The State Energy Plan Advisory Committee (SERAC) published its Report to the Legislature on September 1st. This Committee was formed by appointees from the Governor, Lieutenant Governor, and Speaker to address energy issues that arose after Winter Storm Uri in February of 2021. Phil Wilson, head of LCRA, was chosen to chair the committee.
Invited testimony was taken in July 2022, a draft report was circulated to committee members on August 10th, a vote on the draft report was taken, and the draft report passed by a vote of 7-5. Memos were included toward the end of the report that took issue with some of the findings.
The findings begin on page 43 in summary form, grouped under three topics. Many of the findings and recommendations focused on increasing earnings and incentives for new and existing dispatchable generation.
Nothing from the SERAC Report is binding on the Legislature or agencies, and its impact on actions taken in the 2023 Legislative Session will not be known for months.
Electric and Gas Market Barriers
- The PUC and RRC should continue to work collaboratively to assess the totality of the data that has been gathered regarding all the critical infrastructure and critical loads operating on the ERCOT system and work with the Legislature to facilitate access to the information by the appropriate critical infrastructure electric utility for increased operational and planning effectiveness.
- The RRC should expeditiously continue to finalize its weatherization rules to ensure that all the critical gas infrastructure included on the electricity supply chain map in the state is subject to mandatory weatherization and inspection requirements.
- The PUC and RRC, with oversight by the Legislature, should work to develop a comprehensive set of prioritization standards for the provision of natural gas to electric generation and electric service to critical loads.
- The PUC and RRC should work to minimize the number of unnecessary natural gas production facilities designated as critical and consider re-instating non-critical loads and/or seasonally non-critical loads in the ERCOT Load Resource program.
- The PUC should undertake the planned expansion of its firm fuel supply service to include additional resources with proven firm fuel capabilities.
- The Legislature should study methods to further incentivize natural gas storage solutions.
Electric Service Reliability, Stability, and Affordability
- The key reliability issue facing ERCOT will be to ensure adequate dispatchable generation is available during times of low non-dispatchable output.
- The PUC should define a clear reliability metric or standard for the ERCOT region. The committee believes this is a necessary first step in evaluating the efficacy of the proposals under consideration and “right-sizing” any programs designed to improve reliability in ERCOT.
- To address ERCOT’s changing resource mix, the PUC should continue its work with its independent consultant to evaluate expected improvements to system reliability associated with various market design proposals under a range of sensitivities.
- The PUC should evaluate the need to increase transmission pathways for generation availability and create system resiliency by planning for the transmission and distribution grids further into the future. This will ensure that our infrastructure is ready to meet the needs of Texas’ economy.
- The PUC and ERCOT should continue studying the system’s operational needs as the new ERCOT contingency reserve ancillary service is developed and becomes operational.
- As part of a long-term reliability solution, a shift in the market construct is needed to address the current challenges in maintaining reliability. While there is a diversity of views on the specific parameters of the solution, the committee finds broad support for favoring competitive solutions to manage the uncertainty that ERCOT presently is addressing through out-of-market reliability actions.
- The PUC and ERCOT should analyze the resource adequacy impacts of the proposed EPA regulations, and the PUC’s market design consultant should factor these analyses into its review and final recommendations.
- Transmission line planning and construction timelines often serve as a bottleneck; these processes, requirements, and timelines should be re-evaluated.
Market Structure and Pricing Mechanisms
- In order to provide regulatory certainty to the market, the PUC should expeditiously complete its phase two review and bring forward an analysis of the proposed costs and benefits of the proposals under consideration. This review also should identify how each proposal comprehensively addresses the reliability standard and disconnect that exists today with ERCOT’s conservative, out-of-market actions.
- The PUC should initiate and timely implement a rulemaking project to fulfill the Legislature’s directive to establish an emergency pricing program that complies with section 39.160 of the Public Utility Regulatory Act.
- The PUC should complete the market design blueprint activities that relate to ancillary service enhancements, including development of voltage support service, implementation of FFR and ECRS, and expansion of FFSS to include resources with firm natural gas transport coupled with off-site storage capabilities for natural gas.
- The PUC and ERCOT should continue studying demand response solutions and work to develop a framework to support integration of distributed energy resources in a manner that maintains the integrity of the transmission and distribution grids and supports utility service providers’ statutory obligation to maintain reliability and cost effectively serve all customers.
- Require intermittent generation sources to firm their deliveries with other dispatchable generation technologies.
- The committee does not support a market design that favors new or subsidized generation over existing resources, as doing so could create regulatory
