Regulatory Updates by Region

ERCOT Regulatory Highlights: November 2015

This month…

  • At the request of the Public Utility Commission (PUC), stakeholders will look at the effectiveness of the Operating Reserve Demand Curve over the summer months of 2015 and consider changes.
  • ERCOT released the final Winter and Preliminary Spring Seasonal Assessments of Resource Adequacy.
  • TAC endorsed the 2016 Ancillary Services Methodology changes.
  • Oncor and Hunt filed for 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 questions whether or not the ORDC is properly reflecting scarcity prices as intended.  The Commissioners agreed that they would monitor ORDC performance and asked ERCOT to continue evaluating the data from this summer.  At the Technical Advisory Committee in October, ERCOT presented analysis of the convergence between the Physical Responsive Capability and the ORDC reserve calculation.  Stakeholders will review the analysis and see if there are recommendations for change.  There is the potential that changes to the ORDC will occur within the next year.

Seasonal Assessment of Resource Adequacy (SARA) Released for Winter

ERCOT released its final Winter SARA and preliminary Spring SARA.  In both assessments, and in all scenarios for each, ERCOT indicates they anticipate adequate capacity available for operating reserves to meet the anticipated load.  The newest Capacity, Demand, and Reserves report is due out in December.  All of these reports can be found at the ERCOT Resource Adequacy website

2016 Ancillary Services Methodology Proposal

ERCOT introduced its annual review of Ancillary Services Methodology and proposed 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.  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 approved by the Board in December.  At the October meeting, TAC endorsed the ERCOT methodology. 

Hunt/Oncor Filing at the PUC

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, or the application is considered approved.  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 for January 2016.

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 at a meeting scheduled for November 9.  Following more stakeholder comments, ERCOT will incorporate comments and release a “polished” NPRR late this year or early next year.

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:

Retail Market Subcommittee – November 3

Wholesale Market Subcommittee – November 4

Reliability and Operations Subcommittee – November 5

Commercial Operations Subcommittee – Cancelled

Protocol Revision Subcommittee – November 12

Technical Advisory Committee – November 19

ERCOT Board Meeting – December 13

Public Utility Commission Open Meeting – November 5 and 19

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