Regulatory Updates by Region

ERCOT Regulatory Highlights: June 2017

This month…

  • ERCOT Independent Market Monitor releases 2016 State of the Market Report.

  • Calpine and NRG file whitepaper with market design proposals at PUC.

  • The RMR rulemaking continues. Next steps include incorporating comments and a final rule.

  • A motion for rehearing was filed in the acquisition of Oncor by NextEra.

  • ERCOT stakeholders began scoping the study for Real-Time Co-Optimization.

  • Stakeholders continue to discuss the NPRR introduced to change the load participation limitations for Responsive Reserve Service (RRS).

  • The 85th Session of the Texas Legislature has ended (for now).

ERCOT and the PUC

ERCOT Independent Market Monitor (IMM) releases 2016 State of the Market Report

The IMM released the State of the Market Report for 2016. The report indicates that the market performed well in 2016, however there are several recommendations for improvement in both operation and price formation. One recommendation is to evaluate load programs such as Emergency Response Service (ERS) and the allocation of transmission costs (4CP) that reduce consumption for reasons unrelated to energy prices. The IMM continues to recommend the implementation of real-time co-optimization of energy and ancillary services. They also have recommendations on price formation when a Reliability Must Run (RMR) unit is deployed, the inclusion of marginal transmission losses in dispatch and pricing, and the evaluation of need for a local reserve product.

Resource Adequacy

Back in 2015, Commissioner Anderson filed a memo about resource adequacy, and subsequently the PUC opened Project No. 45572 to review the parameters of the ORDC. Comments and stakeholder work product  were filed by interested parties. The PUC did not act on any of the proposals. 

In May of this year, NRG and Calpine filed a paper called Priorities for the Evolution of an Energy-Only Electricity Market Design in ERCOT under the same project.  The paper is a collaboration between William Hogan and Susan Pope. In it, they call 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 proposals in the paper. They requested comments on the proposals for June 26, however Vistra Energy requested an additional month for the comment period. The PUC will likely discuss the new project at the June 7 open meeting.

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 as well as reviewing the timing for when alternatives to an RMR agreement are considered. After a workshop, and several iterations of comments, PUC staff released a proposed rule for publication and comment. The proposed rule extends the required notice of suspension of operations from 90 to 150 days, with an RMR decision made within the first 60 days. It also allows ERCOT to consider the economic value of lost load when deciding whether to consider an RMR or Must Run Alternative (MRA) contract, and each decision requires Board approval. Comments and reply comments were filed in May. Next steps will include PUC staff incorporation of the comments into the rule preamble, and development of the final rule.

Real-Time Co-Optimization Scoping

At the end of 2013, the PUC opened Project No. 41837 to investigate potential changes to the market. The PUC asked stakeholders to proceed with studying the feasibility and benefits of Real-Time Co-Optimization. The Supply Analysis Working Group (SAWG) began to create an issues  list. Some of the issues include adjustment to the offer cap, creation of Ancillary Service Demand Curves in the Day-Ahead and Real-Time, and Locational Operating Reserve Demand Curve/Reserves.   

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. A hearing was held February 21 – 23.   At the March 30 open meeting, all three commissioners expressed that they did not believe that the acquisition was in the public interest. A final order to that effect was approved on April 13. NextEra filed a Motion for Rehearing which the Commission has yet to rule on. Briefs were filed by parties related to the motion, and the PUC is expected to make a ruling on the motion for rehearing at the June 7 open meeting.

NPRR to Revise the Limitation of Load Resources Providing Responsive Reserve Service (RRS)

Nodal Protocol Revision Request (NPRR) 815 would revise the current limit of 50 percent for Load Resources providing RRS. As allowed in the current protocols, the amount Load Resources are allowed to provide RRS is capped at 50 percent.  ERCOT requires a minimum amount of RRS to provide Primary Frequency Response (PFR). The new language would allow any amount over the PFR requirement to be provided by load. The NPRR is being reviewed in the ERCOT Stakeholder process. 

Texas Legislature

The 85th Regular Session of the Texas Legislature ended on Memorial Day: a special session is likely to resolve at least one time-sensitive issue. The Senate and House were at odds on a number of significant matters, and many bills that successfully passed one chamber failed to get through the other. Bills related to infrastructure hardening struggled to move, bills related to Austin Energy stalled, and HB 1685/SB 736 related to the authority of the General Land Office to sell retail electric power passed only as an interim study. SB 735 is an electric utility omnibus bill that has been signed by the Governor and became effective immediately. The Governor is expected to make an announcement related to the need for a special session in the coming week.

Upcoming ERCOT and PUC Meetings:

Wholesale Market Subcommittee – June 7

Retail Market Subcommittee – Cancelled

Reliability and Operations Subcommittee – June 8

ERCOT Board Meeting – June 13

Commercial Operations Subcommittee – June 14

Protocol Revision Subcommittee – June 15

Technical Advisory Committee – June 29

Public Utility Commission Open Meeting – June 7 and 29

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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