The Texas Public Utility Commission met on June 27th, 2019 to discuss a full agenda. The Commission focused particularly on item 10 regarding the ERCOT market and items 2, 5, 6, 7, 8, 11, 12, 13, 14, 15, 16, 17, 18, and 19 were taken up without discussion.
This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, 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.
Item 10: Project No. 48540 – Review of Real-Time Co-Optimization in the ERCOT Market. (Discussion and possible action) Mark Bryant and Diana Zake
- ERCOT – What’s in the memo allows us to get started & would like to get principles by the end of the year; however, taking to time to understand what people want out of Virtual AS is useful, suggestion is reasonable and something ERCOT can work with
- ERCOT – Appears that people are favoring what IMM put in their comments
- Arthur D’Andrea – Happily this appears to be a non-issue as people have come together for a solution & AS is the only thing left to decide; more briefing would be helpful
- PUCT Staff – Regarding market rules, making a change here how AS are sold and bought, now that we’re moving to real-time market withholding becomes a concern
- PUCT Staff – Needs to be a general expression of PUCT policy that withholding would be an anti-competitive market and not permitted.
- D’Andrea – What does Sec. 4 of the Chair’s memo not have that you would like to see?
- Chair DeAnn Walker – Last paragraph that I thought expressed that clearly, my understanding is that ERCOT has been working with market participants
- PUCT Staff – Concern is statement that PUCT doesn’t need to address this, could have parties saying the PUCT isn’t doing anything, just looking for a statement that withholding would be considered bad behavior
- Potomac Economics – As we tie AS and energy together, ability to withhold on AS becomes a much bigger lever in energy prices
- Potomac Economics – The way the 5% exclusion is written could give free reign to small actors to withhold
- If your unit is available and capable, there should be an offer; if you don’t have an offer, one will be provided
- Still some work at the PUCT level to set policy in this area
- Walker – Are you talking about the small fish rule? If this needs to be addressed today I know where I stand on it
- Potomac Economics – As I read the rule, I’m not sure it makes distinctions between energy offers and AS offers, could be clarification
- I think we would regret an outcome where a party with less than 5% total installed thinks they have immunity to offer AS prices at whatever price whenever they want
- Walker – I don’t know that I think we need to make the decision today
- Potomac Economics – I don’t know that this needs to be decided today, but if we leave with the perception that this is settled it might not be a good outcome; possibly should add to other issues comments were requested on
- Walker – I don’t actually want more comments, I believe that the whole thing should be eliminated
- D’Andrea – Haven’t heard anyone say we still need the small fish rule, but we haven’t had full briefing on it either; you’re not just talking small fish though, you think generally there might need to be some type of decision that withholding and AS is a problem
- Potomac Economics – I think this is a concern with policy and procedure, perhaps if you haven’t done it for a year then maybe you’re not qualified
- D’Andrea – I think the reason the memo is worded this way is because everyone seemed to agree on this, would hate to jump in now and disrupt this
- Potomac Economics – As PUCT market monitor I can’t give carte blanche to availability if resources are available or withheld
- Walker – My intention in the memo is to address units that physically cannot provide; not designed for units that don’t want to
- Potomac Economics – Ability and economic viability are built into the market structure, but this is not carte blanche to get away with things and raise prices overall
- D’Andrea – Why should I be worried about small fish now and withholding in the AS market if the rule hasn’t mattered
- Potomac Economics – Premise is wrong, there have been situations where parties with less than 5% installed have had a noticeable effect on price
- D’Andrea – Isn’t the point of the small fish rule to let them have an effect?
- Potomac Economics – as we move to zonal, not so much
- As we co-optimize, the shortage of AS becomes a much tighter and more powerful lever on energy price
- Walker – To me some of what has been said is the IMM’s job, can’t establish rules so tight that it chokes the market and coopts IMM oversight
- D’Andrea – Do you feel like you are at an impasse?
- Potomac Economics – I think these details could get worked out in the stakeholder process
- If the rule continues to exist, then there needs to be clarification on how this applies to energy versus AS
- D’Andrea – Would be happy to get rid of this in AS, leaning towards this in energy, but would like some more briefing
- PUCT Staff – Staff can come back with a proposal on eliminating the small fish rule & can put it out for comment
- D’Andrea – Agree with Chair’s memo in 4, spoke about “must offer,” etc., but hate to dig in deeper without further study
- Walker – Asks ERCOT, do you have what you need to get started or do you need more direction? Some of these things are specific to the rules that we will have to change & I don’t think we will be able to sit here today and make these changes; memo was trying to set a basic framework
- ERCOT – I have what I need to get going, on this issue ERCOT would build proxy offers in AS for all the units & they can communicate issues for performance and ERCOT would stop building the proxy offer; can come back if further conversation is needed
- Walker – And when they can’t perform it’s not that units just decide they don’t want to, it’s that they cannot
- ERCOT – Yes, can engage stakeholders to find out what we’re not covering
Items 11-19 consented to.
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Item 20: Docket No. 49476 – Agreed Notice of Violation and Settlement Relating to Golden Spread Electric Cooperative, Inc.’s Violation of PURA § 39.151(j), 16 TAC § 25.503(f)(2), ERCOT Nodal Operating Guide § 7.1.2(1)(j), and ERCOT Nodal Protocol § 8.1.1.4.3(3). (Final Order)
- Chair Walker had a memo in this case, other comms. agree with the memo
- Motion to adopt order consistent with memo passes
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Items 25 and 29 were called up together
Item 25: Discussion and possible action regarding implementation of state and federal legislation affecting electricity markets including current and projected rulemaking projects, comments to other state and federal agencies and Commission priorities.
Item 29: 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.
- PUCT Staff memo described what happened during the 86th Session, second memo for “next steps
- PUCT Staff – Had a very successful session due to engagement from the PUCT, memo groups bill info into categories of significant legislation
- PUCT Commissioner note they have reviewed the bill memo, declines an explanation
- Walker thanks the staff, notes that a good job was done with the budget and PUCT received things it didn’t ask for, heard from Capitol staff that PUCT staff was seen often
- Walker – asks after the plan for rulemaking from Session action
- PUCT staff – Memo last week set out the preliminary plan for form amendments and rules implementation, will move forward to make detailed plan with dates if this is acceptable, will bring back at the July 18 meeting for consideration
- Walker – SB 700 had 5 or 6 changes asked for by the PUCT, appreciates Sen. Nichols, Sen. Watson, and Rep. Gerren for helping to get this done, spoke about breaking this out into multiple rulemaking projects instead of one large one
Item 26. Docket No. 45489; SOAH Docket No. 473-18-4178.WS – Application of City of Gregory to Obtain Certificates of Convenience and Necessity in San Patricio County. (Final Order) David Hrncir
- Chair Walker had a memo in this case, other comms. agree with the memo
- Motion to adopt order consistent with memo passes
Item 27. Project No. 48937 – Rulemaking to Amend 24.44 Rate-Case Expenses Pursuant to Texas Water Code § 13.187 and § 13.1871. (Proposal for Publication) Elisabeth English and Justine Tan
- Chair Walker had a memo in this case, other comms. agree with the memo
- Motion to adopt order consistent with memo passes
- Walker – Moving forward, had thoughts on how we do rate case expenses here, something to consider down the road; seems that in every case these expenses are immediately severed and not sure it is a good use of resources to have multiple dockets
- Walker – Past Commissions have spent a lot of time on these and wondering if it is worth the time and effort, not sure PUCT is as efficient as possible
The PUCT met in closed session, but did not take any action resulting from the closed session.