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After the Texas State Senate Business & Commerce Committee conducted a hearing on a Public Utility Commission (PUC) report regarding the restructuring of of the Texas electricity market, the Committee issued a letter to the PUC expressing concern that their proposals do not meet the legislature's directives.
The letter, signed by all members of the committee, said that the Commission's proposals "not only fail to meet the directives" stated in legislation, but "will not guarantee" available generation in a timely and cost effective manner. The senators also took the opportunity to remind the commission it should not adopt any planned market design change without "further consultation with the Legislature."
The letter sent to the Texas Public Utility Commission from the Texas Senate Business and Commerce Committee notes how the PUC 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 redesign.
"The Commission's recently released 'Assessment of Market Reform Options to Enhance Reliability of the ERCOT System' report offers different mechanisms to remake the competitive market, but it does not include any evaluation of the dispatchable ancillary or reliability service directed by SB 3," the letter read. "As was discussed during the Nov. 17 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...To address these concerns, we request the Commission first take action to define the reliability goals for the ERCOT region prior to moving forward with any significant market redesign...Further, any other holistic market design change, including the PCM, that goes beyond the scope of SB 3 should not be adopted by the Commission without further consultation with the Legislature."
According to a press release, last year Gov. Greg Abbott wrote a formal letter directing the Texas Public Utility Commission 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.
The Austin Journal reported that on Nov. 17 at a Texas Senate Business and Commerce Committee hearing regarding the PUC's report, Sen. Donna Campbell (R-TX) was noted as saying "The study is flawed because it's based on assumptions that are not necessarily true. I'm not convinced at all that this was a great study. I'm concerned that there may be effort to put something out there ... just to say you did something. I'm opining here but I wouldn't want that because that's costly and wrong to do."
The Austin Journal also reported that at a Texas Senate Business and Commerce Committee hearing on Nov. 17 regarding the PUC's report, Katie Coleman spoke on behalf of the Texas Association of Manufacturers saying, "All the reliability issues with installed capacity that this report seeks to solve are a product of this assumption that 11,000 megawatts of generation are going to retire and so if you call into question that assumption, you call into question the basis for all of the administratively complex proposals and costs that are being put forth in this. So that is one of our big concerns. I think you heard Ms. (Carrie) Bivers (of Potomac Economics of Austin) talk about some of the issues with the assumptions in the report. We share those concerns. The report itself acknowledges it did not seek to achieve a full equilibrium in it its modeling, it essentially just assumed we were going to retire coal and gas and that creates a problem that we have to solve."