A deadly mid-February 2021 winter storm, known as Winter Storm Uri, cut power to more than 4 million customers in ERCOT, some for days. Until then, ERCOT's energy-only market had relied upon high prices during periods of high demand and scarce supply to incentivize new generation. The PCM cost's offsetting reductions in shortage "would give it, in a sense, almost a zero dollar cost," McDonald said.
But further analysis indicated that the system would go through periods of more excess capacity and more scarcity. In the latter circumstance, "your wind up with a very high PCM" cost, McDonald said.
"That could wind up overpaying PCM considerably over the course of time," McDonald said, estimating annual cost ranging from $350 million to $700 million.
In his last PUC meeting, retiring Commissioner Jimmy Glotfelty said he did not see "a whole lot of value, in terms of adding incremental generation on the system."
"I am not a huge fan of reliability standards as the driver for how you determine a reliable market," Glotfelty said. "Our loss of load expectation going into Winter Storm Uri was pretty strong and reserve margins that were through the roof, and we had a big outage that lasted for a long time, so I just think we need to continue to be working... and we have to get to a solution here, especially with demand growth."
Commissioner Kathleen Jackson suggested keeping the PCM and associated studies "on the shelf for some future date."
Commissioner Lori Cobos, who is also slated to leave the PUC at the end of December, noted that ERCOT is working to implement over the next year a new Dispatchable Reliability Reserve Service and real-time co-optimization of energy and ancillary services.
"So, you have to put those into operation and be able to understand whether they're working or not," Cobos said. "If we need an added incentive, maybe down the road, we could look at what else you could add to the market."
Regarding the Texas Energy Fund, the PUC approved in August a portfolio of 17 natural gas-fired projects for due diligence, totaling 9.8 GW, but the PUC later dropped one of them, Aegle Power's 1.3-GW plant, for failing to meet due diligence requirements. In particular, Aegle Power had claimed that Juno, Florida-based NextEra Energy Resources, was participating in the project, when that was not the case.
In light of that reduction, the PUC authorized Connie Corona, its executive director, to add two projects to its list of 16 natural gas-fired projects for which due diligence examination is to be conducted with the goal of negotiating and executing Texas Energy Fund financing assistance. The projects collectively seek $805 million in TEF funds to build the following:
TEF Director Tracie Tolle said these applications were advanced for due diligence after undergoing "an enhanced know-your-customer review" before being recommended.
"Those items include being in possession of long-lead-time items and executive engineering procurement contract and a binding equity agreement," Tolle said. "These projects would bring the portfolio of the loan applications undergoing due diligence to 9,720 MW."