Regulatory Updates by Region

ERCOT Regulatory Highlights: December 2015

This month…

  • At the request of the Public Utility Commission (PUC), stakeholders will examine how the Operating Reserve Demand Curve functioned over the summer months of 2015 and consider adjustments.
  • ERCOT released the December Capacity, Demand, and Reserves Report.
  • TAC endorsed the 2016 Ancillary Services Methodology changes.
  • Oncor and Hunt seek PUC approval of the acquisition of the Oncor transmission and distribution system by Hunt. 
  • ERCOT continues work on the future Ancillary Services Overhaul with the next step being the review of the cost benefit analysis results.

ERCOT and the PUC

Resource Adequacy at ERCOT

The Public Utility Commission discussed a memo filed by Commissioner Anderson related to the performance of the Operating Reserve Demand Curve (ORDC) during the summer.  In his memo, Anderson states that he believes it is time to “examine how it has functioned and whether there is a need for minor adjustments to improve its efficiency”.  The Commissioners agreed that they would monitor ORDC performance and asked ERCOT to continue evaluating the data from this summer.  Some stakeholders are proposing different approaches to modify the ORDC, including changing the minimum contingency (currently set at 2000 MW), changing the Value of Lost Load (currently set at the offer cap of $9000/MW), and various other ideas. 

Seasonal Assessment of Resource Adequacy (SARA) Released for Winter

ERCOT released the December version of the Capacity, Demand, and Reserve Report (CDR) for ERCOT.  The current reserve margin target is 13.75 percent.  The CDR indicates that the reserve margin will remain above the 13.75 target through the ten years of the projection (2016 – 2025).  Reserve margins increased for all years except 2016 (slight decrease) since the release of the May 2015 CDR report.  The CDR does not account for potential capacity retirements due to new EPA rules such as the Clean Power Plan.

2016 Ancillary Services Methodology Proposal

TAC endorsed the ERCOT Ancillary Services Methodology changes for 2016.  The proposal includes changes to Regulation and Non-Spin Reserve Services.  ERCOT does not propose changes to Responsive Reserve Services for next year.  The methodology will use the same month from previous years instead of previous 30 days to determine the amount of Regulation and Non-Spin.  ERCOT also proposes using dynamic risk analysis for determination of Non-Spin requirements.  The end result is that for most hours the Non-Spin quantity requirements decrease, and in some hours when Non-Spin is most needed it will increase.  The AS requirements for 2016 can be found at this link.  Note that because of methodology requirements, final numbers for October – December 2016 are not available, for these months, they should be considered advisory until they are published on December 20.  The ERCOT Board will consider the changes at the December Board meeting.

Hunt/Oncor Filing at the PUC

Last September, Oncor filed the proposal to transfer Oncor transmission and distribution system from Energy Future Holdings (EFH) to Hunt.  Hunt’s Sharyland utility is structured as a Real Estate Investment Trust (REIT), and the Oncor assets are also to be structured in this fashion, but in a separate entity from Sharyland.  A REIT involves the assets being held in a trust and receiving rental payments from the utility subsidiary that operates the assets. The PUC must make a determination on the transaction by March 27, 2016.  A preliminary order was discussed by the PUC and the list of issues includes consideration of whether the transaction is consistent with public interest, how Certificates of Convenience and Necessity (CCN) would be treated, and REIT-related issues.  The deadline for intervention was October 30.  The hearing is scheduled to begin on January11, 2016.

Houston Import Transmission Project Updates

In 2014, the ERCOT Board approved the Houston Import Project and gave it a “critical” designation which expedites the approval process for the transmission line at the Public Utility Commission.  This project includes the construction of a new Limestone-Gibbons Creek-Zenith 345 kV double circuit transmission line.  More information on the Houston Import Project is available at this link.  At the December 3, 2015 open meeting, the PUC began final deliberations on the need and routing for this project.  Commissioners indicated they would make a decision at the December 17 open meeting.

Ancillary Services Overhaul

In late 2013 ERCOT announced its intention to overhaul the Ancillary Service Markets.  ERCOT filed NPRR667 which proposes the changes to the AS Markets.  ERCOT also hired the Brattle Group to perform a cost/benefit analysis (CBA) of the NPRR.  ERCOT released the draft findings from the CBA for discussion with stakeholders and held a meeting November 9 to discuss findings with stakeholders.  Brattle will incorporate comments from the meeting and release a final CBA this month. 

As a reminder, ERCOT has committed to implement the Ancillary Services Overhaul proposal no earlier than three years after Board approval of the NPRR.

Upcoming ERCOT and PUC Meetings:

Wholesale Market Subcommittee – December 2

Reliability and Operations Subcommittee – December 5

ERCOT Board Meeting – December 8

Commercial Operations Subcommittee – December 9 (morning)

Retail Market Subcommittee – December 9 (afternoon)

Protocol Revision Subcommittee – December 10

Technical Advisory Committee – December 17

Public Utility Commission Open Meeting – December 3 and 17

All data provided in this report is intended for general information use only.  Direct Energy does not guarantee the completeness or accuracy of this data, nor does Direct Energy assume any liability for any loss that may result from the reliance by any person or entity on this information.

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