Regulatory Updates by Region

ERCOT Regulatory Highlights: August 2017

This month…

  • The PUC sets workshop to review the Price Formation paper filed by NRG/Calpine.

  • The acquisition of Oncor is spurring attention by Berkshire Hathaway and the Elliot Group.

  • ERCOT stakeholders debate funding for Congestion Revenue Rights.

ERCOT and the PUC

Resource Adequacy

In 2016, at the request of Commissioner Anderson, stakeholders submitted a work product  to the PUC under

Project No. 45572.  This filing reviewed different parameter changes to the ORDC.  At the time, the PUC did not act on any of the proposals. 

In May of this year, NRG and Calpine filed a paper, authored by Susan Pope and William Hogan, called Priorities for the Evolution of an Energy-Only Electricity Market Design in ERCOT under the same project.  The paper calls for a number of proposed adjustments to the market in ERCOT.  Findings are broken out into three categories:  1) System-Wide Price Formation (Marginal Losses, ORDC Enhancements), 2) Locational Scarcity Pricing (Out-of-Market Actions to Manage Transmission Constraints, Dispatch and Pricing for Local Reserve Scarcity), and 3) Transmission Planning and Cost Recovery (Transmission Planning, Transmission Cost Recovery).

The PUC opened Project No. 47199 to begin discussion of the price formation and the locational scarcity pricing aspects of the paper.  The PUC is holding a workshop on August 10 to review the proposals.  ERCOT filed comments to answer several questions from the PUC on items.  The comments include an outline of recent stakeholder-driven changes to transmission planning, as well as RUC rules.  Finally ERCOT indicates they will provide further information on the timing and cost of several of the proposals, including real-time co-optimization with a localized scarcity pricing mechanism, and imbedding transmission losses into the settlement point price at the October open meeting. 

Potential Berkshire Hathaway Acquisition of Oncor

Following the PUC rejection of merger/acquisition of Oncor by NextEra (which has been appealed to the courts in Texas), there is further interest in Oncor by Berkshire Hathaway.  The Berkshire Hathaway deal must be approved by a bankruptcy judge, and then the PUC.  Oncor requested and received a docket number for future filings.  Docket No. 47392 has been assigned to the proceeding.  Berkshire Hathaway Energy announced stakeholder support for part of their plan in July, including a number of Retail Electric Providers, and the Texas Industrial Energy Consumers.  The Elliot Group is also courting EFH as a current debtor, but it remains to be seen if they will have an offer on the table.

Stakeholders Debate Fully Funding Congestion Revenue Rights

NPRR821 would eliminate the CRR deration process.  This complicated topic has been debated within the stakeholder world now for a number of months.  Currently, CRR holders may not be paid in full for two reasons.  One is that, market-wide, there is not enough congestion rent collected to pay CRR holders.  The other is that a specific transmission path can physically transmit less energy than was sold in the CRR auction.  For the first kind of lower payment, stakeholders developed a CRR balancing account, funded by money that would normally be distributed to loads.  For the most part, that balancing account pays CRR holders that are shorted due to low congestion rent back at the end of the month.  Several parties want all CRRs to be fully funded and discontinue the deration of lines.  An ERCOT estimate showed that more than $20 million would have been needed from the CRR balancing account to not have lines derated over the previous two years.  Many loads and consumers opposed this NPRR at the last TAC meeting and the NPRR did not receive enough votes to pass.  The NPRR was then tabled because a generator indicated derations have been an issue for them and they asked stakeholders to look at a limited solution for their problem.  Stakeholders will continue to debate the merits of the current proposal, and look at new proposals to address the limited stranded generation issue in the upcoming months.

Upcoming ERCOT and PUC Meetings:

Wholesale Market Subcommittee – August 2

Reliability and Operations Subcommittee – August 3

ERCOT Board Meeting – August 8

Retail Market Subcommittee – cancelled

Commercial Operations Subcommittee – August 9

Protocol Revision Subcommittee – August 11

Technical Advisory Committee – August 24

Public Utility Commission Open Meeting – August 10 (price formation workshop), 17, and 31

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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