new report offers market redesign recommendations, PUCT skeptical | News

AUSTIN – A report by an Energy and Environmental Economics consulting firm recommends Texas take a page from the structure of the New England, New York and Mid-Atlantic power grids.

Members of the Public Utilities Commission lean toward another approach.

The report, released Thursday, analyzes six specific market redesign options. Of those, E3 recommended the state choose the Advanced Reliability Market, which is currently used by other networks around the country, and is best suited to provide the reliability Texas is looking for, the report said.

Even so, PUCT members prefer the potential Performance Credit Mechanism market.

Texas began looking into the idea of ​​changing its electricity market design after Winter Storm Uri. In 2021, the country experienced an almost complete collapse of its power grid after a severe winter storm covered much of the country in snow and ice. The weather forced operators to institute rolling blackouts leaving millions of Texans without electricity and water during the day in the middle of freezing temperatures leading to the death of hundreds of Texans.

Since then, PUCT, a five-member board appointed by Gov. Greg Abbott, initiated a market redesign with reliability at the forefront. The PUCT oversees the Electric Reliability Board of Texas, which regulates the state’s independent grid, including the flow of electricity to more than 26 million Texas customers – representing about 90% of the state’s electricity load.

PUCT adopted a blueprint for a two-phase market redesign last winter. The first phase focuses on improved current market reliability practices. The PUCT quickly enacted changes to the rules including actions that improve coordination between the electricity and gas industry during emergencies and one that compels nuclear power plant operators and transmission companies to implement new winter weather standards.

The second phase is to focus on broader rebuilding with specific actions to be identified.

PUCT hired E3 to evaluate market redesign options and make recommendations, but board members said they preferred a different approach than what was provided.

MARKET OPTIONS are different

E3 recommended Texas to open with advanced Reliability market, similar to New York Independent System Operator, Independent System Operator of New England and Pennsylvania-New Jersey-Maryland Interconnection.

Require ERCOT to conduct forward-looking assessments of the needs of the identity system during the peak period of the net and determine the credit reliability of the resource. ERCOT will also conduct a centralized auction for reliability credits to procure what is needed during the period.

After a period of operation, energy generators are assessed and penalized if they fail to perform at the accreditation level.

E3 said it chose this model because it “best fits Texas’ competitive retail and wholesale market.”

PUCT chairman Peter Lake said he now favors the Performance Credit Mechanism model.

In this model, ERCOT sets requirements for operators to purchase “performance credits” earned based on their availability to the system during the highest risk hours at a centrally determined clearing price. Credit terms are fixed quantities determined in advance.

Credits are then awarded to generators after the close of the compliance period based on their availability across a predetermined number of hours of highest reliability risk, said the report.

Lake said he favored the concept of PCM because it will transfer the financial and operational risks of generation out of the ERCOT control room and “to private businesses that make money by evaluating and managing risks”. This, he said, “is where it belongs.”

“At the most basic level, PCM requires in my mind, anyone selling power to a household or business in ERCOT to make sure they’re buying that power from a reliable source,” Lake said. “For the first time, the company that sells your power to whom you send your money every month when you pay your electricity bill will now be required to make sure they can deliver that power.”

However, PCM is currently not used anywhere in the world, so countries have to start from scratch to create it.

Commissioner Will McAdams said he believes Texas should move forward with the PCM model because it allows the state to create a “unique solution based on (Texas’) needs.”

“It has the requirement that the load buys enough power to satisfy our needs plus reserves, but does not do it in advance. It allows many to make business decisions based on the best information on the day of operation,” said McAdams. so it’s a high-risk hour.”

The PUCT does not make the final decision on which method to choose.

The report is available to the public and market participants for comment through noon on December 15. After that, the commission and PUCT staff will consider providing insight before moving forward with a decision.

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