Regulatory Updates by Region

ERCOT Regulatory Highlights: September 2017

This month…

  • The PUC sets another workshop to review the Price Formation paper filed by NRG/Calpine.
  • Reliability Must Run Rulemaking Proposal for Adoption filed at PUC.
  • The acquisition of Oncor is spurring attention by Sempra.
  • ERCOT stakeholders debate funding for Congestion Revenue Rights.

ERCOT and the PUC

Resource Adequacy

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, 2) Locational Scarcity Pricing, and 3) Transmission Planning and Cost Recovery.

The PUC opened Project No. 47199 to begin discussion of the price formation and the locational scarcity pricing aspects of the paper, real-time co-optimization, and other recommendations made by the Independent Market Monitor in the State of the Market Report.  The PUC held a workshop on August 10 to review the proposals.  ERCOT filed comments to answer several questions from the PUC.  The comments included an outline of recent stakeholder-driven changes to transmission planning, as well as RUC rules.  Finally ERCOT indicated 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 prior to the October open meeting. 

Following the workshop, PUC staff filed another memo setting another workshop date for October 13.  In addition, they invited alternative proposals to be submitted, with a deadline of September 29. 

Original work product submitted to the PUC under a previous project to review different parameter changes to the Operating Reserve Demand Curve (ORDC) may continue to play out in this the discussion, as changes to the ORDC are included in the NRG/Calpine paper.


Reliability Must Run (RMR) Rulemaking

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.  The PUC held a workshop and released a proposal for comment.  In August, staff released a Proposal for Adoption.  The proposed rule extends the required notice of suspension of operations (NOS) from 90 to 150 days, unless the NOS is seasonal, then it remains at 90 days. If the resource is not needed, it can be suspended prior to the 150 days with ERCOT approval. 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.  The PUC must decide on the rule by October 14.


Potential Sempra Acquisition of Oncor

Following the PUC rejection of merger/acquisition of Oncor by NextEra (which has been appealed to the courts in Texas), and the withdrawal of Berkshire Hathaway from a possible offer, there is interest in Oncor by Sempra.  Any bid from Sempra would need both approval from the bankruptcy court and the PUC.  The timeline at the PUC has not started yet, but would likely end up with an early 2018 ruling.


Stakeholders Debate Fully Funding Congestion Revenue Rights

As submitted, 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 to consider different options.

Several more options have been proposed by different stakeholders.  One would eliminate the derations with a “circuit breaker” to temporarily reduce CRRs sold in the monthly auction if the balancing account balance drops below zero.  Another would eliminate the hedge value limitation on derations and remove the balancing account fund.  Finally, other options would reduce the cost of the DAM point to point obligations.  Stakeholder debate will continue on the different proposals.


Upcoming ERCOT and PUC Meetings:

Wholesale Market Subcommittee – September 6

Reliability and Operations Subcommittee – September 7

Retail Market Subcommittee – cancelled

Commercial Operations Subcommittee – cancelled

Protocol Revision Subcommittee – September 14

Wholesale Market Subcommittee – September 27

Technical Advisory Committee – September 28

ERCOT Board Meeting – October 17

Public Utility Commission Open Meeting –September 14 and 28


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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