets work with you next session on that
    • Greer – By statute is a 12-month process; PUC and ERCOT procedures build on that
  • King – TDUs are the only ones that reach the customer; would be interested in seeing what other things are missing in your toolbox such as emergency generation
    • Ryan – Want to ensure it is an emergency toolbox
  • Darby – Critical to reduce timelines to CCNs; want to work with you on anything you need from legislature to help you address growth
  • Darby – Concerned about some language at the end of proposed rule for SB 1281
    • Greer – Have provided feedback on this rule; notes they cannot keep up with growth
  • Darby – Know how many sites are designated critical infrastructure?
    • Greer – 3.4k self-identified sites; number may change after approval process

 

Public Comment

Virginia Polashis, Self and Commission Shift

  • Have been submitting comment on the RRC’s proposed rules
  • Have the following concerns:
  • How the commission will enforce changing applicability of the critical infrastructure rule; unclear how commission will enforce weatherization rule in the 2022-2023 winter
  • How emergency calls will be transferred from old to new operators
  • Weatherization methods are not included in rule and penalty guidelines are more reactive than proactive
  • Raymond – Do you know if the 7k sites the RRC is going to inspect will be enough?
    • Were about 68k facilities that had been registered; population will be cut down significantly, but is a big unknown
    • Critical infrastructure rule in 2021 encompassed almost all gas supply systems; new rule curtails those who are eligible

 

Larry Linenschmidt, Self

  • SB 3 and SB 2 are only the beginnings of solving the electric power issues of this state
  • Bills are missing terms like “climate change,” “greenhouse gas,” and other terms
  • Need to consider climate change science in weatherization plans
  • Recommend adding goal of decreasing to 50% emissions by 2030 and 0% by 2050
  • Recommend passing legislation to repay generators for weatherization and loss of revenue during weatherization projects
  • Need to ensure transmission lines are enhanced to remain resiliency to wildfire and other extreme weather events
  • Need to add significant transmission line capacity
  • Recommend the state invest in programs to modernize residential electric equipment
  • Average daily temperature from Texas has increased and more extreme weather conditions are the result of climate change
  • Reynolds – Prudent we adequately address this crux of the problem; has become a partisan issue
    • Would love to see the state have a climate change plan now that there are five large cities have one
  • Reynolds – Have founded an Environment and Energy Caucus to address some of these issues

 

Joel Yu, Enchanted Rock

  • Are a Houston-based microgrid operator; helps bridge the gaps on the grid
  • SB 3 has been a great success and a major improvement to the grid
  • To make a more reliable gird need decentralized local generation paired with more robust and flexible infrastructure
  • Working with a number of water and gas facilities to help them develop microgrids to help them comply with SB 3 resilience efforts
  • Raymond asks Yu about when the company was founded and how they performed during Uri
    • 2009 and performed well with a high level of reliability; 130 sites that were experienced outages and helped fill the gaps
  • Raymond – How many other companies are like yours in the state?
    • At least a dozen or more

 

Cyrus Reed, Lonestar Chapter of the Sierra Club

  • In implementation, are important Phase 1 changes that we have supported; committee needs to be mindful of the increase in ORDC and ancillary services extra costs
  • Concerned about the shrinking about of facilities that will be adherent to the new RRC rule
  • Concerned we have not seen the final product of Phase 2; need to be mindful for the potential cost to consumers and need meaningful public input
  • What was missing during last discussions has been consumer solutions and the demand side
  • Cheapest option we have is to reduce demand; most peak demand is coming from older buildings/residences
  • Need to look at demand response and put more money in modernization/efficiency programs
  • Phase 1 partially addressed demand response through nodal pricing; not been implemented yet
  • Have started a pilot project to aggregate other loads into the market – like Enchanted Rock
  • Sierra Club filed a rulemaking petition similar to legislation that called for an increase in peak demand and energy savings goals required of utilities
    • Unlikely the commissioners will adopt this petition; goal is to start a discussion
  • Hope with the appointment of new Commissioner Jackson more focus on efficiency
  • In favor of adopting new building codes; SICO has adopted new codes, but have run into issues given previous legislation passed
  • Reynolds – Hunter and Howard shared concerns about rising costs; offering any solutions?
    • Need to give consumers more opportunities to save money by reducing energy load
    • Federal government has passed two large packages that potentially has money to directly help consumers; pot could be used for low interest loans for efficient systems