Power sector observers divided on Texas regulators’ ERCOT reliability proposal

Power industry observers differed Jan. 20 over how effective the performance credit mechanism endorsed by the Public Utility Commission of Texas will be in enhancing reliability in the Electric Reliability Council of Texas at affordable costs — or even whether it will be implemented.

The PUC on Jan. 19 unanimously recommended establishing a performance credit mechanism, described as a “hybrid” of capacity and energy-only markets. In particular, the PCM entails performance credits earned by resources generating during hours of highest reliability risk to be traded among load-serving entities – retail electric providers and vertically integrated utilities — in a voluntary forward market administered by an ERCOT clearing house. Implementing the proposal would be delayed until the current Texas legislative session ends May 29.

Siva said Jan. 20, “PCM is a novel concept that resulted from stakeholder feedback during the PUC workshops, and it is unlikely anyone had a design like that in mind when they passed SB 3.”

‘A lot of uncertainty’ remains

Siva said the PCM order’s “long list of decision points” results in “a lot of uncertainty,” and even if it results in more gas-fired generation, reliability may not necessarily follow.

“From what happened in PJM during winter storm Elliott, and the observed outage rates for gas-fired generators, a mechanism that incents dispatchable generation doesn’t necessarily mean that they are going to actually be available when you need them.”