Gov. Greg Abbott has signaled the Texas Public Utility Commission to move forward with electrical grid market redesign, despite Texas lawmakers' request for additional deliberation, Energy Alliance Policy Director Bill Peacock said. Despite this push forward, the redesign still ignores the inherent problem of renewable energy sources lack of reliability.
"Gov. Abbott's direction to the PUC to move the market redesign process forward highlights the bigger process with the problem. It is not that the PUC might ignore the Texas Legislature, it is that all of our elected officials are ignoring the reliability problems caused by renewable energy," Peacock said in a statement.
According to a press release, on Jan. 10, Texas Gov. Greg Abbott sent a letter to the Public Utility Commission (PUC) supporting the adoption of a new reliability standard and a new reliability design for the ERCOT market.
"After an extensive 18-month stakeholder engagement process and a review of the market designs analyzed in the reliability study commissioned by the PUC last year, the Performance Credit Mechanism (PCM) must be given strong consideration and as the Legislature noted, a reliability standard must be the foundation of any reliability design," the letter read. "The PCM best meets this call because it is based on a reliability standard, incentivizes new dispatchable generation, and maintains Texas’ energy-only market."
Abbot previously wrote a formal letter directing the PUC in 2021 to take immediate action to improve reliability of the Texas power grid. Actions meant to be specifically and immediately taken included streamline incentives within the ERCOT market to foster the development and maintenance of adequate and reliable sources of power, like natural gas, coal and nuclear power; allocate reliability costs to generation resources that cannot guarantee their own availability, such as wind or solar power; Instruct ERCOT to establish a maintenance schedule for natural gas, coal, nuclear, and other non-renewable electricity generators to ensure that there is always an adequate supply of power on the grid to maintain reliable electric service for all Texans; and order ERCOT to accelerate the development of transmission projects that increase connectivity between existing or new dispatchable generation plants and areas of need.
On Nov. 10, a report written by E3 was released by the Public Utility Commission of Texas. E3 performed a quantitative and qualitative review on a range of proposed market designs that produced the attached PUC report. In summary, this report provides an independent assessment of potential long-term market design reform options to promote the supply of dispatchable generation and focus on reliability as outlined in Phase 2 of the Blueprint published by the Public Utility Commission of Texas (PUCT) in December 2021. Under the direction of the PUCT and its staff, the consulting team of E3 and Astrape Consulting developed and analyzed six specific market design options and compared the impacts of each against a status quo energy-only market design.
On Dec. 1, 2022, the Texas Senate Business and Commerce Committee sent a letter to the PUC noting how the PUC report did not include any evaluation of the dispatchable ancillary or reliability service product as the Legislature had previously requested. Of the recommendations the PUC made, the B&C Committee believes they fail to meet the required directives and could not be employed in a timely or cost-effective manner. The letter is requesting the PUC define reliability goals for the ERCOT region, evaluating the impact of creating a new market-based service to meet this standard, and put forth clear performance requirements prior to moving forward with any significant market redesigns.
"As was discussed during the Nov. 17, 2022, Senate Business and Commerce Committee hearing, there is significant concern the proposals being considered by the Commission…not only fail to meet the directives clearly stated in SB 3, but more importantly, will not guarantee new dispatchable generation in a timely and cost-effective manner," the committee wrote in the letter.
MSN.com reports that even if the Texas Public Utility Commission does Abbott’s bidding as requested in his official letter to them, state lawmakers are still expected to take a second look at any proposal they forward.
"TX needs to build new dispatchable energy resources for when the grid is stressed in extreme weather/higher energy use. Unfortunately, PUC's current market design proposal falls short of this fundamental goal. Let’s work together this session to get it right for Texans," Texas state senator Charles Schwertner wrote in a Dec. 1 Twitter post.
