Post Uri Market Redesign

Topics

By STEVE REEDY

The Gist

In the aftermath of Winter Storm Uri the Texas legislature determined that the ERCOT market design was in need of reform and decreed a number of changes in Senate Bill 3. The Public Utility Commission opened up project 52373 and invited several rounds of comments on market design. On 12/6/21 they published Phase 1 and Phase 2 of their reform efforts.

Phase 1:

ORDC Changes
- 1/1/22 Set Value of Lost Load (VOLL) and high system wide offer cap (HCAP) to $5000/MWh
- 1/1/22 Set Minimum Contingency Level (MCL) to 3000MW
- Future: Decouple HCAP and VOLL
- Future:Establish a new VOLL based on needed generator revenue
- Every even numbered year: ERCOT reports to PUC on ORDC effectiveness on November first
Demand Response
- Improve transparency of price signals to load resources, including changing demand response pricing from zonal to nodal
- Set higher performance standards for energy efficiency programs
- Examine Virtual Power Plants participation and barriers to participation in ERCOT
Emergency Response Service (ERS) reform
- ASAP: ERCOT to write protocol change to require deployment of ERS when Physical Responsive Capability (PRC) drops to 3000MW
- Future: Determine if ERS auction should be changed to procure a set amount of MW.
- Determine whether ERS should include seasonal apportionment.
Fast Frequency Response Service (FFR)
- Continue to implement FFR
Loads providing NonSpin (NPRR1093)
- Implement NPRR1093
Firm Fuel Product
- Develop a Firm Fuel Reserve Product
- Figure out if it can fit into a LSE Obligation or Dispatchable Portfolio Standard scheme
- Decide on whether it should be purchased via an RFP or an auction
Voltage Support Compensation
- Figure out a way to pay resources for providing voltage support
ERCOT Contingency Reserve Service
- Accelerate implementation of ECRS
- Allocate cost of ECRS in relation to cost-causation principles
Open rulemakings for:
- Voltage reduction
- Distributed Generation interconnection procedures

Phase 2:

Backstop Reliability Service
- ERCOT will develop this service that will provide payments to resources to hold themselves out of the market and thus increase generator revenue and provide incentive for more generation to be built.
Load-Side Reliability Mechanism
- The commission will develop a load side reliability mechanism that will either be a Load-Serving Entity Obligation (LSE Obligation) or the Dispatchable Energy Credits proposal, or a combination of the two.

Important Actions

XX/XX/XX Texas legislature passes HB4492
7/30/21 PUC opens project 52373
12/6/21 PUC files blueprint for phase 1 and 2 of market redesign
3/31/22 PUC discusses opening a project to standardize distribution interconnection