ERCOT observers warn of increased generation forced outages with rule change

The Electric Reliability Council of Texas Board of Directors' vote for a more restrictive generation outage scheduling rule change against the overwhelming opposition of stakeholders drew harsh criticism April 29 from industry observers -- one describing it as "government intervention at its most meddlesome."

After spending more than four hours in executive session an April 28 meeting, the board reconvened about 1:15 pm, eventually hearing the report of the Technical Advisory Committee, the top-level stakeholder body which normally presents nodal protocol revision requests endorsed for board approval.

Among those were NPRR 1108, "ERCOT Shall Approve or Deny All Resource Outage Requests," which had drawn a sharp divide between ERCOT staff and stakeholders.

Neil McAndrews, an Austin, Texas-based energy market consultant, was "not surprised" by the board's support for the ERCOT staff proposal, which he said "will cost more and lower reliability by increasing forced outages."

"A small understanding of the issues often results in a poor outcome," McAndrews said in an April 29 email. "The ERCOT BOD did not understand that the command-and-control limits proposed by ERCOT flies in the face of aging generation units with increasing failure rates. They voted for limiting planned outages to some abstract number that is theoretical and not based on the risk in the supply of generation. ... Government intervention at its most meddlesome."

Currently, only generation outage requests submitted with 45 days or less advance notice require ERCOT approval, while others are automatically accepted. NPRR 1108 eliminates the 45-day-advance-acceptance provision.

At issue is ERCOT's Maximum Daily Resource Planned Outage Capacity levels, with ERCOT staff's proposal setting the maximum at zero for mid-June through mid-September, substantially less than TAC's minimum proposal at certain other periods, such as early and late autumn, and substantially more than TAC's minimum proposal at still other periods such as the spring and mid-Autumn.

Beth Garza, a senior fellow at the R Street Institute think tank and former head of Potomac Economics' independent market monitor office for ERCOT, said the board's support for ERCOT staff over TAC, "portends a shift away from market participant-influenced actions."

"ERCOT staff input has always carried great weight with board and stakeholder decisions," Garza said April 29. "With the new 'independent' board, ERCOT staff input will likely become the preponderant input to board decisions."

Randy Jones, head of the Texas-based Mountaineer Market Advisors consultancy, said, "This board will be directed by the governor's [Public Utility Commission of Texas] going forward." The PUC must approve NPRRs before they can be implemented.

"Failure to properly maintain the fleet in a timely manner can lead to another system shortfall," Jones said April 29. "We should not be surprised by increasing forced outages rates in the future."

ERCOT staff concerns raised

NPRR 1108 provides the MDRPOC to be calculated twice a month for each day of the next rolling 60 months based on a capacity assessment.

TAC's version set a minimum MDRPOC at 2 GW for all periods except the following:

• March 1-14: 12.5 GW
• March 15-May 1: 15 GW
• May 2-May 15: 12.5 GW
• Oct. 1-14:7.5 GW
• Oct. 15-Nov. 30: 15 GW

Advocating for the TAC position on April 28, Bryan Sams, Calpine vice president for government and regulatory affairs, said NPRR 1108 discussions have been "especially difficult ... because we all want the same thing."

"We all want safe and reliable operations of this grid, and for resource owners, that includes the opportunity to take planned maintenance outages with plenty of opportunity to plan when things get very complicated," Sams said.

However, Woody Rickerson, ERCOT vice president for system planning and weatherization, said ERCOT staff is concerned about setting of guaranteed minimum outages and the TAC version's reliance on Advance Action Notices and Outage Schedule Adjustments to alter outages for imminent reliability issues

'Floor' undermines rule's purpose

At times, the TAC proposal's MDRPOC "floor" would exceed the "ceiling" provided in ERCOT's own MDRPOC proposal, Rickerson said.

"Really, this concept of the floor is really undermining when this MDRPOC is most useful," Rickerson said. "So, the TAC proposal would say that when outages might be oversubscribed that ERCOT should just rely on its Advance Action Notice and Outage Schedule Adjustments to remedy that."

However, ERCOT must issue an AAN within seven days before a capacity problem is forecast, and generators can opt not to comply with an AAN or OSA request to delay an outage, Rickerson said.

Another concern is that if a resource owner volunteers or is asked to move an outage, that resource owner "gets automatic acceptance for whenever they want to reschedule their outage" under the TAC proposal. "They could actually reschedule for another day when we already know we have a problem," Rickerson said.

Ultimately, the board approved ERCOT staff's proposed NPRR 1108 language without opposition, about which Michele Richmond, Texas Competitive Power Advocates executive director, said her group is "disappointed."

ERCOT's MDRPOC calculation is based on data from 2019-21, when COVID-19 reduced the labor and supplies necessary for maintenance, Richmond said April 29. Also, since June 2021 ERCOT has operated with higher reserve levels, requiring units to be dispatched under the Reliability Unit Commitment process, running them "more frequently and harder than ever before," she said.

"TCPA is very concerned that the restrictions will risk long-term reliability for the sake of a greater sense of command and control, premised on false precision, and result in forced outages," Richmond said. "Our fear is that the result will be less visibility and reliability, not more."