Regulatory Updates by Region

ERCOT Regulatory Highlights: May 2015

This month…

  • The PUC continues to work toward determining the Reserve Margin Target for ERCOT.  
  • ERCOT released the May 2015 Capacity, Demand, and Reserves Report.
  • ERCOT continues work on the Ancillary Services Overhaul with the next step being the completion of the cost benefit analysis.  A workshop is scheduled for May 18.
  • The Texas Legislature is in session and several bills have been filed 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 for the summer, and is scheduled to release a staff report following the workshop. 

ERCOT Releases Capacity, Demand, and Reserve Report and Seasonal Assessment for Resource Adequacy

The May version of the Capacity, Demand, and Reserve Report (CDR) for ERCOT was released on May 4th.  The current planning reserve margin target is 13.75 percent.  The CDR indicates that the reserve margin will remain above the 13.75 target through 2022.  ERCOT also released the Summer Seasonal Assessment for Resource Adequacy (SARA) and the preliminary Fall SARA.  For both, ERCOT is expected to have sufficient installed capacity to serve forecasted peak demands.  ERCOT anticipates more than 77,000 megawatts (MW) of available generation resources to serve expected peak demand of about 68,000 MW this summer.  They also anticipate a cooler summer.  Only in periods of extreme load and extreme generation outage, or localized challenges in areas such as the Rio Grande Valley would ERCOT anticipate calling an Energy Emergency Alert (EEA).  As a reminder, EEA events trigger scarcity pricing in the energy market.

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.  There are two workshops scheduled for May 18, one to continue discussion on pricing and procurement options and the other workshop to consider the design of the Synchronous Inertial Response Service (SIRS).  With the introduction of NERC BAL-003, ERCOT must mitigate for inertia on the grid.  Wind Generation is increasingly providing more generation to the ERCOT system, and it cannot provide inertial response.  Periods of low to medium load, combined with high wind penetration put the grid at the most risk.  ERCOT is hoping stakeholders begin to make some decisions on procurement and pricing in the next month or two.  The SIRS decisions will likely have a longer timeline.

ERCOT also hired the Brattle Group to perform a cost/benefit analysis of the NPRR which has a late spring completion date.  Stakeholders will have an opportunity to comment again following the cost/benefit analysis.  ERCOT is also looking at other policy initiatives such as Real Time Co-optimization and Multi-Interval SCED to evaluate whether they can be implemented with the overhaul.  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 – 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.
  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 for a few more months.

The Texas Legislature

A total of 6311 bills have been filed this session.  Below is a chart of some industry-relevant bills filed so far this session.  We have narrowed the list to those that we believe may continue to advance in the legislative process.  Bill progression 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 has been referred to the Senate.



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 has been referred to the House. There is no sponsor yet.

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 remains pending.



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 has been referred to the House State Affairs Committee, no sponsor yet.



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


Promotes construction of transmission lines based on the economics of congestion rent.  This bill remains in Committee.

Upcoming ERCOT and PUC Meetings:

Retail Market Subcommittee – May 5

Wholesale Market Subcommittee – May 6

Reliability and Operations Subcommittee – May 7

Commercial Operations Subcommittee – May 13

Protocol Revision Subcommittee – May 14

Technical Advisory Committee – May 28

ERCOT Board Meeting – June 9

Public Utility Commission Open Meeting – May 1 and 21

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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