Regulatory Updates by Region

ERCOT Regulatory Highlights: January 2016

This month…

  • At the request of the Public Utility Commission (PUC), stakeholders are examining how the Operating Reserve Demand Curve functioned over the summer months of 2015 and some stakeholders are proposing changes.
  • The ERCOT Board approved the 2016 Ancillary Services Methodology changes.
  • Oncor and Hunt seek PUC approval of the acquisition of the Oncor transmission and distribution system by Hunt. 
  • The PUC will approve the Houston Import Project in January.
  • 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

In October 2015, 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 states that he believes it is time to “examine how it has functioned and whether there is a need for minor adjustments to improve its efficiency”.  Stakeholders are proposing different approaches to modify the ORDC, including changing the minimum contingency (currently set at 2000 MW), changing the Value of Lost Load (currently set at the offer cap of $9000/MW), and various other ideas.  A working group in ERCOT compiled a list of proposed changes and stakeholders are offering comments during the month of January.  A report summarizing the discussions at ERCOT will be filed at the Commission.

2016 Ancillary Services Methodology

The ERCOT Board approved the ERCOT Ancillary Services Methodology changes for 2016.  The new methodology includes changes to Regulation and Non-Spin Reserve Services.  ERCOT does not propose changes to Responsive Reserve Services for next year and will use the same month from previous years instead of previous 30 days to determine the amount of Regulation and Non-Spin.  It will also use a dynamic risk analysis for determination of Non-Spin requirements.  The end result is that for most hours the Non-Spin quantity requirements decrease, and in some hours when Non-Spin is most needed it will increase.  Final AS requirements for 2016 can be found on the ERCOT MIS site. 

Hunt/Oncor Filing at the PUC

Last September, 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.  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.  Testimony has been filed by all parties and PUC staff recommends rejection of the application as it was submitted.  The hearing will begin on January 11, 2016.

Houston Import Transmission Project Updates

In 2014, the ERCOT Board approved the Houston Import Project and gave it a “critical” designation which expedites the approval process for the transmission line at the Public Utility Commission.  This project includes the construction of a new Limestone-Gibbons Creek-Zenith 345 kV double circuit transmission line.  More information on the Houston Import Project is available at this link.  At the December open meetings, the PUC deliberated the need and routing for this project and made some changes and additions to the proposed Final Orders.  They will finalize the Orders approving the project in January.

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 hired the Brattle Group to perform a cost/benefit analysis (CBA) of the NPRR.  The final CBA was released at the end of December.  ERCOT requests stakeholders to provide comments on NPRR667 by January 25.  A workshop on the NPRR is scheduled for February 1. 

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:

Wholesale Market Subcommittee – January 6

Reliability and Operations Subcommittee – January 7

Commercial Operations Subcommittee – January 13

Retail Market Subcommittee – Cancelled for January

Protocol Revision Subcommittee – January 14

Technical Advisory Committee – January 28

ERCOT Board Meeting – February 9

Public Utility Commission Open Meeting – January 7 and 11 – 20 (Oncor/Hunt hearing)

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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