Regulatory Updates by Region

ERCOT Regulatory Highlights: July 2015

This month…

  • The PUC is reviewing the Reserve Margin Target for ERCOT.  
  • The ERCOT Board approved a new ERCOT Budget and associated System Administrative Fee.  The PUC must approve the budget and fee.
  • ERCOT continues work on the Ancillary Services Overhaul with the next step being the completion of the cost benefit analysis.
  • The ERCOT meteorologist provided an overview of his expectations for this summer at the ERCOT Board meeting.
  • ERCOT stakeholders are reviewing a number of long-term market design issues.

ERCOT and the PUC

Resource Adequacy at ERCOT

The Commission continues to review the appropriate Reserve Margin Target for ERCOT in Project No. 42302.  PUC staff filed a memo in June asking the commissioners for further guidance on how to proceed.  At the June 18 open meeting, the commissioners agreed to have a workshop on the reserve margin target.

ERCOT 2016-2017 Budget and Fee

The ERCOT Finance and Audit Committee recommended, and the Board approved the ERCOT 2016/2017 budget and associated System Administrative Fee. ERCOT submitted the budget and fee request to the Public Utility Commission of Texas for approval.  The Board-approved System Administrative Fee would increase from the current $0.465/MWh to $0.555/MWh.  ERCOT indicates that the significant change in the fee is because of the need to refresh technology that was implemented for the nodal redesign.  The budget and fee must still be approved by the PUC with a proposed effective date of January 1, 2016.

Ancillary Services Overhaul

In 2013 ERCOT announced its intention to overhaul the Ancillary Service Markets.  After a year of stakeholder involvement, ERCOT filed Nodal Protocol Revision Request (NPRR) NPRR667 – Ancillary Service Redesign. 

ERCOT also hired the Brattle Group to perform a cost/benefit analysis (CBA) for the NPRR.  At the June TAC meeting, ERCOT reviewed the schedule and next steps for this NPRR. 

  1. ERCOT to file comments on NPRR 667 (early July 2015)
  2. Stakeholders provide comments on NPRR 667 and ERCOT comments  (by early fall)
  3. Complete CBA (October 2015)
  4. Review and discuss comments on NPRR 667 and CBA
  5. Provide “polished” NPRR 667 and completed CBA to PRS/TAC (Late Fall 2015)

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

2015 Summer Overview

At the June Board meeting, ERCOT’s Meteorologist Chris Coleman presented his findings related to El Nino and the summer forecast for ERCOT.  He expects the effects of El Nino to be noteworthy for ERCOT with a milder summer and more precipitation than in recent years.  Overall he anticipates less than 10 days in Dallas, San Antonio, and Austin over 100 degrees.  For Hurricane season, he indicates that hurricanes generally are not compatible with an El Nino pattern and predictions this year show seven named storms, three hurricanes, one of which could be major.

PUC Issues Related to Renewables and Large DC Ties in ERCOT

At the PUC, there are two projects open to review costs associated with grid reliability related to wind and/or DC ties in ERCOT.  Chairman Nelson has indicated that the PUC will closely consider the impacts of wind to the grid. 

  1. Project No. 42647 relates to planning and system costs associated with Renewable Resources and New Large DC Ties – The PUC held a workshop and sought comments last year on costs associated with renewable resources and large DC Ties.  There has been no new action this year on this project.  Senate Bill 933 was passed and signed by the governor and will impact DC Tie approval processes for ERCOT.
  2. Project No. 42631 covers costs associated to Sub-Synchronous Oscillation (SSO) – The PUC staff issued a rule for publication and comment related to cost allocation.  While the PUC published a rule, the commissioners decided to gather more data through the ERCOT studies to determine the best course of action.  This will delay the decision on cost allocation.


High Level Overview of Long-Term Market Proposals

Stakeholders continue to work on a number of proposals that would have a long-term timeline for implementation.  Note that none of the proposals are included in the budget approved by the ERCOT Board that will be submitted to the PUC and set the system administrative fee for the next two years.

  • Loads in Security Constrained Economic Dispatch (SCED) v.2 – Loads in SCED would help maximize load participation in SCED and create a method for price formation by loads in the Real-Time Energy Market.    Stakeholders continue to debate this issue.
  • Multi-Interval Real-Time Market – MIRTM would enable different types of Load resources to participate in SCED.  Loads that are “blocky” or that have constraints like ramping, minimum or maximum curtailment periods, and the time it takes to return to service would be able to participate in SCED because SCED would use a multi-interval commitment period.  ERCOT will study its forecast accuracy and commitment accuracy to determine if it is sufficient to run the MIRTM.  This study will begin in the fall.
  • Real-Time Co-optimization – Co-optimization is the process of simultaneously procuring energy and Ancillary Services (AS) from available Resources, at the lowest production cost to meet the Real-Time system demand for energy and AS. This results in the optimal allocation of all Resources’ capacity between energy and AS.  Stakeholders are reviewing key inputs and issues so ERCOT can develop an NPRR for consideration later this summer. 
  • Distributed Energy Resource (DER) Improvements – Stakeholders are reviewing ways aggregated resources such as rooftop solar can participate in the wholesale markets in ERCOT.  A whitepaper outlining options is due in the fall.


Upcoming ERCOT and PUC Meetings:

Retail Market Subcommittee – cancelled

Wholesale Market Subcommittee – July 8

Reliability and Operations Subcommittee – July 9

Commercial Operations Subcommittee – July 15

Protocol Revision Subcommittee – July 16

Technical Advisory Committee – July 30

ERCOT Board Meeting – August 11

Public Utility Commission Open Meeting – July 2 and 30

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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