On November 10, the Public Utility Commission of Texas (PUC) released a report and proposed market reform to enhance the reliability of ERCOT’s system ahead of winter. The public will be able to file comments through the commission’s website until December 15.
In May, PUC contracted the energy consulting firm Energy and Environmental Economics (E3) to conduct an analysis and development of a market design blueprint for ERCOT’s wholesale market in an attempt of restoring the public’s trust in the agency and avoid blackouts.
After months of work, E3 produced a quantitive and qualitative market reform report and proposal. Under the new reform, power providers would have to get “performance credits” from power generators to procure that both can ensure reliability during extreme weather conditions. If providers don’t buy the performance credits, or generators don’t meet the reliability standards, both companies could suffer financial consequences.
This would be an unprecedented step towards reforming Texas’ largely deregulated energy market. “This will be the first time that the companies that sell power to households — who you send your check to when you pay your bill each month– this will be the first time they’re actually responsible for ensuring they can deliver that power,” told Peter Lake, chair of the Texas Public Utility Commission to KHOU 11.
However, the report didn’t explain how the grid would operate under the credit system in periods of extreme weather conditions, such as unexpected spikes of heat or cold. E3 did not factor in events like the 2021 winter storm and how these could stress the grid under the new framework. “Such analysis is beyond the scope of this study,” reads the report.
The reform intends to make the reliability of the grid without increasing consumers’ electricity bills. With the credit system, both providers and generators operating the state’s power plants would have declared beforehand that they have enough reserve power on hand during periods of high demand.