Regulatory Updates by Region

ERCOT Regulatory Highlights: June 2015

This month…

  • The PUC continues to work toward determining the Reserve Margin Target for ERCOT. 
  • An increase to the offer cap occurred on June 1st.
  • ERCOT continues work on the Ancillary Services Overhaul with the next step being the completion of the cost benefit analysis.
  • The Texas Legislature session ended June 1 with few bills passing related to the electric industry in Texas.


ERCOT and the PUC

Resource Adequacy at ERCOT

The Commission continues to review the appropriate Reserve Margin Target for ERCOT in Project No. 42302.  The PUC is considering a workshop this summer, and is scheduled to release a staff report following the workshop.  Be advised that the ERCOT System-Wide Offer Cap increased to $9000/MWh on June 1.  The price cap in ERCOT has been $9000/MWh since the implementation of the Operating Reserve Demand Curve (ORDC) last year.

In addition, during the month of June, ERCOT will be implementing NPRR626 ORDC Price Reversal Mitigation Enhancements.  This is commonly referred to as the Reliability Deployment Adder.  ERCOT will adjust the real-time energy price when load is deployed for RRS or ERS or in other times when reliability deployments may inappropriately reduce the total Real-Time price during times of scarcity.  The difference between the real-time energy price without the deployment of load, and with the deployment of load will become an adder to the real-time energy price in a manner similar to the Operating Reserve Demand Curve adder.  This adjustment to the real-time energy price will occur before the price is posted and will be included as a part of the real-time energy price.

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.  A workshop was held in May to continue discussion on pricing and procurement options.  The ERCOT Technical Advisory Committee (TAC) also discussed these options, and voted to not decide on pricing and procurement at this time.  Interested Market Participants are encouraged to voice opinions related to pricing and procurement through the NPRR comment process.

ERCOT also hired the Brattle Group to perform a cost/benefit analysis (CBA) of the NPRR which had a late spring completion date.  ERCOT announced at the May TAC meeting that the modeling for the CBA was more complex than anticipated and in order to have confidence in the model, the CBA timeline will be extended until October.  Stakeholders will have an opportunity to comment again following the cost/benefit analysis. 

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

PUC Issues Related to Renewables 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.  The

Texas Legislature passed SB933 which now awaits governor signature.  If signed into law, it is likely that the PUC will rekindle the rulemaking related to DC Ties.

  1. 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 for a few more months.


The Texas Legislature

A total of 6311 bills were filed this session.  Below is a chart of some industry-relevant reported on this session.  Bill progression/failure is indicated in the comments section.








Energy savings performance contracts entered into by public institutions of higher education.


Requires approval by State Energy Conservation Office before an energy savings performance contract can be awarded.  This bill passed the House and was referred to the Senate.  It was never voted out of Senate committee.  Dead.



Relating to the goal for renewable energy and competitive renewable energy zones.


Terminates the mandated purchases of renewable power or credits on 12.31.15; renewable products will continue to require REC purchases; CREZ determinations cannot be made after 1/1/15.  This bill passed the Senate and was referred to the House. The bill was never voted out of House committee.  Dead.

HB 962


Regulation of the amount of installed electric generation capacity.

Wholesale/ Generation

Eliminates the 20 percent cap on generation ownership and prohibits the PUCT from mandating a capacity reserve (and a capacity market). Heard in Committee and never voted out.  Dead.



Relating to the authority of the PUC to review transmission interconnections that enable imports or exports from the ERCOT power grid.

Wholesale/Resource Adequacy

This Bill provides the PUC the ability to review transmission interconnections with other grids.  New DC Ties would go through the Certificate of Convenience and Necessity process.  This bill passed the Senate and the House and is headed to the governor’s office for signature.



Relating to the allocation of congestion rents in the ERCOT wholesale market.


Promotes construction of transmission lines based on the economics of congestion rent.  Neither bill passed out of House committee.  Dead.

Upcoming ERCOT and PUC Meetings:

Retail Market Subcommittee – June 2

Wholesale Market Subcommittee – June 3

Reliability and Operations Subcommittee – Cancelled

ERCOT Board Meeting – June 9

Commercial Operations Subcommittee – Cancelled

Protocol Revision Subcommittee – June 11

Technical Advisory Committee – June 25

Public Utility Commission Open Meeting – June 18

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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