'The cost of ancillary services are borne entirely by the consumers': ERCOT approach to boosting grid reliability will pass costs on to Texans

Following a directive from Texas Gov. Greg Abbott to boost the power grid's reliability, the Electric Reliability Council of Texas (ERCOT) announced that it would focus on purchasing reserve power to cover for the shortcomings of market demand and avoid blackouts.

In a recent statement, the Public Utility Commission of Texas (PUC) announced that they would respond to recent Texas power shortages by directing ERCOT to “significantly increase the amount of power on standby for the afternoon hours when summer demand is at its highest.” This would be accomplished by purchasing extra “reserve power” from prompt and reliable generators. 

This approach has drawn criticism from citizens because ERCOT itself is purchasing these ancillary services and the cost gets passed on to consumers. Critics say that reserve power should be bought and paid for by the intermittent generators whose inherent unreliability is the reason that Texas needs ancillary services to be purchased in the first place.

Following the disastrous winter storm in February, Texas lawmakers and energy experts set about to fix the grid system and ensure reliability, according to Austin News. One of the key provisions pushed by some was to require intermittent generators to pay for the ancillary services needed to keep the lights on. 

In response to these issues, Texas State Sen. Kelly Hancock filed SB 1278 and his statement of intent describes how making unreliable generators pay for ancillary services are key in ensuring grid reliability. 

Hancock's bill passed the Texas Senate, with several prominent voices speaking in favor of its reforms, Austin News reported. In the end, 25 of the 31 Senators voted to put the responsibility for paying for ancillary services on the intermittent generators causing unreliability in the grid.

"The cost of ancillary services are borne entirely by the consumers right now, even though a significant driver of the costs is the changing performance of intermittent generation sources," Hancock said, according to Austin News.

Jason Isaac, director of Life:Powered at the Texas Public Policy Foundation (TPPF), penned an op-ed in support of making intermittent generators pay for ancillary services when Hancock's legislation was moving. Isaac argued that the Legislature should pass legislation "to require reliable generation and place the cost on the generators that need it, not on Texans."

Bill Peacock, policy director at the Energy Alliance, discussed with Lone Star Standard on the unreliable nature of intermittent generators. During the winter storm that plagued Texans with lengthy power outages, Peacock noted that “the more wind and solar you get onto the grid, the more problems you're going to have with reliability." He described how the storm not only contributed to increased demand, but it also created weather conditions that made renewable energy generators unable to operate at even their already diminished expected levels.

“What's contributing is the fact that we're relying on wind and the turbines are frozen as well as the fact that we're relying on solar and there's no sun shining,” Peacock told the Lone Star Standard. “We could have a reliable natural gas backup in place but we don't. All three of those are related to the renewable energy policies in Texas and in the United States.”