Summary: State agency proposes changes to power market aimed at averting mass blackouts. The proposal is aimed at making sure power providers and electricity generators have enough power on hand in case of increased demand. But it’s not clear how it would hold up in unexpected weather, an expert said.
Latest Update: Thursday, 17 November, 2022
Tags:#Electricity
The Texas Tribune
10 November 2022
Excerpts
The proposal is aimed at making sure power providers and electricity generators have enough power on hand in case of increased demand. But it’s not clear how it would hold up in unexpected weather, an expert said.
After several months of hammering out how to make the Texas power market more reliable in the wake of the deadly 2021 winter storm, state officials have landed on what they say is a solution.
Under a new proposal unveiled Thursday, power providers would be required to buy “performance credits” from power generators — which are intended to guarantee that both have enough electricity to meet increased demand when power demand is high enough to stress the electrical grid. If providers don’t buy the credits or generators don’t meet their end of the bargain, both could face financial penalties.
If the idea is implemented, “this will be the first time … that the companies that sell power to households — who you send your check to when you pay your bill each month — this will be the first time they’re actually responsible for ensuring they can deliver that power,” said Peter Lake, chair of the Texas Public Utility Commission, the board that regulates the state’s power grid operators.
The public will have roughly a month to comment on the plan before the PUC’s final vote on Dec. 15.
But it’s unclear how the grid would function under this framework in periods of unexpected heat or cold, said Alison Silverstein, a former senior adviser at the Public Utility Commission of Texas, which regulates ERCOT.
A consultant hired by the Public Utility Commission, which oversees the largely deregulated Texas power market, to analyze different proposals for overhauling the power market did not factor in how extreme weather events such as the 2021 winter storm would stress the grid operating under the credit system — writing in the report that “such analysis is beyond the scope of this study.”
Silverstein pointed to this year’s unseasonal heat wave in May, which forced six power plants offline.
State officials have worked to find a fix that would make the grid more reliable without further driving up consumers’ electricity bills. Out of several options analyzed by E3, a California consulting firm, the “performance credit mechanism” fix seemed to gain favor among a majority of members on the five-member commission Thursday.
Theoretically, it would insulate consumers from sudden spikes in their electric bills because providers — including publicly-owned power providers like Austin Energy and retail providers like TXU Energy or Reliant Energy — and generators, which operate the state’s power plants, agree ahead of time to have enough reserve power on hand during peak demand periods, Lake said.
The consultant’s analysis said using performance credits would cost an estimated $460 million more per year. But Lake said competition among generators would theoretically drive down prices of the credits. By avoiding massive energy price spikes like those seen during the 2021 winter storm, Lake said power customers “shouldn’t, according to this analysis, experience any significant impact on their bill.”
Willow Park Civics Research
Public Utility Commission Releases Reliability Reform Study on Texas Electric Market Design, Shelby County Today, 11 November 2022, Excerpts
The Public Utility Commission of Texas (PUCT) today released an independent study commissioned to analyze and recommend design updates to the Texas wholesale electricity market that will strengthen current and long-term reliability reforms to the state’s electric grid. The study was done in alignment with the economic and operational reliability principles outlined in the PUCT’s Blueprint for Wholesale Market Design, which was unanimously adopted by Commissioners in December 2021.
“This study confirms that we can achieve even more dramatic improvements in reliability with minimal cost impact to consumers,” said PUCT Chairman Peter Lake. “By combining the best elements of each design model into the Performance Credit Mechanism (PCM), we create a system that ensures enough electricity when we need it most while incentivizing construction of new plants to deliver reliable power to Texas homes and businesses.”
Public Utility Commission of Texas >
Review Of Wholesale Electric Market Design, 10 November 2022
The Public Utility Commission of Texas was charged by the 87th Texas Legislature and Gov. Greg Abbott in Senate Bill 3 with designing the Texas wholesale electricity market to ensure reliability of the state’s electric grid at a reasonable cost to rate payers.
In December 2021, PUCT Commissioners unanimously adopted key principles, summarized here, to guide electricity market design that would: • Ensure adequate supply of electricity at all times, especially during periods of high demand. • Incentivize construction of on-demand electricity generation resources. • Keeps costs low through a competitive retail electric market.
In June 2022 the PUCT engaged Energy+Environmental Economics (E3) to study options for market design aligned with the principles and market design proposals adopted by the PUCT in its blueprint for reliability reforms. / The E3 study, PUCT staff memo and request for public comment / The blueprint adopted by the PUCT for reliability reforms and market design
Public Comment: Texans are encouraged to share comments and feedback on the E3 study and recommendations. Comments and feedback should be provided within the parameters of the PUCT’s blueprint for market design, E3’s report and PUCT’s staff memo, all linked above. The PUCT is adding five days to the normal 30-day public comment period to accommodate for the Thanksgiving holiday. Comments are due by noon, Thursday, December 15, 2022...
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