Regulatory Updates by Region

ERCOT Regulatory Highlights: January 2017

This month…

  • ERCOT Released its December Capacity, Demand, and Reserves Report.

  • The ERCOT Board approved the 2017 Ancillary Service Methodology.

  • The Emergency Response Service (ERS) proposed rule was published and comments and reply comments have been filed.

  • The Reliability Must Run (RMR) rulemaking continues, a workshop was held in December.

  • The PUC approved Distributed Generation Interconnection rules.

  • The PUC set a schedule for the review of the acquisition of Oncor by NextEra.

  • The Texas Legislature convenes January 10, 2017.

ERCOT and the PUC

Resource Adequacy at ERCOT - ERCOT Issues December Capacity, Demand, and Reserves Report

The ERCOT Capacity, Demand, and Reserves Report was released December 15.  Reserve margins for the next five years remain above the reserve margin target of 13.75 percent with the lowest being 2017 with 16.9 percent.  Notably, the report format has changed and the first five years are included in the main report with the next five years in a supplemental section.  The outlying five years show a reserve margin falling below the target with the lowest being 2026 at 11.7%.  Reserve margins in this CDR have fallen since the May 2016 CDR.  ERCOT indicates the decline is mainly due to an updated load forecast that includes annual peak loads averaging about 2000 MW higher than previous calculations.  The driver for the increase is a more robust employment outlook for Central Texas. 

2017 Methodology for Determining Minimum Ancillary Service Requirements

The ERCOT Board approved the 2017 AS Methodology.  Final minimum AS amounts for 2017 have been posted on the ERCOT MIS website.  The requirement changes are minimal, and include the elimination of the Reserve Discount Factor.  Last year ERCOT procured an extra 200 MW of Responsive Reserve Service during summer peak hours because of the RDF, so that has also been eliminated.  Non-Spin quantities are slightly lower because of wind forecast improvements.

PUC Rulemaking on Emergency Response Service

The PUC opened Project No. 45927 – Rulemaking Regarding Emergency Response Service (ERS).  The Commissioners approved a proposed rule for publication which was published in the Texas Register in October.  The proposed rule includes language that would allow ERCOT to use ERS to help solve local congestion.  It also includes language that would release ERS resources which are selected to provide Must Run services to replace a Reliability Must Run (RMR) unit from their current contract at ERCOT.  With several competing language scenarios proposed by commenters, it is likely the PUC will hold a workshop for the rulemaking.

Reliability Must Run (RMR) Issues

The PUC opened Project No. 46369 to consider changing the timeline for a Notice of Suspension of Operation/RMR review from 90 days to 180 days as well as reviewing the timing for when alternatives to an RMR agreement are considered.  Numerous entities filed comments on the draft rule, and a workshop was held December 14.    At the workshop, staff indicated they would strike the language about having the first 60 days of the notice be confidential.  The IMM continues to support a probabilistic approach to determining whether to enter into an reliability contract.  The next step is for staff to develop a rule for publication and comment, and that is expected in February.

PUC Approves Rule Related to Distributed Generation Interconnection Agreements

The PUC has approved a final rule allowing certain entities other than the end-use customer to execute a distributed generation (DG) Interconnection Agreement (IA) with a Transmission Service Provider (TSP).  The rule allows for an end-use customer, a premises owner, a generator, or a person who has been assigned ownership rights to enter into an IA. This amendment reflects the current state of financing, installing, and operating small-scale DG in the Texas market today.  The rule also includes clarifying language for PUC jurisdiction over parties in the interconnection agreement.

PUC Consideration of NextEra Acquisition of Oncor

Oncor and NextEra Energy jointly filed for the regulatory approval of NextEra Energy’s acquisition of Oncor.  The initial filing was made on October 31, 2016, and the PUC has 180 days to rule on the transaction and determine if it is in the public interest.  The PUC approved the Preliminary Order in Docket No. 46238.  The deadline for decision is April 29, 2017.  A hearing is scheduled for February 21 – 24.

Texas Legislature

The 85th Session of the Texas Legislature begins January 10, 2017, and ends 140 days later.  November 14, 2016 was the first day bills could be pre-filed.  A total of 1163 bills had already been filed through the end of 2016.  Several bills related to infrastructure hardening and protection have been filed (SB 83 and HB 407).  As a reminder, these bills must pass numerous steps including passage in House and Senate committees before being considered by each chamber.  The session ends on May 29th.

Upcoming ERCOT and PUC Meetings:

Retail Market Subcommittee – January 10

Wholesale Market Subcommittee – January 11

Reliability and Operations Subcommittee – January 12

Commercial Operations Subcommittee – January 18

Protocol Revision Subcommittee – January 19

Technical Advisory Committee – January 28

ERCOT Board Meeting – February 14

Public Utility Commission Open Meeting – January 12 and 26

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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