Regulatory Updates by Region

ERCOT Regulatory Highlights: October 2015

This month…

  • The Public Utility Commission (PUC) discussed the effectiveness of the Operating Reserve Demand Curve over the summer months of 2015.
  • The PUC approved the ERCOT Budget and associated System Administrative Fee which will be effective January 1, 2016.
  • ERCOT proposed 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 completion of the cost benefit analysis.
  • ERCOT announced changes in leadership.

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 the level of reserves where the price is automatically set at the cap (the current level is 2000 MW), the Value of Lost Load (VOLL) which is currently set at $9000/MWh, how to count reserves for the purpose of the ORDC, and how the Loss of Load Probability is calculated.  The Commissioners agreed that they would monitor ORDC performance and asked ERCOT to continue evaluating the data from this summer.

ERCOT 2016-2017 Budget and Fee

The Public Utility Commission approved the ERCOT 2016/2017 budget and associated System Administrative Fee at the October 8 open meeting.  Under the proposal, the System Administrative Fee will increase from the current $0.465/MWh to $0.555/MWh.  The effective date of the fee increase is January 1, 2016.

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..

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 approve the transaction by March 27, 2016, or it fails by law.  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 is set for October 30.

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 expects the CBA to be completed by late October 2015.  They scheduled a review of the CBA with stakeholders on November 9, and then will allow for comments from stakeholders.  They will incorporate comments and release a “polished” NPRR late this 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.

Personnel Changes in the Industry

ERCOT recently announced new changes in leadership.  Woody Rickerson, currently Director of Grid Coordination, will be vice president of Grid Planning and Operations, and Kenan Ögelman, Director of Energy Market Policy for CPS Energy, will be vice president of Commercial Operations.  Rickerson has been with ERCOT since 2000 and has also worked for utilities in Texas and other states.  Ögelman has been involved in the ERCOT market from its inception and is currently president of the Gulf Coast Power Association.  He also has taught economics at the University of Texas at Arlington and St. Edwards University.

At the same time, the New York ISO announced that Brad Jones, ERCOT Chief Operating Officer, would become its new Chief Executive Officer.  In the interim, Jeyant Tamby will serve as the Interim Chief Operating Officer for ERCOT.

Finally, Governor Greg Abbott has reappointed Donna Nelson to the Public Utility Commission of Texas (PUCT) for a term set to expire September 1, 2021.

Upcoming ERCOT and PUC Meetings:

Retail Market Subcommittee – October 6

Wholesale Market Subcommittee – October 7

Reliability and Operations Subcommittee – October 8

ERCOT Board Meeting – October 13

Commercial Operations Subcommittee – October 14

Protocol Revision Subcommittee – October 15

Technical Advisory Committee – October 29

Public Utility Commission Open Meeting – October 8 and 15

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