Carrie Bivins, who serves as the independent market monitor for Texas’ electric grid, is expected to resign soon. The resignation comes after Bivens’ report that the actions of state officials had raised the cost of electricity by $8 billion.
Bivens presented the market monitor's report to the Electric Reliability Council of Texas' (ERCOT) Wholesale Market Working Group on September 22. The report examined the implementation of the ERCOT Contingency Reserve Service (ECRS). The ECRS was an attempt by Texas regulators to provide more reserves in the case of shortages.
However, according to the report, "ERCOT’s decision to nearly double the amount of required online reserves after implementation of ECRS has resulted in: Shortage pricing for energy and [ancillary services] when the market is not short; Substantial challenges managing congestion as fewer [megawatts] are accessible for dispatch in real-time; and Enormous increases in market costs."
Biven's estimated that "ERCOT’s increase in online reserve procurements with the introduction of ECRS likely raised real-time market energy value by ~$8 billion in three months." She also suggested the costs had continued into November.
According to the Texas Standard, several ERCOT officials, including CEO Pablo Vegas, objected to the costs reported by Bivens during an October meeting. But she stood by the report. "I think we would have been just as reliable this summer without these excess megawatts."
The high costs imposed on Texans by regulators are nothing new, according to Bill Peacock, policy director of the Energy Alliance. "Texas politicians and regulators have been making electricity more expensive since about 2012," Peacock said.
In a report released in January, the Energy Alliance estimated that Texans would be paying more than $8 billion above market price because of manipulation of market prices by Texas and federal regulators by 2026. "The manipulation has occurred through three primary market interventions. First, federal, state, and local renewable energy subsidies. Second, market power regulations designed to reduce competition and market prices. Third, the PUC’s direct manipulation of prices through mechanisms like the Operating Reserve Demand Curve (ORDC) and Ancillary Services." The projected costs did not include the $8 billion this year in the market monitor's report.
The Energy Alliance's report suggests that the growth of renewable energy in the Texas market is one of the primary causes for the higher costs. "It has been well documented that renewable energy has played a major role in making the Texas electricity market less affordable and more unreliable."
Peacock suggests that the growth of renewable energy in Texas is due to billions of dollars a year in renewable energy subsidies that are being poured into Texas from federal, state, and local governments. "Instead of doing something to reduce the renewable energy subsidies, Texas politicians have directed regulators to increase subsidies to traditional thermal generators," Peacock said. "The result has been higher electricity prices for all Texans." (another original quote from me)
Earlier this fall, reports indicated the Public Utility Commission of Texas (PUC) had already sought proposals "for a contractor to act as the wholesale electric market monitor for the ERCOT region." Changes in the proposal from previous years raised concerns about whether the PUC was trying to censor the market monitor. These concerns were voiced by Texas Lt. Gov. Dan Patrick and state Sen. Charles Schwertner in a letter to the PUC. No decisions have been made about which company will serve as the next market monitor.
